China is getting its hands on as much chip-making equipment as possible amid U.S. tech curbs in the AI arms race. According to Bloomberg, Chinese companies are ramping up investments in the semiconductor space, with the import of chip-making equipment into the country rising by 14% to nearly $40 billion last year.
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Reportedly, this rise came even as total imports to China contracted by 5.5% last year. In comparison, imports of chip-making equipment into the country stood at $26.4 billion in 2019. Chip curbs by the U.S. are largely expected to slow the pace of, but not stall, China’s advances in advanced technologies. On the other hand, the country could become self-sufficient in chip production in a few years, given its rapid investments in the semiconductor space.
A key development pointing to this scenario is the nearly 1,000% jump in imports of lithography machinery from the Netherlands into China last month. This rise came ahead of the Dutch export restrictions that began this month. Still, the imports of integrated circuits into China, the largest semiconductor market globally, have contracted by over 15% to $349.4 billion, according to Bloomberg.
The current U.S. administration has moved to sharply restrict the supply of chips, such as NVIDIA’s (NASDAQ:NVDA) latest AI offerings, in China. Amid these challenges, China aims to boost its computing capacity from 197 exaflops in 2023 to over 300 exaflops by 2025. The plans could potentially drive the fortunes of China’s homegrown tech giants, such as Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU).
What is the Best Chinse Stock for 2024?
For now, though, shares of Alibaba and Baidu are down by over 41% and 25%, respectively, over the past year. Following this decline, the TipRanks Comparison Tool indicates the highest upside potential of 70.84% for BABA stock with an average price target of $118.60.
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