USA Asks Multiple Chip Equipment Manufacturers to Stop Shipping to Hua Hong

According to Reuters citing two sources, the US Department of Commerce last week asked several chip equipment companies to suspend shipments of some equipment and materials to two Huahong factories. Lam Research (Pan Lin Group), Applied Materials, and KLA are believed to be among the companies that have received the relevant letters, all of which have significant business in China.

The core of US concern is whether Huahong and its subsidiary, Huali Microelectronics, have more advanced chip manufacturing capabilities. A previous Reuters report stated that Huahong Group has developed advanced manufacturing technology that can be used to produce artificial intelligence chips, and its foundry business, Huali Microelectronics, is preparing for the 7-nanometer process at its Shanghai factory.

Affected by the news, Huahong's Hong Kong stock fell by 7.41% during the session. Lam Research closed down 3.1% on Tuesday, KLA fell 4.7%, and Applied Materials fell 5.8%. An informed source said that if the relevant factories are in the construction or renovation phase, US suppliers could lose tens of billions of dollars in sales.

There is still uncertainty about the effectiveness of the restrictions. The report mentioned that Huahong may seek alternative foreign or Chinese equipment, and the "is-informed" letter used by the US Department of Commerce this time may not necessarily be translated into formal rules.