China is buying computer chips before Hong Kong route is shut down
CHINESE importers of computer chips are on a buying spree before the Hong Kong route shuts down in China's current contretemps with the western powers
03 August 2020 - 19:00
Bloomberg reports that sudden surge of orders is done in expectation that US sanctions on the territory will soon make the trade much harder.
Re-exports of semiconductors through Hong Kong to the mainland jumped by 11 per cent in the first half of the year from the same period in 2019, almost double the increase in total chip purchases, according to official data.
Re-exports rose by 21 per cent in June alone. The Hong Kong trade represents more than 38 per cent of China's total chip imports on average.
In the wake of Beijing's imposition of a national security law on the Asian financial hub, the US government has revoked the special trading status that eased commerce in sensitive goods including some computer chips.
For buyers like Huawei Technologies, Xiaomi or Lenovo Group, a worst-case scenario would entail severe supply bottlenecks.
'Chinese customers are willing to buy more before the actual effective day of the sanction,' according to Victor Choi, chairman of Hong Kong Electronics & Technologies Association, who estimates there are 300 or so firms which specialise in the trade. 'They are placing more orders for those items than before.'
The removal of Hong Kong's special status would 'drastically change' how the global semiconductor industry operates, industrial research firm TrendForce warned in a report earlier this month.
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