China is starting to show what sway it has in the semiconductor supply chain, and stocks are only starting to react. Yunnan Lincang Xinyuan Germanium Industrial’s shares rose by more than 30% over the past five trading days. About a week ago on July 3 , China’s Commerce Ministry announced export restrictions on germanium and gallium would take effect on Aug. 1. The two metals, which China produces most of the world’s supply of, are used in the manufacture of chips, fiber optics or solar panels. A significant amount goes overseas. Between 2018 and 2021, just over half of U.S. imports of the metals came from China, according to the U.S. Geological Survey. On the Shenzhen stock exchange, Yunnan Germanium shares hit the 10% upper trading limit for three days straight. That’s despite the company warning on day three of a loss in the first half of the year. It’s a signal of the growth potential in some Chinese chip subsectors once investors catch on, or new export rules come into play. And it’s those materials in the upstream part of the semiconductor supply chain that early-stage investment firm WestSummit Capital Management is looking for opportunities, said managing director Bo Du. “In China, firms are making more money from investing in the supply chain, not in artificial intelligence,” Du said in Mandarin, translated by CNBC. He pointed out that the supply of high-end chips needed to power AI training models are more sensitive to U.S. restrictions, while there’s a greater market for less advanced chips — found in products used day-to-day. For that category of “mature” chips, Du expects China can build up its own production equipment and materials in about two to three years. WestSummit claims about 20 billion yuan ($2.77 billion) in assets under management. Du said valuations of chip-related deals in China’s primary market have fallen recently, and that the firm is looking to invest more in the sector through the end of the third quarter. China’s latest export…
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