ASPAC tech firms face chip ban risk

Stronger US restrictions on China-made chips have increased uncertainty for Asia -Pacific tech majors.

“Many of the Asia-Pacific tech issuers that we rate have the financial strength to absorb the blow for at least the next 12 months,” said S&P Global Ratings credit analyst Clifford Kurz. “But longer term, the rating implications are clearly negative.”

On 7 October 2022, the US Bureau of Industry and Security significantly stepped-up restrictions on chip manufacturers located in China and the procurement of advanced chips from Chinese companies.

Details are still scarce, and clarification is particularly needed on the following areas to better determine the full credit impact:

• What is the scope of restrictions on the sale of advanced chips to Chinese companies?

• Which companies could be included in the US Entity List in the future?

• Which semiconductor equipment could be restricted for Chinese semiconductor fabrication (fab) plants? Some semiconductor equipment can be used to manufacture chips that are both above and below 16 nanometers (nm).

• Will multinational companies receive licenses to operate their chip facilities in China and what will happen when existing licenses expire in the next 12 months?

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