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The Chinese leadership has an ambitious plan. By 2030, they want to ensure that the self-sufficiency rate in the semiconductor sector is 80% in order to become less dependent on the West, but also on geopolitical risks. This should provide a massive tailwind for Hua Hong's shares.
The Chinese government has defined semiconductors as a strategic priority in its five-year plan for 2026 to 2030. The aim is to strengthen technological independence and innovative strength. Prime Minister Li Qiang told the National People's Congress in March that chips are to be developed into a mainstay of new industries.
Specifically, the plan envisages increasing the self-sufficiency rate for semiconductors to 80 percent. For comparison: in 2024, the quota was still 33 percent. According to Reuters the government also stipulates that at least 50 percent of the equipment used in the construction of new factories must come from Chinese production. This will further accelerate the localization of the entire supply chain.
For Hua Hong, this is positive because the focus is on so-called "mature nodes", i.e. proven manufacturing technologies in the range of 28 to 90 nanometers, for example. It is precisely these technologies that are scalable in China in the short term and form the basis for numerous applications in industry, the automotive sector and power semiconductors. While China is still lagging behind when it comes to state-of-the-art chips, the expansion of these established segments is a political priority and can be implemented quickly.
Only time will tell whether China will achieve its ambitious 80% target by 2030. However, it is clear that the government will do everything in its power to achieve this and that the shares of established contract manufacturers such as Hua Hong should receive a tailwind as a result.
