Semiconductors manufacturing has become even more imperative, particularly with the growing adoption of artificial intelligence. As demand for processing power continues, China’s semiconductors industry can offer investors tremendous growth potential to diversify their tech portfolios.
The second largest economy has been looking to ramp up production of semiconductors. The country is aiming to improve availability of supply to meet current and forthcoming demand for chips. The use of particle accelerators could aid in producing more chips for AI usage. This would help make China a world leader in the semiconductor manufacturing industry.
“China is exploring new avenues to bypass restrictions on lithography machines, which are used in the production of microchips,” a South China Morning Post report said. “Using particle accelerators to create a novel laser source, researchers are laying the foundation for the future of semiconductor fabrication.”
A Cointelegraph article supplemented the SCMP report, mentioning China is developing AI chip factories that will further experiment with these particle accelerators as a means to circumvent Western sanctions. The article noted that Advanced Semiconductor Materials Lithography is the only company that can provide the aforementioned lithography machines. But the U.S. has barred the company from selling machines to China.
“The particle accelerators would be replacing the role of the lithography machine in the steps to produce semiconductor chips for creating high-level AI systems,” Cointelegraph said.
ETF Exposure to China Semiconductors
Creating technology that can power the next frontier, namely AI applications, semiconductors will continue to play a vital role. Given this, the KraneShares CICC China 5G & Semiconductor ETF (KFVG) is poised to benefit, particularly as a growth option.
As its fund name explicitly states, there is also a focus on 5G in addition to semiconductors. Major breakthroughs in 5G technology can provide additional growth exposure for investors alongside semiconductors, as improved chip technology can also help enhance 5G communications.
KFVG seeks to measure the performance of the CICC China 5G and Semiconductor Leaders Index. The index is designed to track the performance of companies engaged in the 5G and semiconductor-related businesses. This includes 5G equipment, semiconductors, electronic components, and big data centers.
Salient features inherent in KFVG:
- Access to China’s 5G and semiconductor companies that offer a potential source of uncorrelated, long-term growth.
- Exposure to Chinese technology companies listed in Mainland China, Hong Kong, and the United States.
- Tracks an index developed by China International Capital Corporation (CICC) Research. CICC is a leading publicly traded Chinese financial services company with expertise in research, asset management, investment banking, private equity, and wealth management. In 2019, the CICC Research Team ranked No. 1 in Institutional Investor’s All-China Research Category for the eighth year in a row.
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