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Shares of SMIC, China’s largest chipmaker, drops 23%

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Shares of SMIC, China’s largest chipmaker, drops 23%

On Monday, shares of China’s biggest contract chipmaker, Semiconductor Manufacturing International Corp (SMIC), tumbled down more than 23% following the U.S. government stated it was considering subjecting the company to export restrictions.

The firm’s shares that are listed in Hong Kong went down 22.88% to close at 18.24 Hong Kong dollars on Monday. SMIC’s recently-listed Shanghai shares closed by dropping 11.29% at 58 yuan. 

The U.S. Department of Defense is deciding whether to include SMIC to the Commerce Department’s Entity List, as reported by CNBC.

“Such an action would ensure that all exports to SMIC would undergo a more comprehensive review,” a Department of Defense spokesperson stated. 

One of the largest economies in the world, China, has focused on developing its domestic semiconductor industry to a great extent. However, SMIC, which manufactures chips, still has catching up to do with companies like Taiwan’s TSMC and South Korea’s Samsung Electronics in terms of technology. 

SMIC depends on American chip making equipment which makes it difficult for the company, if it is going to be added to the Entity List as it will affect the chipmakers’s production.

(Reference: CNBC)

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