Semi equipment stocks fall as US considers SMIC ban

Trump administration weighs blacklisting China's chipmaker SMIC

Trump administration weighs blacklisting China's chipmaker SMIC

The Trump administration is considering adding Semiconductor Manufacturing International Corp (SMIC), which produces chips for Huawei, to the Department of Commerce's entity list.

SMIC's stock price fell by 23 percent on the Stock Exchange of Hong Kong following the publication of Reuters' story.

In addition, a change in SMIC's trade status would undoubtedly affect its business relationship with Chinese conglomerate Huawei.

On Monday, SMIC closed down 22.9% in Hong Kong, while the company closed down 11.3% in Shanghai, wiping more than $5 billion off its market cap.

The Shanghai-based chipmaker expressed "shock and perplexity" at Reuters report and said it would be happy to clear up any misunderstandings about its business with the USA government. Further, the company added that the firm was open to having a "sincere and transparent communication" with the government of the United States to bolster the resolving of any misunderstandings the government may have regarding the firm. A Pentagon spokesperson confirmed that agencies are mulling whether to put Semiconductor Manufacturing International Corporation on the entity list, which prevents USA companies and anyone else who wants to stay in America's good books from doing business with them unless given explicit permission to do so.

Chinese companies including Huawei are developing their own processor chips and other technology.

Andalucia Masters: John Catlin wins ahead of Martin Kaymer at Valderrama
Kaymer finished with a bogey on the final hole, barely missing an effort from off the green, and Catlin tapped in for par to take the title.

Other analysts warned that the implications for US chipmakers could be worse, however, as cutting off SMIC would take away a large part of their business.

The move could make SMIC the next focus of a trade clash that has already threatened Chinese tech firm Huawei's survival and forced Bytedance to negotiate the sell-off of video-sharing app TikTok's American operations.

SMIC is the largest Chinese chip manufacturer but is not as big as market leader Taiwan Semiconductor Manufacturing Co Ltd.

But it is also facing new restrictions from Commerce that require Huawei's chip manufacturers to seek United States licenses before producing chips for the telecoms giant, if they rely on USA chipmaking technology.

China has lashed out at the USA government over potential export restrictions on SMIC, the country's biggest chipmaker.

Analyst Mark Li says SMIC could go under in a few years if sanction is imposed. The list now has over 300 Chinese-based companies on it restricting their ability to interact with US companies. Via its secondary listing in Shanghai, SMIC had raised £5.01 billion in July. Reuters reported that around half of SMIC's suppliers are us firms.

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