According to a Reuters report, SMIC’s relationship with the Chinese military is under investigation, with an unnamed American official and two former officials briefed on the case. The decline in SMIC stock ended the market value of $ 31 billion ($ 4 billion).
The Department of Defense declined to comment on the reports. China’s largest semiconductor manufacturer SMIC said on Monday that it was “in complete shock”.
“The company manufactures semiconductors and only provides services for civil and commercial users and end use,” SMIC said in a statement to the Hong Kong Stock Exchange. “We have nothing to do with the Chinese military.”
SMIC said it is “open to honest and transparent communication with US government agencies” in hopes of clearing up potential misconceptions. ”
The ban against SMIC will be the latest step in the ongoing battle between Washington and Beijing that governs future technologies.
Sanctions on SMIC will push China’s ambitious ambitions. The country wants to build a state-of-the-art semiconductor manufacturing industry, but it takes a lot of time and a lot of money.
Eurasia Group’s head of geotechnology Paul Triolo wrote in a note last week that adding SMIC to the trade blacklist would be “a significant new impediment to China’s semiconductor development”.
According to Triolo, China has invested more than $ 200 billion to try to develop the country’s chip manufacturing industry faster and more advanced semiconductors.
The global supply chain of semiconductors means that sanctions against Chinese companies often harm American companies as well.
Approving SMIC, for example, would “further reduce the revenues of American semiconductor manufacturing equipment companies, which supply Chinese manufacturers, to resell and reorganize available funds.” [research and development] Tricol said later generations of semiconductors and related manufacturing equipment are necessary to develop.
In July, SMIC raised nearly $ 7 billion in a secondary listing on China’s response to the Nasdaq, Shanghai’s star market. The shares popped up more than 200% in its Shanghai debut, indicating that Chinese investors were eager to buy the country’s major chipmaker.
On Monday, SMIC shares were shared both in Hong Kong, where they fell nearly 23% and in Shanghai, where they fell more than 11%.
The shares of SMIC traded in Hong Kong are still over 50% for the year. TSMC shares closed down 0.7% in Taiwan. Samsung stock rose 1.6% in Seoul.