US Considers Ban on Chinese Silicon Chip Maker SMIC, Company’s Shares Plummet

(Source: SMIC)

Shares of China’s largest silicon chip maker, Semiconductor Manufacturing International Corporation (SMIC), plummeted on Monday after Reuters reported that the US plans to blacklist the company. This development contributes to ongoing escalation across the global tech industry, as the policy stands to bar the Chinese firm from using and testing chips with US semiconductor tools.

SMIC’s share price fell nearly 20% on the Hong Kong Stock Exchange and dropped approximately 10% on the Sci-Tech Innovation Board (STAR Market), reducing the company’s overall stock market value by more than $5 billion, Financial Times reported.

SMIC affirmed on Saturday via its public WeChat account that it strictly abides by the laws and regulations of relevant countries, and has established good cooperative relations with international semiconductor equipment suppliers for many years.

“Any assumptions of the company’s ties with the Chinese military are untrue statements and false accusations,” SMIC stated. “The Company is in complete shock and perplexity to the news. Nevertheless, SMIC is open to sincere and transparent communication with the US Government agencies in hope of resolving potential misunderstandings.”

According to the Wall Street Journal, the Department of Defense is now in discussions regarding whether or not to add SMIC to a Commerce Department entity list banning businesses without special licenses from engaging with American firms. CNBC reported that this list now covers over 300 China-based companies.

As SMIC serves as one of Huawei’s chip manufacturers, this move will likely impede the ability of Huawei to access commercially available chips. Adding further complications, the US Department of Commerce announced on August 17 that all foreign semiconductor company are prohibited from selling chips to Huawei that have been developed or produced using US software or technology, unless a license has been obtained in advance.

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In addition to advancing its goal to suppress Huawei’s global expansion, the Trump administration issued an executive order last month forcing Bytedance to divest the popular app TikTok’s US operations.