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China’s largest chipmaker, SMIC plunges 19%

1 min read
Smic

Shares of SMIC, China’s biggest contract chipmaker, plunged over 19% on Monday, after the U.S. government said it was considering putting export restrictions on the company.

The firm’s Hong Kong-listed shares were down 19.75% at 18.98 Hong Kong dollars as of 11:33 a.m. local time. SMIC’s recently listed Shanghai shares were down 9.2% at 60.18 yuan.

The U.S. Department of Defense is assessing whether to add SMIC to the Commerce Department’s so-called Entity List.
China has put a lot of emphasis on developing its domestic semiconductor industry, a move that has gained further impetus amid the trade war with the U.S. SMIC, which manufactures chips, is however still behind rivals like Taiwan’s TSMC and South Korea’s Samsung Electronics in terms of technology.

SMIC also relies on American chipmaking equipment. If it were to be added to the Entity List, that could make it more difficult for the company to obtain the gear needed to develop its capabilities and hurt production.

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