SMIC shares keep sliding this week following US ban threat
Published: Sep 09, 2020 03:42 PM

A staff member works at a workshop of a semiconductor company in Shanghai, east China, Feb. 10, 2020. (Xinhua/Ding Ting)

Shares of the Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) have been falling on the Hong Kong and Shanghai stock markets so far this week after news of a potential US ban spread last Friday. 

On Monday, SMIC's share price plunged to HK$20.15 ($2.6) from HK$23.55 on Friday, slashing around $4 billion off its valuation. On Wednesday, SMIC's price has dropped more than 9.4 percent compared to Monday to HK$18.28 as of press time. Its price on the Shanghai Stock Exchange was also down by more than 11 percent compared to the beginning of this week, dropping to 54.11 yuan ($7.9) per share. 

China is putting high hopes on the company to be more independent in the semiconductor industry, and the ban would bring uncertainties to the sector's future and might cause more fluctuation in the company's valuation if implemented. 

The Shanghai-based company was listed on the Hong Kong Stock Exchanges back in 2004. It became China's biggest IPO in a decade when it made its debut in Shanghai in a secondary listing in July this year, raising as much as 53.2 billion yuan. 

The company is currently facing a potential ban from the US Department of Defense, which has threatened to bar US companies from trading with SMIC, including selling goods and services. The US government has already imposed a ban on the company, blocking it from providing supplies to Huawei, China's telecommunications and smartphone giant. The ban will take effect later this month. 

China's foreign ministry said on Monday that the threat of the ban on SMIC amounts to bullying Chinese firms, and that the US should stop oppressing foreign firms. 

China is currently seeking more self-reliance in the semiconductor industry. Chinese technology company Huawei has been sourcing its chips from Taiwan Semiconductor Manufacturing Company (TMSC), but TMSC has recently halted shipments to Huawei under the US ban. 

Global Times