SMIC shares fall again after warning on U.S. sanctions
China’s biggest and most advanced chipmaker warns of “adverse effects” from U.S. export restrictions.
On September 28, shares in Semiconductor Manufacturing International Corporation (SMIC) plunged about 27% after the U.S. Commerce Department announced new export restrictions on China’s biggest chipmaker. SMIC is widely seen as China’s best hope for an indigenous microchip supply chain, even though it is currently dependent on the U.S. and other international suppliers for key technologies.
Today, SMIC’s stock fell again, by about 5%, after the company filed a notice last night to the Hong Kong Stock Exchange warning of “potential material adverse effects on the company’s future production and operations” because of the U.S. restrictions.
- SMIC also noted that it “has undertaken preliminary exchanges” with the Commerce Department and “will continue to actively facilitate communications with the relevant U.S. government departments.”
How serious is the ban?
- “This is not a complete ban,” said Eric Crusius, a partner at the law firm Holland & Knight quoted by the Financial Times. “Companies have an opportunity to get a license to export, and it remains to be seen how easy that will be.” A financial analyst quoted by CNN is similarly sunny on SMIC’s chances.
- On the other hand, a chip industry executive — apparently, an actual insider — quoted by the FT says he finds it “hard to imagine how this would not be a blanket ban.”
Chinese reactions
Aside from the Hong Kong Stock Exchange filing, SMIC has not released any additional information. The Chinese Foreign Ministry’s spokespeople have been silent, as they are on holiday for Golden Week.
On Chinese social media, reactions run the gamut, including:
- Exhortations for China to accelerate development of its own technologies and end all reliance on the U.S. and other Western countries;
- Lamentations that the country is still backward in certain areas;
- The occasional veiled criticism of China’s system of government, which can hide or exacerbate its weaknesses.
