US eyes sanc­tions for China’s largest chip maker

The Daily Telegraph - Business - - Business - By Michael Cog­ley

SHARES in China’s big­gest chip maker plunged by 23pc yes­ter­day af­ter re­ports that the US may im­pose sanc­tions on the com­pany.

The Trump ad­min­is­tra­tion is con­sid­er­ing adding Semi­con­duc­tor Man­u­fac­tur­ing In­ter­na­tional Corp (SMIC), which pro­duces chips for Huawei, to the De­part­ment of Com­merce’s en­tity list. The re­port, orig­i­nally from Reuters,

led to more than $28bn (£21bn) be­ing wiped off the firm’s val­u­a­tion.

SMIC’s ties to the Chi­nese mil­i­tary are un­der scru­tiny, ac­cord­ing to the re­port. The com­pany sub­se­quently said it was “in com­plete shock and per­plex­ity to the news”, adding that it had no re­la­tion­ship with the Chi­nese mil­i­tary. The US de­fence de­part­ment said that it was look­ing at the com­pany’s ac­tions to see if they would “war­rant adding them” to the en­tity list, in a com­ment to CNBC. The en­tity list, which also in­cludes Huawei, is made up of com­pa­nies, in­sti­tu­tions and gov­ern­ments that need to ac­quire li­cences to trade with the US.

SMIC re­lies on a num­ber of Amer­i­can com­pa­nies for its key pro­duc­tion equip­ment – and in­clu­sion on the list could dec­i­mate the busi­ness’s sup­ply lines. As much as 50pc of SMIC’s equip­ment is from the United States, Jef­feries has es­ti­mated.

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