China's top chipmaker tumbles after joining Huawei on blacklist

[SHANGHAI] Semiconductor Manufacturing International Corp, China's largest chipmaker, saw its shares fall as much as 4.8 per cent in Hong Kong Monday after warning that its inclusion in a US blacklist will have "major adverse impact" on the development of advanced technology.

Research and development of 10-nanometer chips and more sophisticated technologies will be affected, though the blacklist won't have significant impact on SMIC's operations and finances in the short term, the company said in a statement to the Shanghai Stock Exchange.

SMIC will keep communicating with the US government to seek a solution and minimise the impact on the company, according to the exchange filing.

The US Commerce Department on Friday blacklisted more than 60 Chinese companies including SMIC, citing national security and human rights violations as reasons. China's Ministry of Commerce later threatened to impose countermeasures against the US sanctions.

"Though the incremental impact is unclear, the uncertainty likely will prompt customers to look for other suppliers more actively," Bernstein analysts wrote in a note following the news.

Incumbent President Donald Trump had been widely expected to level more sanctions against China's national champions before Joe Biden formally takes over the office in January. SMIC has lost more than 6 per cent of its value since joining the likes of Huawei Technologies Co on a list that denies them access to US technology from software to circuitry.

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The Shanghai-based company, a supplier to Qualcomm Inc and Broadcom Inc, lies at the heart of Beijing's intention to build a world-class semiconductor industry and wean itself off a reliance on American technology. Washington in turn views China's ascendancy and its ambitions to dominate spheres of technology as a potential geopolitical threat. A blacklisting threatens to cripple China's longer-term ambitions by depriving it of crucial gear.

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