US SANCTIONS THREAT CUTS 23% OF VALUE OF CHINA’S BIGGEST CHIPMAKER

Shares in China’s biggest chipmaker SMIC plummeted nearly 23% in Hong Kong on Monday on fears that it could become the latest casualty of the US-China tech war.

The US Department of Defense and other US agencies are reportedly considering banning exports to Semiconductor Manufacturing International Corp. (SMIC), according to Reuters and other news outlets, Sherisse Pham reported for CNN Business late on September 7, 2020. The chipmaker could be added to a list of companies that the US government considers to be undermining American interests. SMIC's relationship to the Chinese military is under scrutiny, according to the Reuters report, which cited an unnamed US official and two former officials briefed on the matter.

The plunge in SMIC stock wiped 31 billion Hong Kong dollars ($4 billion) off its market value. Companies on the US list face significant challenges obtaining vital technology because American firms are banned from selling to them without first obtaining a license to do so. Escalating restrictions on Chinese tech firm Huawei, which was added to the list last year, threaten to cripple its global business, for example. The Department of Defense declined to comment on the reports. SMIC, China's biggest semiconductor maker, said on

Monday that it was "in complete shock."

The company "manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses," SMIC said in a statement filed to the Hong Kong Stock Exchange. "We have no relationship with the Chinese military." SMIC added that it is "open to sincere and transparent communication" with US government agencies "in hope of resolving potential misunderstandings."