SMIC's shares plunge as Trump government considers adding the firm in blacklist

Shares of Hong Kong-listed Semiconductor Manufacturing International Corp (SMIC) fell as much as 15.2% to HK$20.02, the lowest since June 16, after a U.S. official said it was considering adding the Chinese firm to a trade blacklist. The stock was the fifth most actively traded by turnover in early trade. Its Shanghai-listed shares fell as much as 11%.

The Trump administration is considering whether to add China's top chipmaker SMIC to a trade blacklist, a Defense Department official said, as the United States escalates a crackdown on Chinese companies.

SMIC’s ties to the Chinese military are under scrutiny, according to the report. The company subsequently said it is “in complete shock and perplexity to the news,” adding that it has no relationship with the Chinese military.

Chinese tech companies including Huawei Technologies Co. have been caught in the middle of worsening tensions between the two countries, which have clashed on a multitude of issues ranging from trade to the coronavirus pandemic and a Beijing-imposed security law for Hong Kong. Sanctions against SMIC would be an additional blow to Huawei, which has already been shut out from access to U.S. technologies and equipment.