The shares of China’s SMIC fll by a fifth on Monday which report says it could all be traced back to the fact that the chipmaker got sanctioned by the U.S. government which wiped off a huge US$4 billion off its market value which potentially could lead to its doom if a ban is put in place.
The U.S. Department of Defense had been earlier reported by Reuters of possibility of blocking American companies from providing goods and services to Semiconductor Manufacturing International Corp (SMIC) which happens to be China’s biggest chipmaker.
Despite the fact that there have been reports about the Chinese country hoping to build a self-sufficient semiconductor industry via SMIC, this hope might have just been thrown away if further escalations are in place.
“The company could go under within a few years,” says Mark Li, who tracks China’s chip industry at Bernstein Research.
SMIC did not immediately reply to a request for comment.
Its shares in Hong Kong fell more than 22% to close at HK$18.24. In Shanghai, where SMIC raised $6.6 billion in a secondary listing in July, its shares 688981.SS fell as much as 11%, closing at 58.8 yuan ($8.61).