Shares of Semiconductor Manufacturing International Corp (SMIC), China’s biggest contract chipmaker, plunged over 23% on Monday, after the U.S. government said it was considering putting export restrictions on the company.
The firm’s Hong Kong-listed shares plummeted by 22.88% to close at 18.24 Hong Kong dollars on Monday. SMIC’s recently-listed Shanghai shares closed 11.29% lower at 58.80 Chinese yuan.
The U.S. Department of Defense is assessing whether to add SMIC to the Commerce Department’s so-called Entity List.
“Such an action would ensure that all exports to SMIC would undergo a more comprehensive review,” a Department of Defense spokesperson said.
China has put a lot of emphasis on developing its domestic semiconductor industry, a move that has gained further impetus amid the trade war with the U.S. SMIC, which manufactures chips, is however still behind rivals like Taiwan’s TSMC and South Korea’s Samsung Electronics in terms of technology.
SMIC also relies on American chipmaking equipment. If it were to be added to the Entity List, that could make it more difficult for the company to obtain the gear needed to develop its capabilities and hurt production