fbpx
10.1 C
London
Tuesday, November 24, 2020

U.S. threatens to ban SMIC from doing business with American companies.

  • U.S. threatens to ban SMIC from doing business with American companies.
  • Analyst Mark Li says SMIC could go under in a few years if sanction is imposed.
  • China’s foreign ministry calls U.S. sanctions “wanton oppression”.

Semiconductor Manufacturing International Corporation (HKG: 0981) slid sharply in premarket trading on Monday as the United States expressed plans of prohibiting American companies from doing business with the Chinese firm. Consequently, the company lost £3.04 billion of market value. In related news, Verizon chose Samsung Electronics over Nokia as its 5G equipment supplier on Monday.

- Advertisement -

Shares of the company tanked more than 20% in the stock market on Monday. SMIC closed the regular session at £1.79 per share that still represents a little under 50% growth in 2020 so far. In late March, when the Coronavirus pandemic disrupted operations, the Chinese company was reported trading as low as £1.12 per share. Looking forward to investing in the stock market online? Here’s a simple guide to get you started.

- Advertisement -


Analyst Mark Li says SMIC could go under in a few years

According to experts, if SMIC fails to secure goods and services from the U.S. companies, China’s commitment to establishing a self-sufficient semiconductor industry will take a massive blow. The move will also result in further trade tensions between the world’s largest two economies.

Analyst Mark Li of Bernstein Research commented on the news on Monday and said that SMIC, that is currently the largest China-based chip manufacturer, could go under in the matter of a few years if it loses its ties with the U.S.

SMIC refrained from commenting any further on the news at this stage. Via its secondary listing in Shanghai, SMIC had raised £5.01 billion in July. Its Shanghai-listed shares also printed an 11% decline on Monday.

The Chinese semiconductor company that is partially backed by the government, collaborates with several U.S. companies, including Applied Materials, that supply key production equipment. As per Jefferies, about 50% of SMIC’s suppliers are based in the United States.

China’s foreign ministry calls U.S. sanctions “wanton oppression”

China’s foreign ministry called U.S. sanctions “wanton oppression” on Monday as it said that the White House was “blatantly bullying” businesses based in China. According to ministry’s spokesman Zhao Lijian:

“For some time, the U.S. has been stretching the concept of national security and abusing national powers to take various measures on Chinese companies without any excuse. It is a blatant bullying practice, and we firmly oppose it.”

At the time of writing, Semiconductor Manufacturing International Corporation has a market cap of £24.75 billion and a price to earnings ratio of 33.78.

- Advertisement -

Follow Us

16,985FansLike
4,865FollowersFollow
1,643FollowersFollow

Latest news