Chinese chip stocks lose $8.6 billion on US export controls

Shares in China’s top chipmakers lost $8.6 billion in market value on Monday as new US export controls threatened to hamper Beijing’s plans for technological self-sufficiency.

Semiconductor Manufacturing International Corp, China’s biggest chipmaker, fell 4 percent in Hong Kong on Monday, while Hua Hong Semiconductor slumped 9.4 percent and Shanghai Fudan Microelectronics slumped 20.2 percent.

The sharp losses came after Washington on Friday unveiled new export controls restricting the sale of semiconductors made with US technology unless sellers get an export license.

The controls also ban U.S. citizens or companies from working with Chinese chipmakers without express authorization and limit the export of manufacturing tooling that would allow China to develop its own devices.

The US Commerce Department said on Friday it had added 31 companies to its “unverified list” to make it more difficult for Chinese companies to manufacture or source advanced computer chips that are critical to cutting-edge technologies.

Shenzhen-listed Naura Technology, which said one of its entities had been added to the list, fell the maximum 10 percent allowed in Shenzhen on Monday. Other big losers in mainland China included ACM Research Shanghai and Advanced Micro-Fabrication Equipment.

“Most of the new companies are unlisted, but the restrictions are still affecting overall market sentiment,” said Dickie Wong, chief research officer at Kingston Securities in Hong Kong.

The restrictions had already caused the Philadelphia Stock Exchange’s semiconductor index to fall more than 6 percent on Friday, as analysts warned that Chinese chipmakers would be badly hit by the new restrictions. Measured by end users, the Chinese semiconductor market accounts for almost a quarter of global demand.

“Sino-US tensions will not abate, so any addition to a list of entities will not go away,” Wong added. “We have to expect that other companies will also be included in the list in the short term.”

Losses for Chinese chipmakers exceeded losses for broader Chinese markets as traders bounced back from a week-long national holiday on the mainland. The CSI 300 index of stocks listed in Shanghai and Shenzhen fell 2.2 percent, while the benchmark Hong Kong Hang Seng index fell 3 percent.

“Washington will never back down,” said Andy Maynard, a trader at brokerage China Renaissance, adding that stock price volatility is exacerbated by low volume.

Traders said the restrictions were also expected to hit major suppliers in the rest of the Asia-Pacific region, but that any market reaction in Japan, South Korea and Taiwan would be delayed until those markets returned from national holidays on Tuesday.