Smic opens with a crash! The US is considering blacklisting it! A major escalation in the science and technology war between China and the US?

On Monday, SMIC’s Hong Kong shares opened down more than 15%, while smIC’s A-shares at one point fell more than 10%. It follows reports that the US is considering blacklisting SmIC, a Chinese technology company.

According to CNBC, a US defence department spokesman said the Trump administration was considering imposing export restrictions on SmIC, China’s largest semiconductor manufacturer.

The Pentagon is debating whether SMIC should be added to the Commerce Ministry’s list of entities, which in effect restricts the companies from accepting certain US-made goods. The list of U.S. entities currently includes more than 300 Chinese companies.

A defence ministry spokesman said: “The Mod is currently working with various departments to assess the information available to determine whether SMIC’s behaviour warrants inclusion on the Ministry’s list of entities, which will ensure that all products exported to SMIC will be subject to more comprehensive review.”

The potential move by the Trump administration, first reported by Reuters, is part of a continuing effort to put pressure on Chinese technology companies and would mark a major escalation in the tech battle between Washington and Beijing.

Us officials have long accused Chinese technology companies of being protected by the People’s Republic of China and of collecting sensitive information on behalf of the People’s Liberation Army. The Communist Party has previously said it does not engage in industrial espionage.

A report released last month by Virginia-based defense contractor SOS International said SMIC has ties to China’s defense industry, according to people interviewed by the Wall Street Journal.

According to the Wall Street Journal, SOS also said that Chinese military researchers revealed in research papers that they used SMIC technology to make chips.

Smic said in a statement on Saturday that it was “shocked and puzzled by the news” and that it “only provides services for civilian and commercial end users and end USES”.

“We have no relationship with the Chinese military,” SMIC added. “Any reports about the company’s relationship with the Chinese military are untrue.”

“Smic is willing to engage in sincere and transparent communication with US government agencies in the hope of resolving potential misunderstandings,” the company wrote.

Smic is seen as a key player in China’s efforts to revive its domestic semiconductor industry, an ambition accelerated by the US-China trade war. The export controls on SMIC would affect US companies that sell chipmaking technology to Chinese manufacturers.

Us officials recently announced that they would further tighten restrictions on China’s Huawei technologies in an effort to crack down on the telecoms company’s access to commercial chips. These restrictions prevent Huawei from acquiring semiconductors without a special license. Smic is one of Huawei’s manufacturers.

As tensions between the United States and China worsen, American officials are urging other governments around the world to rein in Huawei, saying the company will provide the Chinese government with data used in espionage activities. Huawei has denied spying for China.

The Trump administration also issued executive orders last month banning transactions with Bytedance and forcing the company to divest its U.S. operations from TikTok, a popular app.

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