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China chipmaker SMIC delisting from NYSE amid trade war, tech crackdown

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The largest chipmaker in China has applied for a “voluntary delisting” from the New York Stock Exchange as President Donald Trump’s administration increases its crackdown on Chinese tech.

Semiconductor Manufacturing International Corporation (SMIC) said in a Friday statement that it will file a form to delist with the US Securities and Exchange Commission (SEC) on June 3, and cease trading on June 13.

The company, whose primary listing is in Hong Kong, specializes in integrated circuit manufacturing and works with American companies like Qualcomm and Texas Instruments. Qualcomm, the Chinese telcom giant Huawei, and Belgian nanotechnology firm imec are minority shareholders in SMIC’s R&D arm.

SMIC attributed its decision to delist to “a number of considerations,” which included “limited trading volume of its ADSs [American depositary shares] relative to its worldwide trading volume, and the significant administrative burden and costs” of maintaining the NYSE listings and reporting to the SEC.

Read SMIC’s full statement here.

US President Donald Trump and Chinese President Xi Jinping at the Great Hall of the People in Beijing on November 9, 2017.
NICOLAS ASFOURI/AFP/Getty Images

SMIC made no mention of the ongoing trade war or the US’s growing crackdown on Chinese tech in its Friday statement, and insisted that its decision to delist had nothing to do with either of those factors.

Washington and Beijing are in the throes of a yearlong trade war, in which both sides have imposed billions of dollars’ worth of additional tariffs on each others’ products.

Read more: It’s been more than a year since the US-China trade war started. Here’s a timeline of everything that’s happened so far.

Last week, the Trump administration labeled Chinese telcom giant Huawei a national security threat, and effectively banned it from doing business with US companies. Major tech companies in the US and around the world have severed ties with Huawei since.

There was some speculation that SMIC’s decision to delist was due to the trade war, CNBC reported.

But a spokesperson for the Chinese company told CNBC: “SMIC has been considering this migration for a long time and it has nothing to do with the trade war and Huawei incident.”

“The migration requires a long preparation and timing has coincided with the current trade rhetoric, which may lead to misconceptions,” the spokesperson added.

It’s not clear if the trade war or Trump’s penalizing Chinese tech affected SMIC’s American trades. Business Insider has contacted SMIC for comment.

Employees work at a production line of Semiconductor Manufacturing International Corporation (SMIC) in Shanghai, China, in February 2008.
Nir Elias/Reuters

SMIC made a profit of $746.7 million in 2018 on a $3.36 billion revenue, TechCrunch reported. Its revenue for the first quarter of 2019 was $668.9 million, which was 19% lower year-on-year, according to first-quarter earnings reported earlier this month.

Investors were caught off guard by the announcement, and the company’s stock fell 4.9% on Friday, the South China Morning Post reported.

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