Chipmaker SMIC, which is called the “heart” of the Chinese economy, is facing unprecedented challenges, writes CNBC. The head of the company suddenly announced his departure, after which it was excluded from one of the world’s main stock indices.
In mid-December, SMIC issued a statement, saying that the company “became aware” of co-CEO Mong Song Liang’s intention to step down from his post. SMIC also assured that it “clarifies” the true intentions of the top manager and the reasons for his action.
At the same time, the American stock provider MSCI, which calculates one of the world’s major stock indices, announced the imminent exclusion of some Chinese companies, including SMIC. The reason is in the legal prohibition of cooperation with certain Chinese enterprises in the technology sector for American residents.
Against this backdrop, SMIC shares on the Hong Kong Stock Exchange fell 4.9 percent during the trading session on December 16. Currently, one security is trading at 20.2 Hong Kong dollars (2.6 US dollars).
SMIC was considered a prime candidate to replace Taiwanese TSMC in supplying equipment to leading Chinese smartphone manufacturer Huawei, but now these plans are unlikely to be realized, since the company itself depends on foreign components, which are now banned. In addition, Beijing relied on SMIC to develop its national high-tech sector.