|Bid||431.00 x 0|
|Ask||431.50 x 0|
|Day's Range||424.50 - 431.50|
|52 Week Range||235.50 - 466.50|
|Beta (5Y Monthly)||0.86|
|PE Ratio (TTM)||24.60|
|Earnings Date||Oct. 15, 2020|
|Forward Dividend & Yield||10.00 (2.36%)|
|Ex-Dividend Date||Dec. 17, 2020|
|1y Target Est||262.88|
(Bloomberg) -- Semiconductor Manufacturing International Corp. retreated to a four-month low in Hong Kong after the U.S. imposed export restrictions on China’s largest chipmaker.The shares declined 3.9% on Monday, adding to their 25% loss for the month. Also listed in Shanghai, SMIC’s stock there slumped 7% to the lowest level since its July debut. U.S. firms must now apply for a license to export certain products to the chipmaker, the Commerce Dept. said in a letter dated Sept. 25, reviewed by Bloomberg News. SMIC and its subsidiaries present “an unacceptable risk of diversion to a military end use,” the department’s Bureau of Industry and Security wrote.Read more: U.S. Imposes Restrictions on Exports to China’s Top ChipmakerThe U.S. stopped short of placing SMIC on the so-called entity list, which means the restrictions are not yet as severe as those imposed on China’s Huawei Technologies Co. Still, the ruling against the chipmaker marks a further escalation in the tensions between the world’s two most powerful countries that have already ensnared other Chinese tech companies including ByteDance Ltd. and Tencent Holdings Ltd.“The restriction, once implemented, will severely damage SMIC’s existing and future manufacturing capabilities, and customer trust,” Bernstein analysts led by Mark Li wrote in a note. “Without steady supply and service from the U.S., the yield and quality of SMIC’s capacity will degrade, as early as in a few months for more advanced nodes.”SMIC has not received an official notice of the sanctions, has no relationship with the Chinese armed forces and does not manufacture goods for any military end-users or uses, the Shanghai-based company said in an emailed statement over the weekend. Commenting on the actions against SMIC, the Chinese Foreign Ministry said in a briefing Monday that Beijing will “continue to take necessary measures to safeguard Chinese businesses’ legitimate rights and interest.”The SMIC ruling was a compromise between the Departments of Defense and Commerce and moderates in the Trump administration, according to one person familiar with the negotiations. The U.S. has reportedly said it was mulling a more severe blacklisting on SMIC -- akin to the ones imposed on Huawei -- that would affect exports from a broader set of companies.“If SMIC is not included in the Entity List, this could merely be confirmation of the rule change announced on April 27 for ‘civilian end-users’ in U.S.-unfriendly countries,” Jefferies analyst Edison Lee wrote in a note. “Instead of a blanket ban, the U.S. will have sole discretion on what U.S. companies can sell to SMIC.” The brokerage had previously estimated that as much as 50% of SMIC’s equipment is from the U.S.A formal statement that includes details of the restriction may be released by the U.S. Commerce Department Monday, Citigroup said. There will be a comment period of 30 days before the ruling takes effect, with semiconductor equipment companies and industry groups expected to push back against the restrictions, analysts including Atif Malik wrote in a note.The news lifted shares of SMIC’s rivals, with United Microelectronics Corp. surging by the 10% daily limit in Taipei. Taiwanese chipmakers Vanguard International Semiconductor Corp. and Macronix International Co. rallied more than 9%, while Taiwan Semiconductor Manufacturing Co. climbed 1.8%.Even though SMIC shares have more than halved from the record high set in July, some investors are recommending caution because the U.S. measures may derail its efforts to catch up to TSMC, the world’s largest contract chipmaker. SMIC is still up 50% for the year, outpacing the 30% gain in TSMC, but the Shanghai-based firm’s revenue and profit amount to roughly 10% and 3%, respectively, of its Taiwanese rival. For the current quarter, industry researcher TrendForce estimates that TSMC controls 54% of the foundry market, versus SMIC’s 4.5% market share.“SMIC’s valuations have reached relatively reasonable levels following the recent decline, but the long-term outlook is unclear. If the U.S. imposes restrictions against the company, especially on some key equipment that can only be supplied there, there will be a very big impact on the company,” said Qi He, a fund manager at Huatai-Pinebridge Fund Management Co. “We will mainly adopt a wait-and-see approach, until there is a resolution to the U.S. situation.”(Updates share prices throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Having delivered a heavy blow to the semiconductor plans of China’s biggest technology manufacturer, the U.S. government now seems keen to knock down the nation’s biggest contract chipmaker. The action looks opportunistic.Export restrictions placed on Semiconductor Manufacturing International Corp. mean U.S. companies will have to apply for a license to sell some products to the Shanghai-based chipmaker.The rules don’t appear as strict as those placed on Huawei Technologies Co. earlier this year, according to Bloomberg News. That move ended up forcing suppliers like Taiwan Semiconductor Manufacturing Co. to stop making chips to the Chinese company’s design.Yet the timing should raise eyebrows. The U.S. Commerce Department is implementing the ban because products sold to the chipmaker pose an “unacceptable risk of diversion to a military end use,” according to a letter from the department’s Bureau of Industry and Security, the report said.That sounds terrifying. In reality, anything sold to any company could end up having a military use: from an operating system developed by a software maker (armies use computers), to rubber and chemicals made by industrial giants (military trucks have tires).Despite the increased rhetoric from the Trump administration, the U.S. doesn’t apply arbitrary rules to its definition of military end use. In fact, the bureau has a set of guidelines on the topic. In April, it broadened its definition while adding China to a small cohort of nations — Russia and Venezuela being the others — for which a specific set of Export Administration Regulations apply. It outlined the likely result:This expansion will require increased diligence with respect to the evaluation of end users in China, particularly in view of China's widespread civil-military integration.A month later, the department added 24 groups to its entities list because of a risk that they would support “procurement of items for military end-use in China.” SMIC wasn’t among them. It’s possible that something happened over the past four months to make the Commerce Department suddenly worried about the threat from SMIC. Maybe that extra $7 billion it raised in a Shanghai listing two months ago raised red flags, or it could be that the chip foundry was simply next in line to be dealt with after Huawei.To be sure, there’s no doubt that China poses a threat to U.S. national security. A large nation with a growing economy, rising defense budget and territorial ambitions is by definition a risk.Yet the increased frequency of alarm bells ringing and the weird choice of targets — the forced sale of TikTok and the pointless ban on WeChat come to mind — suggest a different narrative.With less than two months to the U.S. election, and four months remaining in this presidential term, there’s a sense that hawks in the administration may have decided this is the best time to push through a tough-on-China stance.In finance, the concept of a big bath posits that companies dump bad news into one reporting period to get it done with, and to make later periods look relatively strong. With President Donald Trump keen to blame China for so many of America’s woes, and there being no guarantee that a Joe Biden presidency would be as aggressive toward Beijing, leadership in the Commerce, State and Defense departments may be seizing the moment.Once implemented, tighter rules, company bans, and forced divestitures will be difficult for any president to roll back without appearing soft. Trump is unlikely to object, having kicked off this “tough on China” streak during his first presidential campaign, while the Biden camp will see no political advantage in pushing back against such escalation ahead of the Nov. 3 ballot.As we count down the days, expect this big bath of announced Chinese security threats to get even bigger. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
In the latest trading session, TSMC (TSM) closed at $78.38, marking a +0.59% move from the previous day.