Chinese Chip Stocks Drop Sharply Amid U.S. Trade Tensions and Political Pressure
Chinese semiconductor stocks tumbled on Tuesday as rising U.S.–China trade tensions triggered a wave of profit-taking across the previously high-flying chip sector.
Investor sentiment soured further after reports revealed that the Dutch government seized control of a local chipmaker from its Chinese owner, raising fears of increasing Western scrutiny over China’s technology industry.
In Hong Kong trading, Semiconductor Manufacturing International Corp (HK:0981) and Hua Hong Semiconductor Ltd (HK:1347) fell 6% and 9.9%, respectively. On the Shanghai Stock Exchange, Cambricon Technologies Corp Ltd (SS:688256) lost 3.7%, while Wingtech Technology Co Ltd (SS:600745) plunged 10% after Dutch authorities took over its Nexperia unit, citing economic security concerns.
The market downturn followed remarks by U.S. President Donald Trump, who threatened to impose 100% tariffs on Chinese imports in retaliation for Beijing’s export restrictions on rare earth minerals. The comments, which drew a strong response from China, reignited fears of a renewed trade war between the world’s two largest economies.
Most of the selloff centered on Chinese chipmakers, which had surged earlier in 2025 amid optimism over China’s artificial intelligence (AI) ambitions. Beijing’s push to strengthen domestic AI chip production had fueled strong gains for companies such as SMIC and Cambricon, both seen as key players in China’s semiconductor ecosystem.
However, analysts noted that elevated valuations left the sector vulnerable to corrections, as investors opted to lock in profits following months of sharp gains.
