I am surprised to see SMIC and Hua Hong’s shares decline. One would think semiconductors fabbed by these companies would be used almost exclusively for the Chinese market. In theory, tariffs/sanctions should have no impact on their business.
The problem isn’t SMIC’s products. It’s who they sell to and the prospect of THEIR products getting impacted by tariffs. These are meat-and-potatoes components with low margins, not just the high-end processors.
If Walmart and Target stop ordering Elmo dancing dolls, singing greeting cards, and consumer blood pressure monitors, SMIC business could eventually take a hit.
June is also when most Chinese manufacturers start gearing up for mass-producing products for next Christmas. These things don’t turn on a dime.
Are the microcontrollers used in the Elmo dolls; I think that’s the key question.
Better question: are they used for products intended for the US market?
