After 15 years of being listed in the US capital market, Chinese firm Semiconductor Manufacturing International Corp (SMIC) has announced that it will be withdrawing its name from the New York Stock Exchange. One of the world's biggest semiconductor manufacturer reasoned that there they had experienced very low trading volumes and that it no longer made economic sense to be listed on the exchange.
SMIC revealed that it has already notified the NYSE of its intention to be delisted. The company intends to remove its American depositary receipts (ADRs) from the bourse on June 3. According to its recent filing to the Hong Kong Stock Exchange, the company stated that it is no longer willing to shoulder the high cost of maintaining its listing on the NYSE, which includes submitting the required reports and keeping up with related regulations.
The company is expected to be officially removed from the US exchange on June 13. Those who are interested to still invest in the company can still trade the firm's US securities through the over-the-counter market. Prior to being officially removed, the firm will still need to get the approval from the US Securities and Exchange Commission (SEC).
While the company did mention cost and low trading volumes as to the main cause for its planned delisting, some analysts believe that the move could be an indirect result of the on-going trade war between the United States and China.
The US has recently made moves to cut off US technologies from China. This includes the recent trade ban imposed on the Chinese tech firm Huawei. President Donald Trump also recently expressed his intention of adding more companies to the trade blacklist, including video equipment maker Hangzhou Hikvision Digital Technology.
US investors were reportedly caught off guard by SMIC's announcement. Stock prices fell by as much as 4.9 percent following the news. SMIC's stock in Hong Kong also fell by around 4.3 percent.
While some companies do occasionally delist voluntarily, SMIC's move has been off-putting for some investors. According to one investor, suddenly leaving the ADR market is not something that happens very often. Most companies delist because they were offered better terms on another exchange, but this doesn't seem to be the case for SMIC.
SMIC went public in the US and in Hong Kong in 2004. The state-backed firm, with state-linked investment funds as major shareholders, currently has a standing partnership with US tech firm Qualcomm. Both companies have a joint venture firm in Shanghai, which is developing next-generation microprocessors.
