TL;DR: “Semiconductor Manufacturing International Corporation (‘SMIC’ or the ‘Company;’ NYSE: SMI; SEHK: 981) today announced that the Company has notified the New York Stock Exchange (‘NYSE’) on May 24, 2019 (Eastern Time in the U.S.) that it will apply for the voluntary delisting of its American depositary shares (‘ADSs’) from the NYSE and the deregistration of such ADSs and underlying ordinary shares under the U.S. Securities Exchange Act of 1934, as amended (the ‘Exchange Act’),” SMIC announced, citing low volumes and US regulatory burden.
SMIC to Delist from the New York Stock Exchange
The US trade war with China is heating up alright, as China’s largest manufacturer of semiconductors will voluntarily delist itself from the NYSE, one of the most prestigious and iconic platforms in the world. SMIC would have traded for more than 15 years on the NYSE when formal withdrawal is expected to take place in mid June of 2019. For cryptocurrency enthusiasts, the move is unclear as to its eventual impact — SMIC is a popular foundry for chips associated with mining, for example.
“The Board of Directors of SMIC approved the delisting of its ADSs from NYSE and the deregistration of such ADSs,” the company claimed, “and the underlying ordinary shares under the Exchange Act due to a number of considerations, including the limited trading volume of its ADSs relative to its worldwide trading volume, and the significant administrative burden and costs of maintaining the listing of the ADSs on the NYSE, the registration of the ADSs with the United States Securities and Exchange Commission (the ‘SEC’) and complying with the periodic reporting and related obligations of the Exchange Act.”
And while it is true SMIC’s US volumes have been lagging compared to its Hong Kong listing (up more than 20% this year), last year was a banner one for the giant, fetching an all time high in revenue of more than $3.3 billion. Most investment analysts were surprised by the sudden delisting move, and attributed it entirely to the Trump administration’s ratcheting up of various sanctions, tariffs, and, more recently, its placing of China’s crypto-friendly telecom company Huawei on a kind of blacklist, as CoinSpice reported.
In an effort to perhaps sweeten against the bitter taste of that move, the Chinese government announced its exempting of such manufacturers from corporate tax for the next two years. “After delisting its ADSs from the NYSE,” the chip manufacturer explained further, “SMIC remains committed to serve its investor and intends to maintain its ADR program as a Level I program, which will enable American investors and current holders of SMIC ADSs to continue to hold and trade SMIC ADSs in the US over-the-counter market. As a result of the delisting of the ADSs, the trading of SMIC’s securities will be concentrated on SMIC’s primary market (The Stock Exchange of Hong Kong Limited).”
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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