Relations between China and the U.S have become increasingly tense, with tariffs and accusations coming from both sides. The most recent dispute is about the global technology supply chain and the risks and vulnerabilities that stem from it. A Bloomberg report last Thursday stated that China spied on the U.S by using microchips that were placed into computing parts built for U.S tech companies. Hong Kong-listed shares of Lenovo, the Chinese PC maker, and ZTE Corp, the Chinese smartphone and telecommunications equipment company, both fell by over 10% following the news. U.S.-listed tech companies, such as Acer, fell as well.
For years there have been concerns about China using their products to spy on the U.S., but Chinese companies have denied this and China has had these same concerns about U.S. companies. With the U.S. placing tariffs on $250 billion in Chinese exports, Chinese technology stocks have already been hurt and this report added to the pain. While ZTE did not comment, Lenovo stated that Super Micro Computer Inc., the chip company connected to China’s spying, is not a supplier to them.
Around ⅓ of Lenovo’s revenue comes from the U.S markets, so continued supply chain concerns may very well have a notable impact on sales.
Source:
https://www.wsj.com/articles/chinese-tech-shares-tumble-on-spying-concerns-1538721860
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