Lenovo, ZTE shares pummelled in Hong Kong after microchip report

Hong Kong trade PC maker Lenovo tanked more than 17 per cent, while telecoms equipment maker ZTE plunged 11.4 per cent. — Reuters pic
Hong Kong trade PC maker Lenovo tanked more than 17 per cent, while telecoms equipment maker ZTE plunged 11.4 per cent. — Reuters pic

HONG KONG, Oct 5 — Shares in two mainland Chinese tech giants were hammered today after a report said Beijing had used microchips inserted in US computer goods as part of a drive to steal technology secrets.

Bloomberg News said the tiny chips were place in gadgets made for Amazon and Apple, and possibly for other companies and government agencies.

In morning Hong Kong trade PC maker Lenovo tanked more than 17 per cent, while telecoms equipment maker ZTE plunged 11.4 per cent.

“Electronics produced in China may be viewed unsafe due to this news, and tech shares are falling in general because of that,” said Ray K W Kwok, an analyst at CGS-CIMB Securities Hong Kong.

With around a third of its revenue coming from North America, Lenovo could be in particular trouble.

And ZTE was already struggling to recover its losses for the year after collapsing 40 per cent in June in response to a Washington decision to ban US companies from selling crucial hardware and software components to it for seven years.

While the ban was eventually lifted after it agreed to pay a huge fine, its share price remains subdued.

“The hack report has nothing to do with Lenovo, but since Lenovo sells PCs and servers there, some investors may have concerns on a sentiment level,” Dennis Guan, a senior analyst at eFusion Capital. “It’s just too hard to predict how things will develop.”

The sell-off comes as tech firms around the world struggle on profit-taking following a healthy rally in recent years.

The report added to already tense relations between the world’s top two economies as they slug out a trade war that has seen them impose tariffs on hundreds of billions worth of goods.

Vice President Mike Pence added to the uncertainty by accusing Beijing of military aggression, commercial theft and rising human rights violations, while saying it was bent on interfering in upcoming US elections.

“There can be no doubt — China is meddling in America’s democracy,” he warned. — AFP

Related Articles