SMIC's stock price plummeted 5.50% during the afternoon trading session on Tuesday, reflecting broader weakness across the semiconductor sector.

The decline comes as hedge funds, which had aggressively purchased emerging market equities, are now hastily reassessing their positions. This shift follows the weakening of stocks and currencies in some developing nations after military actions involving the US and Israel against Iran, creating geopolitical uncertainty that is impacting investor sentiment toward emerging market exposures.

Popular chip stocks, including TSMC, Samsung, and SK Hynix, are facing revaluation risks amid this market reassessment. The sell-off in the semiconductor sector highlights how geopolitical events can rapidly alter risk appetites and portfolio allocations, particularly for companies with significant exposure to global supply chains and emerging markets.