Semiconductor Manufacturing International Corporation (SMIC) saw its stock price plummet by 5.74% during intraday trading, as Hong Kong's technology sector faced a broad sell-off. The decline in SMIC's shares comes amid a larger retreat in the Hang Seng Tech Index, which shed 2.2% with chip stocks leading the downward trend.

The semiconductor sector, which had previously benefited from expectations of increased AI demand and import substitution themes, is now facing renewed scrutiny. Eugene Hsiao, Macquarie Capital's head of China equity strategy, suggests that easing U.S.-China trade tensions may have reduced the urgency for semiconductor import substitution. This shift in geopolitical dynamics could be contributing to the negative sentiment surrounding Chinese chip manufacturers.

Additionally, market participants appear to be reassessing the potential returns from massive artificial intelligence investments globally. Recent concerns surrounding U.S. tech giant Meta's accelerating AI spending have sparked questions about the profitability of such ventures. This broader uncertainty in the tech sector, coupled with specific concerns in the semiconductor industry, has likely contributed to SMIC's significant stock price decline.