** Shares of Semiconductor Manufacturing International Corp (SMIC) fall 20.3%, as investors lock in gains after stock soared 57% in past two trading sessions on hopes of more government stimulus

** Hong Kong shares of Hua Hong Semiconductor drop 22.9% after stock jumped 50.7% in last two trading days

** Goldman Sachs raises TP for SMIC to HK$25.7 from HK$22.4, and Hua Hong to HK$31.3 from HK$27.3, saying it is positive on China foundries' long-term opportunities on increasing localized demand

** CMB International (CMBI) maintains "outperform" rating on China semiconductors sector, saying most stocks are still trading at discounts to historical highs

** "For semiconductor sector, we are optimistic that HK-listed companies will have upside opportunities, driven by improvements of the market sentiment and funds inflows," CMBI wrote, adding SMIC, Hua Hong, ZTE may be favored by funds considering their larger market capitalizations

** ZTE falls 21.6% after stock surged 30.9% in last two sessions

** However, China shares of ZTE jump 9.7% after market reopened after long holiday, Hua Hong up 20%

** China's chipmaking index jumps 19.4% while Hong Kong's Hang Seng Tech Index falls 7.5%

(Reporting by Donny Kwok)

((donny.kwok@thomsonreuters.com))