Hikvision and Dahua share prices fell almost 10% after the US banned American companies from selling parts to Chinese telecom giant ZTE on Monday.
The Department of Commerce banned American companies from supplying ZTE for seven years after if found ZTE had lied about disciplining employees involved in illegally shipping US goods to Iran. ZTE is China’s second largest telecom and networking equipment maker after Huawei and the move was widely interpreted as being the latest blow in the ongoing US-China trade conflict.
Many Chinese stocks fell on the news, particularly in tech. Chinese investors fear that a company like Hikvision could be the “next ZTE” because it is a beneficiary of Made in China 2025, an industrial program focusing on hi-tech sectors that the US has targeted.
Hikvision would be particularly vulnerable because of its use of Intel and Nvidia for its AI / deep learning efforts. (See "Hikvision Nvidia Supercomputing Partnership" and "Hikvision Partners with Intel Movidius for Artifical Intelligence Cameras.") However, Chinese media has reported that the "domestic proportion of AI chips [used by Hikvision and Dahua] for front-end cameras has gradually increased, and only a few products, such as GPUs for back-end data centers, rely on imports."
Despite the fears, the US has given no indication that it will target Hikvision or Dahua in the future. China has retaliated by imposing hefty anti-dumping duties on imports of American sorghum.
Hikvision and Dahua's stock prices can be seen below - note the sharp drops on Tuesday, April 17, the first day of trading in China after the US' announcement.