China’s biggest maker of semiconductors is to withdraw from the New York Stock Exchange, bringing to an end its 15-year listing in the US, as the increasingly ferocious trade war with the US spills over into the technology sector.

Semiconductor Manufacturing International Corp (SMIC) said on Friday evening it has notified NYSE of its intention to apply on June 3 to delist its American depositary receipts from the bourse. In a filing to the Hong Kong stock exchange, where its shares are listed, SMIC cited low trading volumes of its ADRs and the high costs of maintaining the listing and complying with reporting requirements and related laws.

The delisting is expected to happen after June 13, and trading of the chip maker’s US securities will shift to the over-the-counter market, the statement said. The board has already approved the proposal, it said, though SMIC will require permission from the Securities and Exchange Commission (SEC) too.

Investors were caught off-guard by the announcement. The chip maker’s ADRs tumbled by around 5 per cent in pre-market trading in the US. Its Hong Kong-listed shares dropped 4.3 per cent to HK$8.42 at the close on Friday.

The sudden move came at a time when Washington is stepping up efforts to cut off its technology from China, with trade negotiations between the world’s two largest economies still deadlocked.

The Trump administration has put Huawei Technologies, China’s biggest telecoms equipment maker, on its so-called entity list that will virtually ban the company from buying key American technologies and products. The sanction may be expanded to include as many as five Chinese video surveillance companies including the largest, Hangzhou Hikvision Digital Technology, and Zhejiang Dahua Technology, according to media reports.

In an attempt to combat such moves, China has ratcheted up its policy support of its home-grown chip industry to reduce the sector’s reliance on imports. Following an announcement from the finance ministry this week, Chinese integrated circuit makers and software developers will be exempt from paying corporate taxes for two years starting in 2019, and the tax rate will be halved in the next three years.

 SMIC is backed by the Chinese government, with state-owned enterprises or state-linked investment funds as the major shareholders. The China National Integrated Circuit Industry Investment Fund, which was created by the government in 2014 to bolster the development of home-grown technologies and acquire overseas patents and designs, has invested in SMIC through an investment arm.

SMIC’s shares started trading in Hong Kong and the US at the same time, in March 2004. Its Hong Kong-traded shares have advanced 23 per cent so far this year, well ahead of a 5.8 per cent gain on the Hang Seng Index in the same period. Its revenues increased 8.3 per cent from a year earlier to a record high of US$3.36 billion in 2018.