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Abu Dhabi, UAETuesday 23 October 2018

Lenovo shares tumble as investors fret over impact of Chinese spy chip report

Report says that Chinese spies had placed computer chips inside equipment used by US companies and government agencies

Lenovo has fallen more than others because the US represents a huge chunk of its business. Reuters
Lenovo has fallen more than others because the US represents a huge chunk of its business. Reuters

Personal computer maker Lenovo’s shares plunged on Friday, hurt by concerns its sales could suffer in the wake of a Bloomberg report that US companies’ systems had been infiltrated by malicious computer chips inserted by Chinese spies.

The report cited 17 unidentified sources from intelligence agencies and businesses that Chinese spies had placed computer chips inside equipment used by about 30 companies and multiple agencies in the US administration, which would give Beijing secret access to internal networks.

Apple and Amazon.com, cited as companies that had been subject to the attack, denied the report. Super Micro Computer, which the report said was the supplier of server boards that contained the malicious chips, also denied the report.

The report did not say that any Chinese tech firms were involved in the attack.

But Lenovo shares tumbled 18 per cent while Hong Kong-listed shares of Chinese telecommunications equipment maker ZTE Corp fell 11 per cent in what analysts and market participants said was response to fears that consumers and businesses may become reluctant to buy Chinese tech goods.

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Lenovo said in a statement: “Super Micro is not a supplier to Lenovo in any capacity. Furthermore, as a global company we take extensive steps to protect the ongoing integrity of our supply chain.”

ZTE declined to comment.

“Lenovo has fallen more than others because the US represents a significant chunk of their business," said Linus Yip, chief strategist at First Shanghai Securities.

“The stock had also risen a lot in recent months... so the price is at a relative high point, the news of uncertainty may prompt some to sell and profit.”

The IT hardware sector subindex on the Hong Kong stock exchange was down 5.5 per cent, underperforming a 0.4 per cent dip in the benchmark Hang Seng index.

China's Ministry of Foreign Affairs did not respond to a written request for comment. Beijing has previously denied allegations of orchestrating cyber attacks against Western companies.