Illumina, a leading provider of DNA sequencing technology, has been prohibited from exporting its sequencing machines to China. This restriction follows China’s decision to block the company in response to the United States’ recent expansion of tariffs on Chinese imports under the Trump administration.
Earlier this year, after the U.S. initially imposed a 10% tariff on Chinese goods in February, China’s Ministry of Commerce placed Illumina on its “unreliable entities list.” This classification exposed the company to potential sanctions. The latest round of U.S. tariff increases, which saw an additional 10% hike, came into effect last night. Simultaneously, new 25% tariffs were imposed on imports from Canada and Mexico. The medical technology trade association, AdvaMed, has been advocating for medical devices to be exempt from these tariffs, given that approximately 75% of medical hardware sold in the U.S. is produced abroad. China and Mexico are major manufacturing hubs for these devices, while Canada remains a key export market for U.S.-produced medical technology.
Following the announcement, Illumina’s stock experienced a 4% decline in after-hours trading before rebounding to a 1.5% loss, with shares stabilizing around $82.60.
In response to the restriction, Illumina released a statement clarifying that the decision does not prohibit its overall operations in China. The company emphasized that the government’s notice did not explicitly reference the reagents and consumables required for sequencing processes. “Illumina will continue to support its customers in China and contribute to advancements in human health,” the statement noted. Additionally, Illumina reaffirmed its commitment to adhering to Chinese regulations and acknowledged the country’s historical support for foreign investment. The company is currently evaluating the implications of the government’s decision.
China accounts for approximately 7% of Illumina’s revenue, with 2024 sales amounting to around $300 million. The company employs over 300 individuals in the region, including staff in Hong Kong and Taiwan. In 2022, Illumina established a reagent manufacturing facility in Shanghai, with plans to extend production to sequencing instruments by 2028. However, its market share in China has been steadily declining due to increased competition from domestic firms such as BGI Genomics and MGI Tech.
The announcement led to significant stock gains for Illumina’s Chinese competitors. BGI saw its shares surge by over 8% on the Shenzhen Stock Exchange, while MGI Tech’s stock rose by 20% in Shanghai, reaching the maximum daily trading limit, according to Reuters.
In addition to restricting Illumina’s exports, China responded to the latest U.S. tariffs with countermeasures that include imposing 10% to 15% levies on American agricultural exports, such as poultry, beef, wheat, corn, cotton, soybeans, and feed grains. Furthermore, the country expanded its “unreliable entities list” by adding 25 additional U.S. companies.
