Shares of SMIC listed in the city fell 3.88% on Monday, against a broader rise in the sector as the Hang Seng Tech index gained 0.86% on the day to 6,978.59.
The reported move by the U.S. government would hurt China's plans to boost its domestic semiconductor industry. Tension between Washington and Beijing has accelerated China's plans to boost its own chips industry.
Meanwhile, shares of China Evergrande Group in Hong Kong soared 20.61%. It came after the Shenzhen-based property developer, announced Friday that its "operations remain stable and healthy while financial conditions remain sound."
Evergrande shares in Hong Kong had seen a Friday plunge on the back of reports on a leaked document that showed the Chinese property developer was seeking government support to approve a restructuring plan, warning of an impending cash crunch.
Overall, the Hang Seng index in Hong Kong rose 1.04% to close at 23,476.05.
China's industrial profits rose 19.1% in August, the country's National Bureau of Statistics announced over the weekend. Chinese economic data has been watched by investors for signs of the country's continued recovery from the coronavirus pandemic.
Elsewhere, in Japan, the Nikkei 225 added 1.32% to close at 23,511.62 while the Topix index gained 1.69% to finish its trading day at 1,661.93. South Korea's Kospi rose 1.29% to close at 2,308.08, with entertainment shares in the country jumping after K-pop sensation BTS' label Big Hit Entertainment priced its anticipated IPO at the top end of the range.
Over in Australia, the S&P/ASX 200 slipped 0.21% to end its trading day at 5,952.30.
Overall, the MSCI Asia ex-Japan index rose 0.74%.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 94.486 after rising from levels below 93.0 last week.
Oil prices were lower in the afternoon of Asian trading hours, with international benchmark Brent crude futures down 0.69% to $41.63 per barrel. U.S. crude futures also shed 0.8% to $39.93 per barrel.