The arrest could drive a wedge between China and the United States just days after President Donald Trump and President Xi Jinping agreed to a temporary truce in their trade war to give the two sides more time for negotiations.
Meng Wanzhou, one of the vice chairs on Huawei's board and the daughter of company founder Ren Zhengfei, was arrested in Vancouver and is facing extradition to the United States, a Canadian Justice Department spokesman has said.
The arrest is related to violations of U.S. sanctions, a person familiar with the matter said, though officials have so far stayed mum on her allegations.
The news sent shares of technology companies and hardware suppliers tumbling. Huawei is one of the world's largest makers of handsets and telecommunications network equipment.
In Hong Kong, the Hang Seng's IT hardware index and the sub index for tech firms finished the morning 3.5 percent lower.
By midday, CSI300's sub index for IT stocks was down 2.7 percent. The wider CSI IT index was down 2.3 percent, while the CSI's All Share Telecom index lost 3.7 percent.
The tech rout and renewed trade worries pulled the Shanghai Composite index down 1.3 percent to 2,615.82 points, and the blue-chip CSI300 index fell 1.6 percent.
"The impact (in the market) is quite big because we just had the Trump-Xi meeting, and people were expecting a 90-day honeymoon," said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong, referring to Beijing and Washington's agreement last weekend to refrain from adding tariffs on each other in the next couple of months.
Ben Kwong, director of research at KGI Asia in Hong Kong, noted Huawei was not the only reason for scepticism in the market.
"People are just as worried about further adjustments in the U.S. stock market, the inverted yield curve and a slowing economy there," he said.
(Editing by Jacqueline Wong)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)