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China’s SMIC Sees Big Profit Jump But Wary of Chips Outlook

China’s biggest chipmaker reported a big jump in second-quarter revenue and $514m in profit on Friday, but warned that the sector faces “panic and uncertainty”


The US Commerce Department has contacted dozens of suppliers to Semiconductor Manufacturing International Corp (SMIC). Photo: Reuters
The US Commerce Department has contacted dozens of suppliers to Semiconductor Manufacturing International Corp (SMIC). Photo: Reuters

 

Semiconductor Manufacturing International Corp (SMIC) – China’s biggest chipmaker – reported a 42% jump in second-quarter revenue on Friday, but warned that the sector faces “panic and uncertainty”.

A slowdown in demand for smartphones has driven down prices for certain chips, co-CEO Zhao Haijun told investors on an earnings call.

His remarks echo comments from other chip companies which have warned that a weakening global economy and a re-balancing of supply and demand might soon lead to a glut for some types of semiconductors.

Memory chip maker Micron Technology has cut its current-quarter revenue forecast citing waning demand for PCs and smartphones, while GPU chip maker Nvidia has warned of weak demand for its gaming business.

SMIC’s revenue for the April-June quarter came in at $1.9 billion, in line with a Refinitiv consensus estimate.

Net profit slid by a quarter to $514.3 million as the company poured funds into capacity expansion, but still beat an average estimate from analysts of $475 million.

 

ALSO SEE: US Set to Limit Export of Chipmaking Gear to China Firms

 

Last year, at the height of the global chip shortage, the company committed to opening new fabs in Shanghai, Beijing, and Shenzhen. The new projects “are progressing as planned,” Zhao said.

He added that the company spent $2.5 billion in the first half of the year, and had increased its 8-inch wafer production capacity by 53,000 wafers per month.

SMIC also said Zhao would step down as an executive board member to focus on his co-CEO duties.

Former Arm executive William Tudor Brown resigned as independent non-executive director of the board, replaced by Wu Hanming, an industry veteran who worked at Intel before returning to China.

 

  • Reuters with additional editing by Jim Pollard

 

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Semiconductor Sector Outgrows Boom and Bust Cycles: Pimco

 

Germany’s Merck to Build $82m China Semiconductor Plant

 

India’s Vedanta to Announce Semiconductor Plant Location

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.

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