China’s biggest chipmaker, Semiconductor Manufacturing International Corp (SMIC), posted strong revenue and profit growth in earnings released on Thursday.
Why it matters: SMIC posted robust growth despite being banned from importing US technology. The company attributed the growth to strong domestic demand and rising chips prices due to a global semiconductor shortage that began early this year.
Details: SMIC’s net profit jumped 63% year on year to $405 million in the quarter ending in June, according to a Thursday earnings report (in Chinese). Revenue grew 43% year on year to $1.34 billion. On Friday, SMIC’s share price opened 8.6% higher than the previous day’s close price and soon lost most of its gain. At the time of writing, the stock was up 0.9%.
- SMIC raised its full-year growth forecast to 30%, up from “less than 10%” forecast in February.
- SMIC’s profit margin was 30% in the quarter, up from last year’s 27%.
- Zhao Haijun, SMIC co-CEO, said in a Friday earnings call that growth in the second quarter was mainly driven by strong domestic demand for consumer electronics and electric vehicles chips.
- Zhao said being added to the US export blacklist has hurt the company’s ability to develop advanced chip-making technology. In December, the Trump administration placed SMIC on the Department of Commerce entity list, which bars the company from importing US technology without a government license.
- Zhao said SMIC has faced difficulties importing US equipment to make advanced 14-nanometer and 28-nanometer chips. He added that the company is communicating with the US government and suppliers to address the issue.
Context: Shanghai-based SMIC is backed by the Chinese government and state-owned investment firms. The company is China’s largest contract chipmaker, manufacturing chip designs for companies including Huawei and Qualcomm.