Technology Aug 07

Chinese chipmaker SMIC posts record Q2 revenue

Homegrown tech rival to TSMC, Samsung hopes to fill gap left by rivals as they mull future in China. Analysts pessimistic it will succeed  

Chinese chipmaker SMIC posts record Q2 revenue

(ATF) US pressure on technology supplies to China has benefited the country’s largest chipmaker, which has reported record second-quarter revenue.

The homegrown Semiconductor Manufacturing International Corporation (SMIC), said on Thursday sales climbed 19% year-on-year to $938.5 million. That also represented a 3.7% quarter-on-quarter rise, according to the company's fiscal report.

Gross profit in the April-to-June period surged 64.5% year-on-year to $249m, a quarter-on-quarter growth of 6.4%.

SMIC competes with Taiwan Semiconductor Manufacturing (TSMC) and Samsung, which supplies components to makers of handheld and other devices in China, including Apple. But since the White House imposed strict sanctions on companies offering what it considers American-created technology in China, TSMC and Samsung are reviewing their operation in the world’s second-largest economy.

READ MORE: China accuses US of 'outright bullying' over TikTok

While that should benefit SMIC, the Chinese chipmaker has no capabilities to produce the high-end chips that modern devices require. 

Founder and CEO Richard Chang Rugin said he believed the company would soon be able to produce the latest 7nm chips, according to Reuters. That will be a big step, say analysts, even with financial incentives offered by officials in Beijing recently so SMIC can devote more capex to research and development.  

The company expects a further revenue increase in the third quarter, with the growth forecast at 1% to 3% on the previous three months. Gross margin is forecast to range from 19 to 21% quarter on quarter.

SMIC, China's leading semiconductor manufacturer, was listed on the country's Nasdaq-style Shanghai Science and Technology Innovation Board, known as the STAR Market, on July 16. It obtained approval for its IPO from Chinese regulators in 19 days and entered the board in just 46 days, reflecting the fast-track listing process adopted by the year0old market.

READ MORE: Foxconn expanding iPhone production in India