Biz / Tech

Surging growth for SMIC in wake of global chip shortage

Zhu Shenshen
In the first quarter, SMIC's net profit was 1.03 billion yuan, which represents 136.4 percent year-on-year growth, with revenue increasing 13.9 percent to 7.29 billion yuan.
Zhu Shenshen

China's Semiconductor Manufacturing International Corporation (SMIC) expects revenue growth and capital spending to reach 28.1 billion yuan (US$4.32 billion) in 2021, after posting better-than-expected net profit and revenue in the first quarter, the company announced today.

STAR-listed SMIC, the top chipmaker on the Chinese mainland, attributed business growth to the global chip shortage and price increases. However, it warned the business climate is uncertain due to US technology sanctions.

In the first quarter, SMIC’s net profit was 1.03 billion yuan, which represents 136.4 percent year-on-year growth, with revenue increasing 13.9 percent to 7.29 billion yuan. Both figures beat analysts' expectations.

In the second quarter, SMIC expects revenue to continue growing at a rate of 17-19 percent. The company conceded it has communicated with clients about increasing prices due to the chip shortage — in the wake of rising demand fueled by electric cars and other electronics, SMIC said in a conference call today.

SMIC spent 3.5 billion yuan in the first quarter while it plans to spend totally 28.1 billion yuan in 2021. It will invest in production capacity for the mature technology sector as well as advanced technology innovations.

Another Chinese mainland chipmaker Hua Hong Semiconductor posted record-high revenue of US$304 million in the first quarter, with 50.3 percent year-on-year growth, according to the HK-listed Hua Hong.

Chip demand in the Chinese market for use in smartphones, televisions, consumer electronics and cars is surging. The domestic supply can only meet 20 percent of demand, according to the Ministry of Industry and Information Technology.

The integrated circuit industry is one of three strategic industries Shanghai aims to develop in the next five years, as the city has the most complete industry chain, covering materials, design, manufacturing, testing and assembly.

The stock price of STAR-listed AMEC, the country’s top chipmaking equipment vendor, surged 7.3 percent today to close at 121 yuan. SMIC is a major client of AMEC.

SMIC, Hua Hong and AMEC are all Shanghai-based firms.

In today's conference call, SMIC also said US restrictions have created uncertainties for its capacity expansion.

However, SMIC can rely on domestic suppliers such as AMEC. The company said it is communicating with other governments and has seen a lot of progress.

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