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

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.

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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.