The chip sector faces some panic in China after SMIC posts a quarterly revenue surge

By TechThop Team

Posted on: 13 Aug, 2022

The Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) reported a 42% rise in second-quarter revenue on Friday but also warned of 'panic and uncertainty.

During an earnings call, co-CEO Zhao Haijun said a slowdown in smartphone demand has driven down prices for certain chips.

According to him, global growth is slowing and supply and demand are rebalancing, which could lead to a semiconductor glut shortly.

A company that makes memory chips has lowered its current-quarter revenue forecast in response to waning demand for PCs and smartphones, while a company that makes GPU chips has warned of weak gaming demand.

A Refinitiv consensus estimate predicted $1.9 billion in revenue for SMIC's April-June quarter.

The company poured funds into capacity expansion, which resulted in a quarter-point decline in net profit to $514.3 million. Still, it beat analysts' average estimate of $475 million.

The company opened fabs in Shanghai, Beijing, and Shenzhen last year when the chip shortage was at its peak. Zhao said the new projects are proceeding according to plan.

In the first half of the year, the company spent $2.5 billion and increased its production of 8-inch wafers by 53,000 wafers a month.

Zhao will also step down as an executive board member to concentrate on his responsibilities as co-CEO of SMIC.

In his place, Wu Hanming, a former Intel executive who returned to China before becoming an independent non-executive director of the board, replaced former Arm executive William Tudor Brown.

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