Chinese chipmaker Semiconductor Manufacturing International Corporation reported flourishing sales on Friday amid a global shortage of semiconductors, while senior executives hinted at progress in getting the company waived from a U.S. technology ban.
The publicly traded firm, China’s largest semiconductor maker, reported sales of US$1.1 billion in the first quarter of the year, or a 22% increase compared to the same period last year. Gross profit topped US$250 million, up 7.1% while net profit leapt to US$159 million, an increase of 148%.
“First-quarter revenue reached one billion U.S. dollars on a firm footing. Facing difficulties, we tackle[d] with precision, and continue to exceed ourselves,” Zhao Haijun and Liang Mong-song, joint chief executive officers, said in a filing. They added that the chipmaker expects to see “forecast-beating” growth in revenues to US$2.4 billion in the first half of the year.
Despite being placed on a U.S. Entity List that effectively cuts SMIC off from American suppliers and technology, the Shanghai-based technology giant has benefitted from a global scramble for chips, after the technology bans initiated by former U.S. President Donald Trump led to the stockpiling of chips by companies as demand soared.
When asked whether SMIC may get itself removed from the U.S. ban, Zhao said the company remains in communication with relevant governments and has seen “lots of progress.”
A key player in Beijing’s bid to boost domestic output and reduce reliance on foreign semiconductor manufacturers, SMIC has made plans to expand its capacity, including building a fabrication plant in Shenzhen with an expected output of 40,000 12-inch wafers per month.
Another plant is being planned for Beijing to produce 12-inch wafers at a rate of 100,000 per month, with its first phase of construction set for completion in 2024.
The company’s monthly capacity to produce the more advanced eight-inch-equivalent wafers has increased to 540,750 in the reporting quarter from 520,750 in the last quarter of last year. But officials admitted the U.S. ban might slow down its planned expansion.
“This year, the semiconductor market notes a positive development”, chief financial officer Gao Yonggang said. “But as SMIC was placed on the US entity list, the company is restricted from procuring related US-origin items and technologies. There are still risks and uncertainties to our second half of 2021.”
China’s SMIC raises revenue expectations following strong Q1 as chip shortage boosts demand
China’s Semiconductor Manufacturing International Corp (SMIC) said on Friday that demand for chips exceeds supply, and raised its expectations for sales for the first half of the year.
“Our current capacity could not fulfill customer needs, and products in every market segment faced shortages,” Zhao Haijun, co-chief executive of SMIC, said in a company earnings call.
SMIC reported sales of $1.1 billion in Q1 2021, a year-on-year increase of 22%, and gross profit reached $250 million, a 7.1% increase. The company said it expected revenue of $2.4 billion for the first half of the year, which it called “higher than expected.”
Shares in the company rose as much as 4.4% in Hong Kong.
Speaking with investors and analysts, Zhao said the company was working to rapidly expand capacity, with some facilities moving ahead of schedule.
He added that demand for internet-of-things related chips, such as WiFi modules and micro-controller units, remained in tight supply across the industry.
Backed in part by state funding, SMIC is a key player in China’s efforts to boost its domestic semiconductor manufacturing capabilities.
In March, the company announced it would invest $2.35 billion with the government of Shenzhen to build a new fabrication plant capable of producing 40,000 wafers per month.
Last year, the Trump administration placed sanctions on the company that curbed U.S. equipment makers from supplying it.
In an earnings call, Zhao said these restrictions have created uncertainties for its capacity expansion plans. However, Zhao added, the company remains in communication with relevant governments and has seen “lots of progress.’