China’s semiconductor foundry company SMIC achieved record quarterly performance in the third quarter of this year (July to September).
Despite challenges in producing advanced semiconductors due to U.S. sanctions, the demand for legacy chips used in local home appliances has increased, leading to higher sales.
SMIC announced on Nov. 8 that it recorded $2.17119 billion in sales in the third quarter, a 34% increase compared to the same period last year ($1.62058 billion).
This marks the highest quarterly sales ever, and it is the first time SMIC’s sales have surpassed $2 billion. Operating profit was $169.89 million, and net profit was $148.80 million, representing increases of 94.4% and 58.3%, respectively, compared to the same period last year.
SMIC’s performance continues to improve, supported by the Chinese government’s backing for semiconductor self-sufficiency despite the ongoing U.S.-China conflict.
In the third quarter, domestic sales in China amounted to $1.875 billion, accounting for 86.4% of total sales, up from 84% ($1.361 billion) last year. Conversely, sales in the U.S., Asia, and Europe declined.
SMIC is also facing difficulties in acquiring advanced semiconductor equipment. Its capital expenditure in the third quarter was $1.179 billion, a 44.8% decrease from $2.135 billion last year.
However, production based on legacy processes continues to increase. SMIC’s factory utilization rate in the third quarter was 90.4%, recovering from 77.1% in the same quarter last year.
SMIC expects its sales in the fourth quarter (October to December) to be similar to or slightly higher than the record high of the previous quarter.
Hua Hong Semiconductor, another leading foundry in China alongside SMIC, also showed significant improvement compared to last year.
The company’s third-quarter sales were $526.30 million, a 7.4% decrease compared to the same period last year, but net profit turned positive at $22.91 million, compared to a loss of $25.90 million last year.
The strong performance of Chinese semiconductor companies could provoke further tightening of U.S. semiconductor regulations.
The South China Morning Post reported, “It is a common view that Trump will strengthen control over China’s technology sector.”
