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China’s chipmakers eye demand recovery

CHINA DAILY – Revenue and profit dropped in the second quarter for China’s major chip foundries amid geopolitical uncertainties and weakening demand. However industry experts said they expect a recovery in the second half on the back of demand from the smartphone sector.

The biggest manufacturer of semiconductor chips on the Chinese mainland Semiconductor Manufacturing International Corp, posted revenue of usd1.56 billion in the second quarter.

This is an 18 per cent decrease year-on-year.

Its net income also declined 21.7 per cent to USD402.76 million during the period.

Hua Hong Semiconductor, another major chip foundry, reported a 1.7 per cent year-on-year increase in revenue to USD631 million in the second quarter.

However, gross profit rate at the company, which earlier this year made the world’s second-largest initial public offering, dropped 5.9 percentage points year-on-year for 27.7 per cent.

The market, especially the smartphone and consumer electronics segments, has recovered slower than expected, SMIC’s co-Chief Executive Officer Zhao Haijun said. He added that he expected revenue in the second half of the year to be better than that in the first half.

The company will strengthen technology research and development, verify new products quickly, arrange support capacity as soon as possible, and fully prepare for the next growth cycle, Zhao said.

Industry experts said the global tech industry downturn has deepened amid rising geopolitical tensions, and the smartphone market, one of the most important for chips, has been declining for several quarters, with China being no exception. Data from the China Academy of Information and Communications Technology showed that over 22 million smartphones were shipped in the domestic market in June, a year-on-year decrease of 20.9 per cent.

PHOTO: CHINA DAILY
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