AFP – China’s top chipmaker posted yesterday a fall in annual profits last year, the first since the United States (US) imposed sanctions on it in 2020 as technological rivalry between Beijing and Washington intensified.
Semiconductors are an indispensable part of the modern economy, used in everything from kitchen appliances and mobile phones to cars and weapons.
The chips industry is increasingly caught in the crossfire as the US and China vie for technological supremacy, with relations between the world’s two largest economies deteriorating in recent years.
Washington has sought to cut Chinese companies off from supply chains that give access to advanced US technology, tightening export restrictions on chips.
Semiconductor Manufacturing International Corporation (SMIC), China’s leading chipmaker, was targeted by US sanctions in 2020 over concerns about its military ties.
SMIC, listed in Hong Kong and its home city Shanghai, reported profits of USD902 million for 2023, down 50.1 per cent from the previous year. Revenue for the year was USD6.3 billion, down 13.1 per cent.
The latest figures compare to a profit of USD1.7 billion in 2022 and revenue of USD7.2 billion.
“In 2023, the semiconductor industry went into a downward cycle due to global economic weakness, soft market demand and other factors,” SMIC said.
Beijing is seeking self-sufficiency in semiconductor manufacturing, directing billions of dollars in state funds in recent years in a bid to catch up with foreign competitors.
SMIC is “at the core of China’s semiconductor dream”, said senior economist Gary Ng at Natixis who specialises in the global chip trade.
“With state-led domestication and subsidies, the Chinese flagship chipmaker is actively adding manufacturing capacity and has made some progress in advanced nodes,” Ng told AFP.
Experts said SMIC has managed to produce a seven-nanometre chip – likely impossible without access to foreign technology – calling into question the effect of US sanctions.
Chinese tech giant Huawei, which has also grappled with severe US restrictions, unveiled its new Mate 60 Pro smartphone last year powered by just such an advanced chip.
Bloomberg reported this month that SMIC and Huawei used technology from the US to develop the chip in 2023, using machinery obtained before Washington banned such sales to China a year earlier.
