China's SMIC says Trump tariffs did not cause expected 'hard landing'
A logo of Semiconductor Manufacturing International Corporation (SMIC) is seen at China International Semiconductor Expo (IC China 2020) following the coronavirus disease (COVID-19) outbreak in Shanghai, China, on Oct 14, 2020. (Photo: REUTERS/Aly Song)
BEIJING: China's top foundry SMIC said on Friday (Aug 8) US tariff policy had not led to a "hard landing" the company had initially feared and strong domestic demand would keep its production capacity tight until October.
Co-CEO Zhao Haijun told a post-earnings call the company was not consulting with customers on US President Donald Trump's 100 per cent tariff plan for chip imports but expected smaller impact, thanks to contingency plans made after the April tariffs.
"After these past few months, everyone has either stocked up enough inventory for this year and next year, or found other suppliers," Zhao said, "So I think the impact will become even smaller."
Previous tariff rounds had led to cost increases of less than 10 per cent for overseas customers, he added.
China raised additional duties on US goods to 125 per cent in April after Trump effectively raised tariffs on Chinese goods to 145 per cent. On Wednesday Trump vowed a tariff of about 100 per cent on imports of semiconductors, but excluded companies manufacturing in the US or which have committed to do so.
SMIC, which does not have manufacturing in the United States, was blacklisted by the US commerce department in 2020.
China is its dominant market, contributing 84 per cent of second-quarter revenue, flat with the first, while the US made up 12.9 per cent, up slightly from 12.6 per cent.
SMIC's second-quarter revenue rose 16.2 per cent on the year to US$2.2 billion. Its profit attributable to owners declined 19.5 per cent to US$132.5 million, missing analysts' estimates of US$183.35 million, according to LSEG data.
Semiconductor Manufacturing International Corp (SMIC), as it is formally known, shipped 2.4 million eight-inch equivalent wafers in the second quarter, up 4.3 per cent from the previous quarter.
Zhao said its production capacity remained insufficient and would stay tight until October due to robust demand from domestic substitution for analogue chips, WiFi and ethernet chips and controller chips for memory.
SMIC's monthly production capacity expanded by 18.5 per cent quarter-on-quarter to 991,000 wafers, with utilisation rates rising to 92.5 per cent from 89.6 per cent in the March quarter.
But Zhao said the fourth quarter is usually a slow season for the industry and rush orders and early shipments would slow then.
SMIC expects third-quarter revenue to increase by 5 per cent to 7 per cent from the second.
SMIC's Hong Kong-traded shares were down more than 5 per cent on Friday.Â
