Computers and Technology

CHINA’S SMIC WARNS OF ‘IMMEDIATE FREEZE’ AS SMARTPHONE DEMAND DROPS

Semiconductor Manufacturing International Corp. warned that customers in sectors such as smartphones are freezing orders, highlighting how falling demand for consumer electronics is hurting the chip sector.

Co-Chief Executive Officer Zhao Haijin told analysts on Friday that declining demand from smartphone and TV component makers is forcing SMIC to restructure its manufacturing plans. He said in a conference call that the economic downturn and inventory adjustments had caused “a sharp freeze and halt to rush orders” as some customers delayed placing new orders. The SMIC in Hong Kong fell to 3.1 percent.

Investors fear the notoriously cyclical chip industry is headed for a prolonged recession after weak years that led to heavy investments in capacity. SMIC is among a string of semiconductor makers now facing a sharp unwinding of global demand for electronics, as consumers outgrow the peak of the pandemic era. It is also dealing with the continued tightening of US export sanctions as Washington tries to contain Beijing’s tech boom.

Revenue at China’s biggest chipmaker rose 42 percent to $1.9 billion in the second quarter, in line with general expectations. It posted net income of $514.3 million in the second quarter, beating the average estimate of $469.5 million.

SMIC is at the forefront of China’s long-term ambitions to produce chips sophisticated enough to replace U.S. silicon. Which accounts for the bulk of the country’s $155 billion annual semiconductor consumption.

It is a technology leader in a major national industry that is now embroiled in a series of corruption investigations. As top officials frustrated by the country’s lack of growth in semiconductors begin to hold executives accountable. The outcome of the wider raid and its impact on the local community is still unclear.

US sanctions have played a central role in curbing the country’s chip ambitions. The Trump administration blacklisted SMIC nearly two years ago over national security concerns, citing the company’s ties to the Chinese military, a charge the chipmaker denies. Washington is now pressuring allies to join the effort, including key vendors such as ASML Holding NV of the Netherlands and Nikon Corp. of Japan. His techs are joining the blockade.

 

US Urges ASML To Stop Selling Chipmaking Equipment To China

In response, local companies have sought to develop alternatives to American silicon. The Shanghai-based contract chipmaker was able to expand its production technology to 7 nanometers in two generations this year. Although industry insiders have warned that it is not based on the standards used. By major rivals such as Taiwan Semiconductor Manufacturing Co. Could be

SMIC has said the restrictions hurt its ability to develop more advanced technologies. The company’s capacity is severely limited by its lack of access to. For example, ASML Holding NV’s advanced ultraviolet lithography systems, which are needed to make the latest chips.

The smartphone company said in a separate filing that former Arm Ltd chairman. Tudor Brown has resigned from the board, confirming an earlier Bloomberg report. Zhao also resigned as CEO, according to the company.

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