US chip restrictions hinder AI ambitions of China’s top chip foundry, CEO says

SMIC co-CEO Zhao Haijun said the foundry can still benefit from rising demand for less advanced ‘legacy chips’ required for some AI products

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SMIC’s facility in Pudong district of Shanghai on March 15. Photo: AFP

Published: 5:00pm, 8 Nov 2024

The chief executive of China’s top foundry said on Friday that the company cannot take full advantage of surging demand for artificial intelligence (AI) chips because of US restrictions on advanced-node technologies.

Semiconductor Manufacturing International Corporation (SMIC) co-CEO Zhao Haijun made the comments the day after the chipmaker reported record revenue in the third quarter owing to strong demand for “legacy chips” such as those used in electric vehicles (EVs).

US sanctions have prevented the Shanghai-based foundry from importing advanced tools needed to upgrade its processing and narrow its technological gap with international rivals such as Taiwan Semiconductor Manufacturing Company (TSMC). Yet Zhao suggested SMIC could still be benefiting from the industry-wide AI boom.

“AI is a blessing for semiconductor manufacturing,” Zhao said during an earnings conference call with analysts on Friday. “It can bring us business growth in many years ahead.”

The AI boom over the past couple of years has led to a surge in demand for global foundries, which have rushed to reconfigure their production mix to focus on graphics processing units (GPUs), the chips that power much of the training of AI models. TSMC, the world’s largest contract chipmaker, said in October that it is bullish about its outlook for the next year because of solid AI demand.

With foundry priorities shifting towards GPUs and other specialised AI chips, Zhao said many customers are turning to SMIC to get other services they need.

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