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US-China tech war: top Chinese chip makers push ahead with expansion plans despite political tensions, talk of supply glut

  • The strong performance of China’s two largest chip makers comes on the back of a surge in demand for mature-technology chips
  • SMIC’s three new factories in Beijing, Shanghai, and Shenzhen all focus on mature 28-nanommetre node and above

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Employees work on a semiconductor chip production line.  Photo: Reuters

China’s top chip foundries are pushing ahead with capacity expansion plans, helped by record-high revenues and profits on the back of strong demand and in the face of US threats to further restrict their access to advanced technologies.

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Semiconductor Manufacturing International Corp (SMIC), China’s largest fab, said its capital expenditure in 2022 will be about US$5 billion with most of the funds used for three new fab projects in Beijing, Shenzhen and Shanghai as well as the expansion of existing plants.

The Shanghai-based company’s revenue rose to 35.6 billion yuan in 2021, an increase of 30 per cent year-on-year, while its net profit surged 147 per cent year-on-year in 2021 to a record 10.7 billion yuan, according to its annual report for 2021 released on Wednesday.

Meanwhile, China’s second-biggest chip maker is also expanding its capacity and seeking a secondary listing in Shanghai. Hua Hong Semiconductor’s 2021 revenue increased 70 per cent from a year ago to US$1.63 billion, while its net profit surged almost sevenfold to US$231 million.

The strong performance of China’s two largest chip makers comes on the back of a surge in demand for mature-technology chips from downstream users, such as carmakers and home appliance manufacturers.

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