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China’s top chip maker SMIC beats earnings estimates despite threat of more US sanctions

  • Semiconductor Manufacturing International Corp reported revenue growth of 41.6 per cent for the June quarter
  • Net profits were down 25 per cent from the same period last year, as gross margin rose to 39.4 per cent

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A Chinese flag hangs from a pole near the Semiconductor Manufacturing International Corp headquarters in Shanghai. Photo: Bloomberg

Semiconductor Manufacturing International Corp (SMIC) reported better-than-expected earnings for the June quarter, as China’s top chip maker faces up to rising risks of harsher US sanctions.

The company reported on Thursday that revenue during the three-month period rose 41.6 per cent year-on-year to reach US$1.9 billion, slightly better than Bloomberg’s consensus estimates of US$1.89 billion.

Net profits came in at US$514.3 million under global accounting standards, down 25 per cent from the same period last year, compared with US$447.2 million in the previous quarter. This was better than Bloomberg’s consensus estimates of US$469 million.

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China condemns new US law aimed at boosting domestic semiconductor manufacturing

China condemns new US law aimed at boosting domestic semiconductor manufacturing

Gross profit margin rose to 39.4 per cent year-on-year from 30.1 per cent last year, compared with 40 per cent in the March quarter.

The Shanghai-based company said its revenue and gross margin during the period exceeded expectations mainly because the Covid-19 pandemic prevented some fabrication plants from conducting annual maintenance.

The financial results came amid escalating US-China tensions.

On Thursday, William Tudor Brown, former president of British chip design specialist Arm, said in a now-deleted LinkedIn post that he was leaving SMIC’s board as an independent non-executive director.

“Bitter sweet day today,” he wrote. “After 9 years I resigned from [the] SMIC board. The international divide has further widened.”

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