AI Demand Fuels Record Profits at China Chipmakers SMIC and Hua Hong
SCMP · 1 SOURCESabout 1 hour ago2 MIN
Summary
China's leading contract chip manufacturers reported outstanding second-quarter results as domestic demand for artificial intelligence chips accelerates. Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Grace Semiconductor posted triple-digit profit growth, driven by tech giants and startups seeking computing power for AI applications without relying on US export-controlled technology. Both companies are running fabrication plants at full capacity to meet demand.
Key Points
- SMIC net profit surged 261.7 percent year on year to US$479.2 million in the June quarter
- Hua Hong Grace net profit jumped 385.9 percent to US$38.6 million year on year in Q2
- SMIC revenue rose 36 percent to US$3 billion, beating consensus estimate of US$2.9 billion
- Hua Hong reported record quarterly revenue of US$717.5 million, up 26.8 percent from a year earlier
- Bai Peng, Hua Hong chairman and president, expects price increases to continue through the second half of 2024
- SMIC stated it would flexibly allocate capacity and accelerate new capacity expansion to ease supply constraints
- Both companies attributed earnings growth to increased shipments and improved average selling prices during the AI cycle
Why It Matters
The results underscore how China's semiconductor industry is capitalizing on the AI boom while navigating US technology restrictions, positioning domestic foundries as critical infrastructure for China's AI development ambitions. The sustained high demand signals continued revenue growth potential for Hong Kong-listed chipmakers as they expand capacity to serve the domestic market.
The results underscore how China's semiconductor industry is capitalizing on the AI boom while navigating US technology restrictions, positioning domestic foundries as critical infrastructure for China's AI development ambitions. The sustained high demand signals continued revenue growth potential for Hong Kong-listed chipmakers as they expand capacity to serve the domestic market.