China’s biggest chipmaker has cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing the country’s worst COVID-19 outbreak in two years.
Semiconductor Manufacturing International Co (SMIC, 中芯) estimates a month-long lockdown in Shanghai could spur component shortages and logistics tangles, and erase about 5 percent of its output in the second quarter.
“We are trying our best to mitigate the impact on product delivery,” SMIC Chairman Gao Yonggang (高永崗) told analysts on a call yesterday morning. “We are still assessing the actual impact as many suppliers restart their operation.”
China’s “zero COVID-19” strategy, which relies on a playbook of closed borders, quarantines, lockdowns and mass testing, is upending its giant manufacturing sector even as the rest of the world lives with the virus and opens up. The impact has been particularly keen in the eastern region around Shanghai, which is struggling to contain an outbreak.
Hua Hong Semiconductor Ltd (華虹半導體), another Shanghai-based chipmaker, on Thursday also warned of potential impact from lockdowns and logistic disruptions on Thursday.
Some have bucked the trend.
SMIC jumped as much as 3.1 percent in Hong Kong yesterday after reporting profit more than doubled in the first three months, thanks to consistently strong demand for the chips used in everything from connected devices to electric vehicles.
However, the pain for manufacturers could deepen if lockdowns persist, or if global macroeconomic uncertainty undermines demand for electronics.
While factories have been given special allowances to reopen under strict guidelines and systems, snarls in the supply chain — from a shortage of delivery drivers to a lack of materials — continue to disrupt local operators and global giants, including Tesla Inc and Sony Group Corp. Apple Inc predicted that supply constraints in China would cost US$4 billion to US$8 billion in revenue this quarter.
Moreover, despite a decline in virus cases, the lockdown is intensifying as officials chase the elusive goal of wiping out COVID-19 in the community.
The local government in Shanghai said it plans to achieve “no community spread” of the virus by the middle of this month, a crucial milestone that has eluded the city, despite strict lockdown measures that have now stretched to nearly six weeks. The city of 25 million on Thursday added more than 2,000 cases and two deaths.
The COVID-19 pandemic in China, as well as the war in Ukraine, could also shave about 200 million units off global smartphone shipments this year, SMIC co-CEO Zhao Haijun (趙海軍) said on the same call.
“The majority of the amount will be shouldered by Chinese smartphone vendors,” he said.
AVOIDING CONFUSION: Passengers are to be able to check in two items of luggage, while the free weight allowance is to be increased to conform with other airlines EVA Airways Corp (長榮航空) yesterday announced that from June 23 it is to adopt a new baggage allowance policy for all passengers with a higher weight limit as it aims to benefit passengers and increase efficiency. The airline currently has a two-system baggage policy: It allows passengers flying to the US and Canada to check in two pieces of baggage with a free weight allowance, while for those flying to Asia, Europe and Oceania there is also a free weight allowance, but no limit on the number of pieces of baggage. From June 23, passengers would be able to check in two
MORE THAN BUZZ: The chip designer said it has received numerous orders from automakers to supply 5G modem chips, as it works to expand beyond smartphones MediaTek Inc (聯發科) yesterday said it would ship the first 5G chips for vehicles to customers in the Asia-Pacific region by the end of the year, as it moves to expand the reach of its 5G chips beyond smartphones. The Hsinchu-based chip designer said it has been developing 5G chips for connected vehicles over the past few years, targeting applications such as telematics and in-vehicle information systems. “We are seeing demand for 5G technology from numerous makers of connected cars, including electric vehicle makers. We have obtained numerous orders from automakers to supply 5G modem chips with highly integrated features,” J.C. Hsu
Qualcomm Inc yesterday said it would maintain its supply chain strategy of sourcing chips from multiple foundry partners, including advanced chips from two major suppliers, to ensure a sufficient chip supply amid the COVID-19 pandemic. Qualcomm is reportedly working with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co on advanced products, such as 4-nanometer chips, for its new flagship 5G chips, the Snapdragon 8+ Gen 1 series. Qualcomm is sourcing chips made by mature technologies from several foundry partners, the company said. Alex Katouzian, general manager of Qualcomm Technologies Inc’s mobile, compute and XR business, told a virtual media briefing that
US DRAM maker Micron Technology Inc is set to install the industry’s most cutting-edge technology — extreme ultraviolet (EUV) lithography equipment — in its facility in Taichung this year, the company said yesterday. In early preparation for the volume production of 1-gamma nanometer node DRAM, “we plan to introduce EUV tools to our Taichung fab later this year,” Micron president and chief executive officer Sanjay Mehrotra said via video at the Computex trade show in Taipei. Gamma refers to the dimension of half the distance between cells in a DRAM chip. Micron is also looking forward to beginning mass production of its