China’s top foundry, Semiconductor Manufacturing International Corp (SMIC, 中芯), yesterday said that artificial intelligence (AI)-related demand would continue to underpin orders for its production and that it had raised prices for its most sought-after capacity.
SMIC co-chief executive officer Zhao Haijun (趙海軍) said on an earnings call that the firm raised prices following negotiations with customers in the first quarter and that it would charge more for wafers processed in the third quarter.
“We believe we’ve reached top-tier industry standards in these areas,” Zhao said. “Since there’s still a big gap between industry-leading wafer prices and SMIC’s current prices, we need to negotiate with customers for fairer pricing.”
Photo: Reuters
Silicon wafers serve as the base material onto which chip patterns are printed by SMIC through the fabrication process.
SMIC, the only Chinese foundry able to mass-produce logic chips such as CPUs and GPUs on a 7-nanometer process, posted revenue above US$3 billion for the first time in the second quarter, driven by strong AI demand.
Profit attributable to shareholders tripled to US$479.2 million, with both figures beating average analyst estimates compiled by LSEG.
The company shipped 2.9 million 8-inch-equivalent wafers in the second quarter, up 14 percent from the previous quarter, while the average selling price of wafers rose 5.7 percent, as AI demand drives tightness in semiconductor supply chains around the world.
Zhao said that the rise in shipments was driven mainly by surging AI-fueled demand for chips other than CPUs and GPUs, mostly from China-based customers, as well as earlier-than-expected orders.
SMIC chief financial officer Wu Junfeng (吳俊峰) said the jump in net profit was also boosted by a one-time gain from a subsidiary in the second quarter.
AI would continue to drive robust chip demand for foundry services in the second half of the year, Zhao said, adding that SMIC would adjust its capacity and accelerate the ramp-up of new production lines to help ease industry-wide supply constraints.
SMIC shares were up 5 percent after the earnings call, although they are down 0.21 percent this year.
The company’s monthly production capacity rose 1.7 percent quarter-on-quarter to 1.1 million 8-inch-equivalent wafers, with utilization — a measure of a foundry’s production intensity — reaching 93.7 percent, slightly up from the first quarter.
SMIC added 8,000 wafers of monthly 12-inch capacity during the second quarter.
The company said that first-half amortization totaled US$2.3 billion and it expects full-year amortization of about US$5 billion, up 30 percent year-on-year.
China remained SMIC’s largest market, accounting for 90 percent of second-quarter revenue, while the US contributed 8 percent.
Capital spending in the first half reached US$3.4 billion, up from US$3.3 billion a year earlier.
SMIC expects third-quarter revenue to rise 2 to 4 percent from the second quarter, with wafer shipments continuing to increase.
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