Chinese Firm SMIC Emerges as the World's Second Largest Wafer Foundry

SMIC achieves a revenue of US$1.75 billion in Q1, surpassing UMC and GlobalFoundries. SMIC's growth highlights China's efforts to strengthen domestic semiconductor capabilities. TSMC maintains its position as the industry leader with a revenue of $18.262 billion in Q1.

Credit: SMIC

The company recently unveiled its first-quarter financial results, revealing a remarkable revenue of US$1.75 billion, marking a 19.7% year-on-year increase. This achievement propels SMIC ahead of United Microelectronics Corporation (UMC) and GlobalFoundries in terms of quarterly revenue. UMC reported revenues of US$1.71 billion, while GlobalFoundries recorded US$1.549 billion for the same period.

It is important to note that the ranking does not include Integrated Device Manufacturer (IDM) companies such as Intel and Samsung. This milestone for SMIC comes at a time when the United States has imposed sanctions on Chinese chip development. The company's growth signifies China's determination to strengthen its domestic semiconductor capabilities and reduce reliance on foreign suppliers.

While SMIC's first-quarter financial results position it as the world's second-largest wafer foundry, it still lags significantly behind Taiwan Semiconductor Manufacturing Company (TSMC). TSMC reported a staggering revenue of US$18.262 billion for the same period, highlighting its dominant position in the industry.

In terms of production, SMIC shipped 1.79 million units of 8-inch wafers in the first quarter, representing a 7% increase compared to the previous quarter. The company's capacity utilisation rate also saw a positive growth of 4% quarter-on-quarter, reaching 80.8%.

Revenue distribution across SMIC's chip-related business segments is as follows: smartphones account for 31.2%, computers and tablets for 17.5%, consumer electronics for 30.9%, IoT (Internet of Things) and wearables for 13.2%, and industrial and automotive for 7.2%.

Geographically, the majority of SMIC's revenue comes from China, making up 81.6% of the firm's total. The United States contributes 14.9%, while the EMEA (Europe, Middle East, and Africa) region accounts for 3.5%.

However, SMIC's net profit for the quarter experienced a significant decline of 68.9% compared to the previous year, amounting to $71.8 million. The semiconductor industry as a whole faced a substantial decline in profits in early 2024 due to product price drops and inventory backlog. SMIC attributed this decline to shifts in product assortment, depreciation, and diminished investment returns.

Despite the challenges, SMIC CEO Zhao Haijun revealed that the company received urgent orders from customers in the smartphone and computer sectors during the first quarter. Efforts are underway to coordinate orders from lower-priority customers for delayed processing, and the 12nm chip production line is operating at almost full capacity.

In the broader context, TSMC's advanced packaging capacity, including Chip-on-Wafer-on-Substrate (CoWoS) and System-on-Integrated-Chip (SoIC), has been fully booked for 2024 and 2025, driven by the AI-related needs of companies like Nvidia and AMD. TSMC predicts a compound annual growth rate of 50% for AI chips over the next five years, with AI chip orders expected to contribute over 20% to the company's total revenue by 2028.

---

• SMIC achieves a revenue of US$1.75 billion in Q1, surpassing UMC and GlobalFoundries.

• SMIC's growth highlights China's efforts to strengthen domestic semiconductor capabilities.

• TSMC maintains its position as the industry leader with a revenue of US$18.262 billion in Q1.

Source: TECHNODE