China's top chipmaker reports surge in profits

China's top chipmaker reports surge in profits
by AFP Staff Writers
Beijing (AFP) Nov 7, 2024
China's leading chipmaker SMIC announced Thursday a sharp rise in profits over the same period last year, despite a simmering rivalry between Beijing and Washington over vital technologies.

The United States has taken steps in recent years to cut off Chinese firms from accessing its technology and has tightened curbs on semiconductor exports to the world's second-largest economy.

Those restrictions have targeted Semiconductor Manufacturing International Corporation (SMIC), which is listed in Hong Kong and its home city Shanghai.

Beijing maintains that the US measures unfairly aim to preserve its supremacy in the crucial sector, and has rolled out measures at home to boost the ability of Chinese companies to produce advanced chips.

SMIC said in a statement to the Hong Kong Stock Exchange on Thursday that its third-quarter profit attributable to owners of the company stood at $148.8 million, a jump of 58.3 percent compared to the equivalent period last year.

The company said its revenue rose to nearly $2.2 billion, a record high and the first time it had raked in over $2 billion in a single quarter.

The results marked a return to form for the chipmaker after chalking up a nearly 60 percent year-on-year decline in profit in the second quarter.

The firm said it expected revenue growth to be roughly flat in the fourth quarter, adding that it would "strengthen our confidence in development, maintain our strategic focus, stabilize our market share and consolidate our position in the industry".

Computer chips hum beneath the surface of swathes of the modern economy and are increasingly important for national security, embedded in everything from televisions and cars to weapons and satellites.

China and the US have tussled for supremacy in the strategic sector as bilateral tensions have risen over thorny issues like Taiwan and the South China Sea.

China lacks the capabilities needed to produce large quantities of the smallest and most advanced chips, making it dependent on foreign suppliers.

Despite making significant progress as Beijing pours tens of billions of dollars into the sector, the technical performance of China's top firms still lags that of TSMC, the Taiwanese juggernaut responsible for over half of global chip production.