Chinese chipmaker SMIC increases prices on strong AI demand
BEIJING: China’s top foundry, Semiconductor Manufacturing International Corp, said on Friday that AI-related demand would continue to underpin orders for its production, and that it had raised prices for its most sought-after capacity. Co-CEO Zhao Haijun said on an earnings call that SMIC raised prices following negotiations with customers in the first quarter, and that it would charge more for…
Semiconductor Manufacturing International Corp, the leading chipmaker in China, disclosed on Friday that it had increased prices for its premium capacity due to robust demand for AI-related products. Co-CEO Zhao Haijun announced the price hike during an earnings call, stating that negotiations with customers led to the price adjustments.
The price increases are expected to take effect in the third quarter, as Zhao believes SMIC's current wafer prices are significantly lower than those of industry leaders. The company highlighted its adherence to top-tier industry standards and expressed its intention to negotiate fairer pricing with customers.
SMIC's revenue exceeded $3 billion for the first time in the second quarter, driven by the surge in AI demand. The company's net profit for the quarter tripled to $479.2 million, surpassing average analyst estimates. SMIC produced 2.9 million 8-inch-equivalent wafers during the quarter, a 14% increase from the previous quarter. The average selling price of wafers rose by 5.7%, as the demand for AI chips, excluding CPUs and GPUs, grew rapidly.
Chief Financial Officer Wu Junfeng attributed the profit surge to a one-time gain from a subsidiary during the second quarter.
AI-fueled demand for various chips, primarily from Chinese customers, contributed to the increase in shipments. SMIC's first-half capacity rose by 1.7% quarter-over-quarter, reaching 1.1 million 8-inch-equivalent wafers, with utilization at 93.7%. The company added 8,000 wafers of monthly 12-inch capacity during the second quarter. First-half amortisation amounted to $2.3 billion, with SMIC predicting full-year amortisation of around $5 billion, a 30% increase compared to the previous year.
China accounted for 90% of SMIC's second-quarter revenue, while the United States contributed 8%. The company's capital expenditure in the first half reached $3.4 billion, up from $3.3 billion a year earlier. SMIC anticipates a 2% to 4% revenue growth in the third quarter, with wafer shipments expected to continue increasing.
Written by urgent.news from Business Recorder's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
Also reported by 1 other outlet
- Chinese chipmaker SMIC increases prices on strong AI demand economictimes.indiatimes.com
