Advances in technology helped cushion the impact of US sanctions on Semiconductor Manufacturing International Corp.
The company said in a statement that it had a net income of $514.3 million in the second quarter. Revenue was $1.9 billion.
As Washington tries to contain Beijing's technological rise, SMIC is among a raft of Chinese Semiconductor manufacturers. Consumers are leaving a boom behind as demand for electronics plummets.
Firms have tried to develop alternatives to American Silicon. The contract chipmaker has advanced its production technology two generations this year to 7-nanometers, though industry experts caution that may not be based on the same standards used by larger rivals.
SMIC said in a separate filing that Tudor Brown has resigned from the board. The company said that the co-CEO would remain as an executive director.
The US has tightened its grip on exports of chipmaking gear.
Semiconductor Manufacturing International’s return on equity is on track to hit a new high in 2022 despite disruptions to production and capacity expansions due to stricter US export-licensing requirements and China’s Covid-19 lockdowns. The company’s chip foundries will run at high utilization rates over the next two years amid a rapid increase in local fabless chipmaker numbers and increasing silicon content in consumer appliances and automobiles. Its shift toward higher-margin specialty chips -- less exposed to sanctions risk -- may help to offset soaring depreciation and staff costs.
- Charles Shum, analyst
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SMIC is at the forefront of China's long-term ambition to produce chips sophisticated enough to replace American-designed Silicon, which makes up the majority of the country's annual $155 billion in Semiconductor Consumption.
Senior officials frustrated with the nation's lack of progress in Semiconductor begin to hold executives accountable, as it remains a technological leader in a giant domestic industry now gripped by a series of corruption probes. The dragnet's impact on local players is still unknown.
ChinaGraft probes stem from anger over failed chip plans.
The country's chip ambitions have been curbed thanks to US sanctions. SMIC has denied that it was blacklisted by the Trump administration due to its ties with the Chinese military. The United States is pressing allies to join its technology blockade.
It hurts SMIC's ability to develop more sophisticated technologies. The company is not able to make the most advanced chips due to its lack of access to ASML Holding.
It isn't clear how worsening demand for electronics, memory and even auto chips will affect SMIC's business. After years of widespread shortages that led to heavy investments in capacity, investors are growing more cautious.
The US wants ASML to stop selling chipmaking gear in China.
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