U.S. Markets close in 6 hrs 22 mins
  • S&P 500

    4,177.74
    -7.73 (-0.18%)
     
  • Dow 30

    34,067.99
    -132.68 (-0.39%)
     
  • Nasdaq

    14,030.35
    -21.99 (-0.16%)
     
  • Russell 2000

    2,262.67
    +5.60 (+0.25%)
     
  • Crude Oil

    63.13
    0.00 (0.00%)
     
  • Gold

    1,770.80
    -9.40 (-0.53%)
     
  • Silver

    25.84
    -0.26 (-1.02%)
     
  • EUR/USD

    1.2031
    +0.0050 (+0.4211%)
     
  • 10-Yr Bond

    1.6140
    +0.0410 (+2.61%)
     
  • Vix

    17.19
    +0.62 (+3.74%)
     
  • GBP/USD

    1.3955
    +0.0115 (+0.8331%)
     
  • USD/JPY

    108.2400
    -0.5430 (-0.4992%)
     
  • BTC-USD

    56,430.74
    +1,764.93 (+3.23%)
     
  • CMC Crypto 200

    1,279.72
    -19.23 (-1.48%)
     
  • FTSE 100

    7,009.02
    -10.51 (-0.15%)
     
  • Nikkei 225

    29,685.37
    +2.00 (+0.01%)
     

SMIC says it is unable to keep up with customer demand amid chip industry shortage and sanctions squeeze

Josh Horwitz
·2 min read
A man visits a booth of Semiconductor Manufacturing International Corporation (SMIC), at China International Semiconductor Expo (IC China 2020) following the coronavirus disease (COVID-19) outbreak in Shanghai

By Josh Horwitz

SHANGHAI (Reuters) - China's Semiconductor Manufacturing International Corp (SMIC) cannot meet customer demands for certain mature technologies and its plants have been running "fully loaded" for several quarters, it said on Friday.

Zhao Haijun, co-CEO of China's largest chipmaker, made the comments during a conference call after its latest quarterly results. He also said external sanctions would continue to affect the company's revenue growth.

In Q4 2020, SMIC reported sales of $981 million, up 16.9% year on year. However, the company expects revenue to increase in the "mid-to-high" single digits in 2021.

"Without these influences, SMIC could have maintained last year's record growth momentum," Zhao said. "Although we cannot control external forces, we will cultivate new possibilities and opportunities in the face of crisis and changes."

SMIC is a key player in China's efforts to build up its domestic semiconductor manufacturing capabilities, but sanctions by the former Trump administration have curbed U.S. companies from supplying it.

Zhao added that the company remains in talks with suppliers and the U.S. government in hopes of obtaining licenses that would allow it to purchase equipment to boost production.

The company is aiming to expand its capacity this year at its 12-inch fabrication plant by 10,000 wafers per month and by 45,000 wafers per month at its 8-inch fabrication plant.

However, because of expected longer lead times for equipment procurement, Zhao added, most equipment won't be in place until the second half of this year, so the expansion won't contribute much to 2021 revenue.

SMIC is also an important player in the global semiconductor supply chain, which is under heavy pressure as pandemic lockdowns drive up demand for electronics such as laptops and phones.

Global automakers, in particular, have been caught off guard by the chip shortage, and firms from General Motors to Stellantis have announced that they have slowed down production and furloughed thousands of workers.

Zhao said that SMIC had not felt much of a squeeze for chips in the car sector, but that in other areas, the company has been under intense pressure.

He added that with regard to pricing, the company honours contracts for its long-term clients, but that the changes in the market have given the company lots of room for negotiation, which its customers understand.

(Reporting by Josh Horwitz; Writing by Se Young Lee and Brenda Goh; Editing by Jacqueline Wong and Gerry Doyle)