China’s SMIC raises revenue expectations following strong first quarter as chip shortage boosts demand

In this first half of the year, there is an increased demand for the chips. China’s Semiconductor Manufacturing International Corp (SMIC) said that the chip demand is exceeding the supply and the sales expectations are high.

Zhao Haijun, co-chief executive of SMIC, said in a company earnings call that their current capacity could not fulfil customer needs and products in every market segment faced shortages. Sales of $1.1 billion in Q1 2021 has been reported by SMIC. A year-on-year increase of 22%, and gross profit reached $250 million, a 7.1% increase.

Revenue of $2.4 billion for the first half of the year has been expected by the company. This is higher than expected. Shares in the company rose as much as 4.4% in Hong Kong. Zhao said the company was working to rapidly expand capacity. As part of this some facilities moving ahead of schedule.

The demand for internet related chips, such as WiFi modules and micro-controller units remained in tight supply across the industry. SMIC is a key player in China’s efforts to boost its domestic semiconductor manufacturing capabilities. $2.35 billion will be invested by the company with the government of Shenzhen. This investment is to build a new fabrication plant capable of producing 40,000 wafers per month.

Trump administration placed sanctions on the company last year. Zhao said in an earnings call that these restrictions have created uncertainties for its capacity expansion plans. The company remains in communication with relevant governments and has seen lots of progress said Zhao.