SMIC, China’s top contract chipmaker in Shanghai, is confidently braced against the proposed U.S. tariffs. Even if President Trump follows through with a 100% tariff on imported chips, the company expects its strong domestic demand to offset the blow.
Co-CEO Zhao Haijun explained that the company’s production capacity is robust, with demand currently outstripping supply. He reassured stakeholders that even a slowdown in demand growth would not dent its steady utilisation rate. SMIC has also been helping clients build up inventory, anticipating a typical seasonal dip in the fourth quarter.
Moreover, SMIC’s exposure to the U.S. market is fairly limited, with only 12.9% of its sales coming from there last quarter, compared to 84.1% generated in China. Zhao recalled that previous tariff disputes resulted in less than a 10% impact on overseas business, highlighting the chipmaker’s resilience to external pressures.
Financially, while second-quarter revenue climbed to $2.21 billion—a 16.2% increase from last year—the net profit dipped to $132.5 million from $164.6 million a year ago. This slight decline in profit, alongside a minor 1.7% drop from the previous quarter, has been managed against a backdrop of strong domestic market performance and strategic planning.
Ultimately, SMIC’s solid market position in China and proactive measures ensure it is well-prepared to navigate the challenges posed by U.S. tariff moves. Its commitment remains on maintaining production capacity and catering to the burgeoning domestic demand.
