On Thursday, Aug. 11, China's top chip maker Semiconductor Manufacturing International Corp (SMIC) reported that its earnings for the June quarter were better than expected.
This is despite the US imposing stricter sanctions on foreign companies regarding semiconductors.
SMIC Reports Great Earnings
According to SCMP, SMIC's revenue during the three months increased 41.6% year-on-year to reach $1.9 billion, which is a bit better than Bloomberg's estimate of $1.89 billion for the company.
The net profits came in at $514.3 million under global accounting standards, down 25% from the same period in 2021, compared with $447.2 million in the last quarter. This is still a bit better compared to Bloomberg's estimate of $469 million.
SMIC's gross profit margin increased 39.4% year-on-year from 30.1% in 2021, compared with 40% in the March quarter, according to Business Times.
Also Read: Qualcomm orders 28nm chips from China's SMIC
The Shanghai-based tech company said its revenue and gross margin exceeded expectations during the period because the COVID-19 pandemic prevented some factories from conducting annual maintenance.
The financial results of SMIC came amid escalating tension between the US and China.
On Thursday, Aug. 10, former president of British chip design William Tudor Brown said in a LinkedIn post that he was leaving SMIC's board after nine years due to the "widened international divide."
The company confirmed Brown's resignation on the same day.
Export Ban on China
Last week, major American semiconductor equipment suppliers KLA Corp and Lam Research said that the US government wants to widen the scope of its export ban to China and is looking to include tools for making chips at 14-nm and below.
This is an escalation from the current restrictions, which only banned 10-nm technology and below for chipmaking.
According to SCMP, it followed reports that the Shanghai-based company may have also achieved the ability to make 7-nm chips despite having no access to any cutting-edge extreme ultraviolet lithography systems.
Currently, SMIC has the capability to produce 14-nm chips.
The US government also wants to block the export to China of electronic design automation software, which would take the restrictions to a whole other level.
Amid Beijing's push for Chinese companies to rely less on semiconductor equipment that is imported from other countries, SMIC has been trying to use more domestic alternatives, but there have been reports of failed attempts.
Earlier this week, a contract for the company dismissed a task force that repeatedly failed to deliver a home-grown computer integrated manufacturing system for the company's new factory in Beijing. However, the contract denied the report.
On Thursday, Aug. 10, SMIC also announced that its co-CEO Zhao Haijun has stepped down as an executive board member to focus on managerial duties.
Wu Hanming, a veteran Chinese microelectronic expert, was appointed an independent non-executive director on the same day that Haijun stepped down.
US Focus on Chips
As the sanctions rely less on China for semiconductors, President Joe Biden signed the CHIPS law to provide $53 billion in assistance to chipmakers so semiconductors can be done domestically.
The new law can elevate the US chipmaking market from 2% to 10%, according to CNET.
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Written by Sophie Webster
