Semiconductor Manufacturing International Corporation (SMIC) reports record profits in 2021, $1.7 billion, up 138% from the previous year. The growth rate of its turnover, 39% is the highest since 2010, it stands at 5.44 billion dollars. When the results were released on February 11, a company executive enthused that ” fastest growing among the world’s top four foundries “.
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This success is due to The global chip shortage and high demand for local manufacturing “deciphers a press release from SMIC. The weight of China in the company’s turnover increased from 56% to 68.3%.
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Flattering results, but also revealing the challenges facing the Chinese group. The first of these is its presence on the US Department of Commerce’s blacklist in 2020. This “Entity List” has been mainly populated by companies from the Middle Kingdom since the start of the trade war with the United States. .
This black or rather gray list requires SMIC to obtain authorization for sales and purchase operations with American structures. The North American market share decreased between 2020 and 2021, from 27.7% to 19.6%.
More problematic for SMIC, the presence on this list requires authorization for any technology transfer. This is SMIC’s biggest weakness compared to competitors Samsung and TSMC. The company does not have access to chips below 10 nanometers, used in the latest smartphones. It focuses on more mature technologies indicates The Register, the 28 nm chips. These are in high demand, especially for the automotive industry, which has been badly affected by the global shortage of semiconductors.
SMIC should not hope for a softening on the part of the American authorities. Washington is afraid of being technologically overtaken by China and is trying to stop it so as not to lose this race.
SMIC, China’s air bubble
The semiconductor sector has proven to be the country’s main weak point. China imports the vast majority of its chips. Beijing’s efforts to support its national champion remain insufficient given the delay to be made up. SMIC currently represents less than 10% of domestic demand in the Middle Kingdom.
Backed by encouraging 2021 results, SMIC will invest $5 billion in 2022 to increase its production capacity. This is 500 million better than in 2021, but still far from the champions of the sector.
This money should support the commissioning of three new factories. Two are due to open this year, one in Beijing and the other in Shenzhen. The construction of a factory in Shanghai will be launched. Ultimately, they should make it possible to triple the production of the SMIC. China will need it.