SMIC Accelerates Capacity Buildout as Chip War Intensifies

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A Chinese flag flies on top of Semiconductor Manufacturing International Corp.’s headquarters in Shanghai in March. Photo: Bloomberg

(Bloomberg) — Semiconductor Manufacturing International Corp. is expediting its plans to build more capacity as a U.S.-led multinational campaign is putting more restrictions on China’s access to advanced foreign technologies.

“Some of our customers have won new opportunities due to geopolitics-induced changes in the supply chain,” SMIC Co-Chief Executive Officer Zhao Haijun told analysts during a post-earnings call on Friday. “We are growing capacity at a speed faster than originally planned.”

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SMIC is accelerating capacity expansion due to U.S.-led restrictions on China's access to foreign tech.
China is pushing for self-sufficiency in key tech areas; Huawei collaborates with SMIC on advanced processors.
SMIC plans to produce an additional 60,000 wafers monthly by December; its shares rose over 9% after strong earnings.

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Who’s Who

Semiconductor Manufacturing International Corp.: Semiconductor Manufacturing International Corp. (SMIC) is accelerating its capacity expansion due to geopolitical changes limiting China’s access to foreign technologies. It's set to add 60,000 300mm wafers monthly by December. SMIC is aiding Chinese firms like Huawei to produce semiconductors domestically. Demand exceeds supply, leading to rising prices. SMIC's shares surged over 9% in Hong Kong following better-than-expected earnings.

Huawei Technologies Co. Ltd.: Huawei Technologies Co. Ltd. is a key player in China's effort to achieve self-sufficiency in strategic tech fields, such as automotive chips. It collaborated with Semiconductor Manufacturing International Corp. (SMIC) to produce a 7-nanometer processor for its Mate series last year, competing with global leaders like Qualcomm Inc.

Qualcomm Inc.: Qualcomm Inc. is mentioned in the article as a global leader in the semiconductor industry. SMIC produced a 7-nanometer processor for Huawei's Mate series last year, which rivaled processors from Qualcomm. The context indicates competition in advanced technology development between Qualcomm and companies like SMIC and Huawei, particularly in the automotive chip sector.

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What Happened When

August 8, 2024：: SMIC reported better-than-expected earnings.

Friday, August 9, 2024：: SMIC Co-Chief Executive Officer Zhao Haijun spoke to analysts during a post-earnings call and mentioned customers winning new opportunities due to geopolitics-induced changes in the supply chain.