August 14, 2023: SMIC posted a decline in second-quarter revenue on continuing weak chip demand.

SMIC said second-quarter revenue totaled $1.56 billion, down 18% from the $1.9 billion logged in the same period in the previous year. Net income was $402.76 million, down by 21.7% from the $514.33 million recorded in the second quarter of 2022.

SMIC is China’s biggest foundry, manufacturing semiconductor chips that other firms design. The Chinese firm competes with Taiwan’s TSMC and South Korea’s Samsung, but analysts say its technology is several generations behind.

The Chinese foundry has been the target of U.S. sanctions since 2020. It was placed on a U.S. trade blocklist restricting its access to crucial foreign technology, allowing it to produce cost-efficient advanced chips.

SMIC has yet to obtain extreme ultraviolet lithography machines, which only the Dutch firm ASML can make. Without EUV machines, SMIC cannot produce advanced chips on a large scale at lower costs.

An ongoing slump in demand for specific chips that go into consumer products, such as memory, has also severely impacted SMIC and the likes of TSMC and Samsung.

The Semiconductor Industry Association said that global sales of semiconductors totaled $124.5 billion during the second quarter of 2023. This represents a 4.7% increase from the first quarter but is 17.3% below the second quarter of 2022.