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Performance indicators
2022: Revenue growth 33.6% to $7.27 billion
Semiconductor Manufacturing International Corp (SMIC), the largest contract microchip manufacturer in China, generated revenue of $7.27 billion in 2022, up 33.6% from the previous year. Such data are provided in the financial report published on February 10, 2023.
SMIC's net profit in 2022 reached $1.82 billion. This is 6.8% more than the result for the previous year, when the profit was $1.7 billion. By the end of 2022, the share of the Chinese market in the company's revenue decreased to 69.1% from 74.4% a year earlier. On the American market, the indicator, on the contrary, increased: if at the end of 2021 it was 19.6%, then at the end of 2022 it reached 25.3%. Eurasia accounted for 5.6% against 6% at the end of 2021.
SMIC is actively investing in capacity expansion in China. By the end of 2022, research and development costs reached $197.5 million. Capital expenditures in 2022 amounted to $6.35 billion.
It is noted that by the end of 2022, the monthly production capacity increased to 714 thousand plates in 8-inch equivalent. Annual capacity utilization was 92%. SMIC Shenzhen began mass production, and SMIC Jingcheng began pilot production. At the SMIC Lingang site, the construction of the main production building was completed, while the SMIC Xiqing project entered the construction phase. At the same time, mass production at the SMIC Jingcheng plant is planned to be postponed for one to two quarters due to delays in the supply of equipment.
In 2020, SMIC was blacklisted by the United States under the name Entity List, which cut it off from key foreign technologies for the production of more advanced microchips. In this situation, SMIC is forced to take measures to improve the financial situation.[1]
2021: Among the world's largest semiconductor manufacturers by revenue
2019: Among the largest companies in the semiconductor industry by revenue
History
2023
Mastering 5nm Chip Production
In early December 2023, it became known that China, contrary to sanctions from the United States, mastered the manufacture of microchips using 5-nm technology. Moreover, in this regard, Chinese companies were able to get ahead of American manufacturers. Read more here.
Development of ACCEL chip
On November 1, 2023, it was reported that Chinese scientists produced a chip that is significantly faster and uses less power than modern chips to work with AI on tasks such as image recognition and autonomous work. The research results are published in the journal Nature. Read more here.
Release of processor for smartphone Huawei Mate 60 Pro using 7nm technology
U.S. export controls have not stopped China from developing surprisingly advanced semiconductors for smartphones, adding to American worries about the country's military capabilities amid significant uncertainty.
The chip Kirin in the smartphone Huawei Mate 60 Pro is not as perfect as the 3nm chips that run the most modern new iPhone companies. Apple But export controls were aimed at keeping Chinese technology capabilities 8 to 10 years behind American ones, and the phone demonstrated that a chip partner Huawei , Shanghai-based Semiconductor Manufacturing International Corp. (SMIC), could be just four years behind.
2022: US threatens to destroy SMIC in case of deliveries to Russia
Chinese companies that decide to ignore the sanctions imposed against Russia against the backdrop of a special operation in Ukraine will face tough measures from Washington, warned the head of the US Department of Commerce Gina Raimondo on March 8, 2022. This, in particular, applies to one of the largest chip manufacturers outside Taiwan, Shanghai company SMIC.
If SMIC decides to supply microelectronics to Russia, the United States may "actually close" this company by blocking American equipment and software for it, Raimondo warned.
2021: $8.87 billion investment plan to build new plant in Shanghai suburb
In September 2021, Semiconductor Manufacturing International Corp. intends to spend $8.87 billion on the construction of a new plant in the suburbs of Shanghai, which is a major expansion of capacity at a time when China is trying to create a world-class chip industry. The company plays a key role in China's broader chipmaking ambitions.
2020
SMIC CEO Mong Song Liang resigns
In mid-December 2020, it became known about the resignation of Mong Song Liang, who, together with Zhao Haijun, heads the largest semiconductor company SMIC in China. The dismissal of one of the CEOs is associated with US sanctions imposed against the chipmaker. Read more here.
US blacklists SMIC
In early December 2020, it became known that the presidential administration USA Donald Trump included the leading Chinese chipmaker SMIC and oil giant CNOOC in the blacklist for the alleged connection with the armed forces, China this decision caused condemnation from the outside. Beijing
In total, the US Department of Defense has listed four companies believed to be owned or controlled by the Chinese military. China Construction Technology and China International Engineering Consulting were also on the list.
The total number of companies on the blacklist increased to 35. Despite the fact that initially such a measure did not imply sanctions, the recent decree of Donald Trump will not allow American investors in 2021 to acquire securities of these companies.
Chinese Foreign Ministry spokeswoman Hua Chunying said the PRC opposes US efforts to suppress Chinese companies, adding that Washington's actions are contrary to the principles of market competition.
 | The United States must stop abusing national power and national security concepts to suppress foreign companies, Hua said at a briefing on December 4, 2020. |  |
SMIC said it strongly objected to the decision, which reflects the U.S. administration's fundamental lack of understanding of the end-use of SMIC's business and technology.
The expansion of the blacklist is seen as an attempt to cement Trump's tough on China and force Biden, the Democratic president-elect taking office on Jan. 20, to take a hard line on Beijing amid bipartisan anti-China sentiment in Congress.[2]
US sanctions
At the end of September 2020, the US Department of Commerce announced sanctions on SMIC. The limitations are that American companies wishing to supply technology to SMIC must obtain special licenses.
American companies are the main suppliers of equipment for the production of chips. US sanctions could cut SMIC off from these devices, forcing the Chinese chipmaker to turn to products from other manufacturers.
The reason for the imposition of sanctions against SMIC is that, according to the American authorities, the company works closely with the Chinese authorities and therefore may pose a threat to US national security. SMIC itself denies this.
| | SMIC repeats that it manufactures semiconductors and provides services exclusively for civil and commercial end users and applications. The company has no relationship with the Chinese military and does not produce products for military end users or applications, a SMIC spokeswoman told The Wall Street Journal. | |
Lithographic equipment in China occupies no more than 2% of the global market. The share of domestic equipment in production in China does not exceed 10%, analysts at Bernstein Research estimate.
Industry organization Semiconductor Equipment and Materials International (SEMI), which brings together leading suppliers of semiconductor equipment and materials, believes that sanctions against SMIC will harm the American semiconductor industry, as it will become more difficult for local manufacturers to supply a Chinese chipmaker who annually purchases semiconductor equipment and materials from the United States worth up to $5 billion.
The uncertainty of the situation around SMIC has already caused a drop in the company's stock price: on the site in Hong Kong on September 28, 2020, it decreased by 7%, in Shanghai - by 6%, and in total from the beginning of August to the end of September, these securities fell by 40%.[3]
Possible sanctions
The US administration is considering adding China's largest chipmaker Semiconductor Manufacturing International Corporation (SMIC) to a trade blacklist in the fall of 2020, forcing US suppliers to obtain a very hard-to-reach license before shipping their products to that company. SMIC was founded in 2000, it is the largest chipmaker in China, it raised $6.8 billion. The US in its IPO in Shanghai in July 2020, more than double the original target. In theory, this could hamper China's efforts to develop its own domestic integrated circuits and software that will affect all areas, from smartphones to 5G base stations and missile guidance systems.
Entry into the Shainhai Stock Exchange
In mid-July 2020, China's largest chip maker SMIC entered the Shainhai Exchange. On the very first day of trading, the shares soared by 245%. As part of the IPO, the semiconductor issued 1 685 620 000 shares at a price of 27.46 yuan per unit, which allowed the company to raise 46.28 billion yuan ($6.62 billion). Before the start of trading, the value of securities was set at 95 yuan.
IPO revenues more than doubled SMIC's original goals. According to Dealogic, this event was the largest share sale in mainland China in ten years after the Agricultural Bank of China raised more than $22 billion on the Hong Kong Stock Exchange in 2010. Institutional investors took an active part in the acquisition of SMIC shares, including funds supported by the governments of the PRC, Singapore and the UAE. This allows SMIC to bypass the Taiwanese UMC in terms of capitalization, as well as receive the necessary amount to master advanced technologies.
An active share sale is key to the development of not only the company itself, but the entire Chinese semiconductor industry, especially amid the trade war between USA and China. SMIC is known to be part of the so-called China Science and Technology Innovation Council, or STAR Board. Thus, SMIC is considered as a key player in China in expanding chip production.
According to CNBC, SMIC is a direct competitor to Taiwan's TSMC and South Korea's Samsung Electronics, but so far Chinese technologies are weaving far behind their competitors. SMIC will need serious investment to catch up with them, and going public can help achieve that goal. SMIC intends to spend up to 40% of the proceeds from the IPO on the construction of an enterprise capable of producing semiconductor components on 300 mm silicon wafers using 14-nm technology.[4]
Notes
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