SMIC Updates: Impact of U.S. Tariff Policy on Production Capacity

China’s top foundry Semiconductor Manufacturing International Corp (SMIC) reported that the U.S. tariff policy did not result in the feared ‘hard landing’, with strong domestic demand maintaining production capacity until October.

Co-CEO Zhao Haijun mentioned in a recent call that the company is not actively engaging with customers regarding President Trump’s 100% tariff plan for chip imports. The company expects a smaller impact due to contingency plans formulated after the April tariffs.

Past tariff rounds caused less than a 10% cost increase for international customers. China raised additional duties on U.S. goods to 125% in April, following Trump’s tariffs on Chinese goods.

Despite challenges, SMIC’s revenue saw a positive trend in the second quarter, reaching $2.2 billion. The company faced a decline in profit to $132.5 million.

SMIC’s production of 2.4 million wafers in the second quarter was up by 4.3% from the previous quarter. The production capacity is expected to remain tight until October due to strong demand.

While SMIC anticipates a revenue growth of 5-7% in the third quarter, Zhao mentioned that the fourth quarter generally slows down for the industry.