SMIC Says Unable to Keep Up With Customer Demand for Certain Types of Chips

SMIC is hit by sanctions by the former Trump administration that curbed US companies from supplying the Chinese company.

By Gadgets 360 Staff With Inputs From Reuters | Updated: 5 February 2021 10:13 IST

SMIC Says Unable to Keep Up With Customer Demand for Certain Types of Chips

SMIC is a key player in China's efforts to build up its domestic semiconductor manufacturing capabilities

Highlights

When the pandemic first struck in early 2020, chip orders collapsed
But remote work and studying has spurred demand for computers
That has caused auto and electronics makers to re-up their chip purchases

China's Semiconductor Manufacturing International Corporation (SMIC) cannot meet customer demands for certain mature technologies and its plants have been running "fully loaded" for several quarters, it said on Friday.

Zhao Haijun, co-CEO of China's largest chipmaker, made the comments during a conference call after its latest quarterly results. He also said external sanctions would continue to affect the company's revenue growth.

SMIC is a key player in China's efforts to build up its domestic semiconductor manufacturing capabilities, but sanctions by the former Trump administration have curbed US companies from supplying it.

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The company is also an important player in the global semiconductor supply chain, which is under heavy pressure as pandemic lockdowns drive up demand for electronics such as laptops and phones.

Global automakers, in particular, have been caught off guard by the chip shortage, and firms from General Motors to Stellantis have announced that they have slowed down production and furloughed thousands of workers.

In more chip-related news, Qualcomm, the world's largest smartphone chipmaker, warned it is struggling to meet demand, signaling that a global semiconductor shortage is spreading.

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“The shortage in the semiconductor industry is across the board,” said incoming Chief Executive Officer Cristiano Amon.

Like most chipmakers, Qualcomm outsources production to companies such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics. These suppliers are trying and so far failing to adjust to a vigorous rebound in demand. The auto sector has complained about this recently, but Qualcomm's comments show the problems are broader.

When the COVID-19 pandemic first struck in early 2020, chip orders initially collapsed. But remote work and studying has spurred demand for computers, while car buying has surged as people avoid public transport. That, in turn, has caused auto and electronics makers to re-up their chip purchases.

Amon said orders for chips that run computers, cars and many other Internet-connected devices are swamping the industry, which mostly relies on just a handful of factories in Asia. Supply should improve in the second half of 2021, he added.

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