Semiconductor Manufacturing International Corp (SMIC) posted a strong financial performance in the first quarter, with profit surging 162% to $188 million and revenue rising 28% year-over-year, driven partly by rush orders from U.S. clients seeking to preempt newly imposed tariffs. However, despite the gains, the results missed analyst expectations, and SMIC’s Hong Kong-listed shares dropped 6.8% following a cautious Q2 forecast.
SMIC, China’s largest chip foundry, said it expects revenue in the second quarter to decline by as much as 6%, citing potential challenges from lower production yields as the company integrates new manufacturing equipment.
Key Financials (Q1 2025):
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Profit attributable to shareholders: $188 million (vs. $222.4M LSEG estimate)
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Year-over-year profit growth: +162%
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Revenue growth: +28%
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U.S. customer contribution: 12.6% of revenue (up from 8.9% in Q4 2024)
Tariff Impact and Industry Risks:
Co-CEO Zhao Haijun acknowledged the escalating U.S.-China trade tensions, noting that although the current impact is limited—thanks to tariff exemptions and a diversified supply chain—uncertainty looms for the second half of the year.
“If customers cut back purchases due to price increases, the sector could face a hard landing,” Zhao warned.
The company remains largely focused on legacy chips for consumer electronics and home appliances, while advanced chips, such as those powering Huawei smartphones, make up a very small portion of its business. SMIC has not confirmed any production ties to Huawei.
Broader Policy Context:
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The Trump administration in April approved tariff exclusions on selected Chinese electronics including smartphones, computers, and memory chips, partially easing import pressures for U.S. firms.
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Meanwhile, Chinese authorities have granted exemptions on some semiconductor imports and are in active talks with the domestic chip sector to mitigate the trade war’s impact.
Despite its strong Q1, SMIC’s outlook reflects the fragility of the global semiconductor supply chain in a climate of geopolitical tension, policy shifts, and technological transition—especially as it scales new equipment and process nodes.