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China’s SMIC Reports Resilience Despite U.S. Tariffs, Expects Tight Capacity Through October

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China’s leading semiconductor foundry, Semiconductor Manufacturing International Corp (SMIC), stated on Friday that U.S. tariff measures have not caused the “hard landing” initially feared. The company cited strong domestic demand that will keep its production capacity tight until October.

Co-CEO Zhao Haijun said during a post-earnings call that customers have largely mitigated the impact of U.S. President Donald Trump’s tariff plans—such as the proposed 100% tariff on chip imports—through inventory stockpiling and sourcing from alternative suppliers. He noted that previous tariff rounds increased costs by less than 10% for overseas customers.

China’s additional tariffs on U.S. goods reached 125% in April, following Trump’s tariffs effectively pushing the rate on Chinese goods to 145%. However, the latest semiconductor tariffs exclude companies manufacturing in the U.S. or committed to doing so. SMIC, blacklisted by the U.S. in 2020, has no U.S.-based manufacturing.

SMIC’s revenue for Q2 grew 16.2% year-on-year to $2.2 billion, though its profit declined 19.5% to $132.5 million, missing analyst expectations. The company shipped 2.4 million eight-inch equivalent wafers in the quarter, a 4.3% increase from Q1.

Capacity utilization rose to 92.5%, and monthly production capacity expanded modestly by 1.85% quarter-on-quarter to 991,000 wafers. Zhao forecasted continued tight capacity driven by strong domestic demand, especially for analog, WiFi, Ethernet, and memory controller chips.

SMIC expects Q3 revenue growth of 5% to 7% over Q2 but anticipates the industry’s typical seasonal slowdown in Q4, with rush orders and early shipments likely to taper.

SMIC’s shares in Hong Kong dropped over 5% following the report.

Taiwan Adds Huawei and SMIC to Strategic Export Control List Amid Security Concerns

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Taiwan has placed China’s tech giants Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) on its export control list, requiring Taiwanese firms to obtain government approval before exporting any products to these companies.

The additions were part of a recent update to the Ministry of Economic Affairs’ trade administration strategic high-tech commodities entity list, announced on June 10. Alongside Huawei and SMIC, the update included 601 entities from countries such as Russia, Pakistan, Iran, Myanmar, and China, including groups like the Taliban and al Qaeda.

Taiwan’s trade administration stated the review and update were driven by “prevention of arms proliferation and other national security considerations.” It urged manufacturers to comply with export control regulations, fulfill verification obligations, and carefully assess transaction risks.

Taiwan is home to TSMC, the world’s largest contract chipmaker and a key supplier to AI leader Nvidia. Both Huawei and SMIC are pivotal to China’s ambitions in chips and artificial intelligence and have been striving to close the technology gap.

Taiwan already enforces strict chip export controls on Taiwanese companies that manufacture domestically or supply Chinese firms, reflecting ongoing tensions between Taipei and Beijing, which claims Taiwan as its territory.

Huawei is also subject to U.S. export restrictions barring access to American and foreign-made goods involving U.S. technology, including chips manufactured by TSMC. Last year, TSMC was ordered by the U.S. Commerce Department to halt shipments of certain chips to Chinese customers, including Huawei and Sophgo, a Chinese chip designer linked to Huawei’s AI processor.

Taiwan’s government has repeatedly pledged to combat Chinese efforts to steal technology and attract Taiwanese chip talent, emphasizing the strategic importance of the semiconductor sector.

SMIC, China’s largest chipmaker, continues to invest heavily to expand capacity amid U.S. export curbs, aiming to boost China’s domestic semiconductor capabilities.

U.S. May Add More Chinese Tech Firms to Export Blacklist, Including CXMT

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The U.S. Commerce Department is considering expanding its Entity List to include additional Chinese technology firms, including ChangXin Memory Technologies (CXMT) and subsidiaries of Semiconductor Manufacturing International Corporation (SMIC) and Yangtze Memory Technologies Co. (YMTC), a source familiar with the matter told Reuters.

The potential move is under review by the Bureau of Industry and Security (BIS), which oversees export controls on sensitive technologies. Companies added to the Entity List are effectively banned from receiving U.S. goods, software, and technology without a special license — one that is typically denied.

Strategic and Political Context:

  • The timing of the decision is reportedly complicated by a recent U.S.–China trade deal, according to the Financial Times, which first reported the news.

  • Inclusion on the list is reserved for entities deemed to be acting “contrary to U.S. national security or foreign policy interests.”

Recent Escalations:

  • In January, the Biden administration added over two dozen Chinese entities, including:

    • Zhipu AI, a large language model developer

    • Sophgo, linked to chips produced by TSMC and allegedly incorporated into Huawei AI processors in violation of U.S. export rules

  • Those actions were accompanied by tighter controls to restrict chip flows that could indirectly support Huawei and other blacklisted firms.

Implications:

  • CXMT is a leading Chinese DRAM memory chipmaker and considered a strategic rival to U.S. memory firms such as Micron. Blacklisting CXMT would further strain U.S.–China tech relations.

  • Adding SMIC and YMTC subsidiaries would intensify U.S. efforts to curb China’s progress in semiconductor self-sufficiency and advanced chip production.

While no final decision has been announced, the move would signal a continued hardline stance on Chinese tech development, particularly in areas with potential military or surveillance applications.