Chinese Chipmaker Surges to Third Largest Globally, defies US Sanctions

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The Rise of China’s Chipmaker: SMIC Surges to Global Prominence

From Domestic Powerhouse to Global Contender

In a remarkable feat, China’s Semiconductor Manufacturing International Corporation (SMIC), the country’s largest chipmaker, has ascended to the third position globally in terms of foundry revenue for the first quarter of 2024. This unprecedented rise has sent shockwaves through the industry, as SMIC solidifies its status as a major player on the world stage.

Outpacing Rivals, Setting New Benchmarks

Breaking through global barriers, SMIC has surpassed industry giants GlobalFoundries and Taiwan’s United Microelectronics Corporation. With a commanding market share of 6%, SMIC has established itself as a force to be reckoned with, trailing only industry titans Taiwan Semiconductor Manufacturing Company (TSMC) and South Korea’s Samsung Foundry.

Underlying a Demand-Driven Surge

Bolstered by a surge in demand within China, including sectors such as CIS, PMIC, IoT, and DDIC applications, SMIC has experienced unprecedented financial success. The company’s first-quarter revenue skyrocketed by an impressive 19.7%, reaching .75 billion. Remarkably, over 80% of this revenue was generated from domestic Chinese customers.

A Strategic Player in the Global Semiconductor Market

SMIC’s success is not isolated to its domestic market. The Chinese firm’s chips have become ubiquitous, playing a vital role in powering the world’s automobiles, smartphones, computers, and IoT devices.

Riding the Wave of Future Growth

Fueled by a robust demand in the coming quarters, SMIC forecasts a robust revenue increase of 5% to 7%. Leading analysts expect SMIC to capture a substantial portion of this projected market growth.

China’s Growing Semiconductor Independence

SMIC is not merely a corporate success story; it is a symbol of China’s strategic ambitions in the global semiconductor industry. Beijing has poured billions of yuan into SMIC and other domestic chip firms, aiming to reduce its reliance on foreign technology in a sector deemed crucial for national security.

US Sanctions and Technological Challenges

Despite its remarkable progress, SMIC faces challenges, including US sanctions and technological limitations. Since 2020, American companies have been required to obtain licenses before selling to SMIC, restricting its access to certain US technologies.

Additionally, SMIC lacks access to extreme ultraviolet lithography (EUV) machines from Dutch firm ASML, essential for high-volume production of advanced semiconductors.

Cutting-Edge Technologies: A Race Against Time

TSMC and Samsung Electronics, SMIC’s global rivals, lead the pack in chip manufacturing capabilities. They have been mass-producing 7-nanometer chips since 2018 and have since moved on to producing even smaller and more efficient 3-nanometer chips.

SMIC: A Catalyst for China’s Technological Prowess

While SMIC may still lag behind TSMC and Samsung Electronics in some aspects, its rapid rise has sent a clear message: China’s semiconductor industry is progressing at an astonishing pace. With the government’s support and a growing domestic demand, SMIC is poised to continue its trajectory and push the boundaries of chip manufacturing, redefining China’s role in the global tech landscape.

Data sourced from: cnbc.com