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Chip shortage will help Chinese SMIC offset losses due to US sanctions
02.03.2021 [10:32],
Alexey Razin

US sanctions hit SMIC’s business as many overseas clients were forced to abandon its services. The current situation in the automotive industry with a shortage of semiconductor components may become a kind of revenge, since their production does not require advanced technical processes, and SMIC may well offer its services.

Image Source: Getty Images

Efforts by the US authorities to restrict the activities of SMIC, as is known, were aimed at preventing the supply of advanced lithography equipment necessary for the production of the most sophisticated and advanced semiconductor components. The bulk of SMIC products are manufactured using 28nm and rougher technologies, although the company was recently able to establish serial production of 14nm products.

As CNBC notes, citing analysts from China Renaissance, SMIC may well be the beneficiary of a shortage of chips in the automotive industry, since most of these products do not require the most modern technological processes, and the Chinese manufacturer freed up some capacity as a result of sanctions. SMIC has already started to raise prices for its services, following the example of some Taiwanese competitors. For a company that is in dire need of funding to maintain the pace of development, this will be a favorable factor. SMIC expects to increase revenue by 7-9% this year, and analysts call this forecast rather conservative.

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