SMIC and Hua Hong See Significant Profit Jumps Amid AI-Driven Demand
Quick Look
SMIC and Hua Hong report substantial year-on-year profit increases of 261.7% and 385.9% to $479.2M and $38.6M, respectively, in Q2, driven by high demand for AI computing power, with Hua Hong's revenue reaching a record $717.5M.
AI-generated summary
Why It Matters
The surge in AI applications has created a high demand for integrated circuits.
Net profits for SMIC and Hua Hong jumped 261.7 per cent and 385.9 per cent year on year to US$479.2 million and US$38.6 million, respectively, in the June quarter. Meanwhile, revenue at its smaller rival Hua Hong reached a record US$717.5 million in the quarter, up 26.8 per cent from a year earlier, compared with the consensus estimate of US$702.7 million. The results highlight how local foundries are aggressively running their fabrication plants at full capacity to meet domestic needs, as tech giants and start-ups scramble for computing power to train their large models and power AI applications.
“Looking ahead to the second half of this year, the industrial momentum and spillover effects generated by AI will persist, driving broad-based demand for integrated circuit manufacturing,” SMIC said in a filing to the Hong Kong stock exchange on Thursday, adding that it would flexibly allocate existing capacity and accelerate new capacity to ease supply constraints.
What to Watch
AI outlook — possibilities, not facts
Continued high demand for SMIC and Hua Hong's services in H2 2023
Likely · Within weeks
Open Questions
- How will global semiconductor leaders respond to China's growing capacity?
