China's largest chip maker on Thursday (28/3) reported a decline in its annual profit last year. This is the first decline in profits since the United States (US) imposed sanctions in 2020, following increasingly fierce technological competition between Beijing and Washington.
Semiconductors are an integral part of the modern economy because they are used in a variety of products, from kitchen equipment, cell phones, cars to weapons.
The chip industry is increasingly being drawn into the feud between the US and China. The two countries compete with each other to be superior in the field of technology. Relations between the two countries with the world's largest economies have worsened in recent years.
Washington has sought to cut supply chains from Chinese companies that provide access to advanced US technology, by tightening restrictions on chip exports.
Semiconductor Manufacturing International Corporation (SMIC), China's leading chip manufacturer, was targeted by US sanctions in 2020 because the US feared the company was affiliated with Beijing's military.
SMIC, whose shares are traded on the exchanges in Hong Kong and its hometown, Shanghai, reported net profit in 2023 fell 50.1 percent from the previous year to $902 million (Rp. 14 trillion) in 2023.
Its revenue this year is projected to reach $6.3 billion (around Rp. 100 trillion) or down 13.1 percent.
“In 2023, the semiconductor industry will experience a downward trend due to the weak global economy, sluggish market demand and other factors,” said SMIC.
Beijing is seeking self-sufficiency in semiconductor production and has allocated billions of dollars in its budget in recent years to catch up with foreign competitors.
Experts say SMIC has succeeded in producing seven nanometer chips, which seems impossible without the support of foreign technology. They questioned the impact of the US sanctions. (br/f/ft)