SMIC sees little impact from Trump's proposed chip tariffs

Semiconductor Manufacturing International Corp (SMIC) expects minimal impact from US President Donald Trump’s proposed 100% tariff on imported chips.

The company cited strong domestic demand and limited exposure to the US market, with China making up 84.1% of its sales in Q2 and the Americas 12.9%.

In Q2, SMIC’s revenue rose 16.2% year-on-year to US$2.2 billion, but net profit dropped 19.5% to US$132.5 million.

The company shipped 2.4 million wafers with a factory utilisation rate of 92.5%.

The company forecasts Q3 revenue growth of 5% to 7%, driven by higher shipments and increased average selling prices.

SMIC has not sought customer feedback regarding the proposed US tariffs.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Chinese chipmakers shield themselves through domestic market focus

SMIC’s confident response to potential US tariffs reflects a deliberate strategic shift toward domestic dependency that Chinese semiconductor companies have executed over recent years.

The company’s revenue mix shows this transition clearly, with Chinese sales jumping from 80.3% in Q2 2024 to 84.1% in the same period this year, while Americas revenue share dropped from 16% to 12.9%1.

This domestic focus creates a natural buffer against trade tensions, as SMIC’s co-CEO noted that previous tariff disputes resulted in less than 10% impact on their overseas clients1.

The strategy appears to be working operationally too. Despite being placed on the US Department of Commerce’s entity list, which limits access to advanced chipmaking equipment, SMIC reported 16.2% revenue growth and maintains 92.5% utilization rates with demand exceeding supply1.

This focus on the domestic market allows Chinese semiconductor companies to maintain growth even as US-China tech tensions escalate, reducing their vulnerability to trade policy changes.

2️⃣ Semiconductor tariffs create amplified costs throughout the entire supply chain

Trump’s proposed 100% tariffs on semiconductors would trigger significant cost multiplication effects that extend far beyond the chip industry itself.