Trump's tariffs: SMIC to assess impact on revenue decline

Semiconductor Manufacturing International Corporation (SMIC) will assess the impact of tariffs on demand, according to co-CEO Zhao Haijun.

He noted that tariffs had increased orders from US customers in the past quarter, but the overall impact remained limited.

In its financial report, SMIC projected a revenue decline of up to 6% for the second quarter.

Zhao also mentioned that visibility for the second half of the year was unclear.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Semiconductor companies face contrasting short-term gains and long-term uncertainty

SMIC’s impressive 161.9% profit jump to $188 million in Q1 2025 stands in stark contrast to their projected revenue decline of up to 6% for Q2 1.

This contradiction reflects a pattern seen across the semiconductor industry: short-term order increases driven by customers stockpiling ahead of tariff implementation, followed by potential demand drops once tariffs take effect.

The cautious outlook from SMIC’s co-CEO about “closely monitoring tariff impacts” mirrors similar uncertainty expressed by TSMC, whose CEO acknowledged tariff-related uncertainties despite projecting mid-20% revenue growth 2.

This suggests semiconductor manufacturers are experiencing a temporary “pull-forward” effect in orders, a phenomenon previously observed during the U.S.-China trade tensions of 2018-2019.

Industry forecasts indicate this volatility could significantly impact the sector’s growth trajectory, with predictions of a potential -20% growth rate for 2025 if tariffs are fully implemented, compared to the 7.5% compound annual growth rate previously projected through 2030 3.

2️⃣ Tariffs accelerating semiconductor supply chain restructuring

The uncertain tariff situation is forcing a fundamental restructuring of semiconductor supply chains that had already begun with the CHIPS Act investments.

U.S. semiconductor manufacturing has declined dramatically from 37% global share in 1990 to just 10% in 2022, creating the vulnerability that current policies aim to address 3.

Major industry players are responding with substantial manufacturing shifts. TSMC is investing $165 billion in U.S. operations, while Apple plans to spend $500 billion in the U.S. over four years to reduce tariff exposure 2.