Chinese semiconductor industry

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Overbom

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SMIC is doing fine. Even the so called "oversupply" won't affect them

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China's Semiconductor Manufacturing International Co. (SMIC) said it is not concerned about oversupply in the chip industry as it continues to expand production capacity, saying domestic demand will insulate it from any global shocks.
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"Maybe there will be oversupply for a certain chip production technology, but because of the strong demand for indigenous production, we can dodge the risks," Zhao told investors on Friday morning. "Our customers are closely supplying to electronics makers and system companies, and they want to have this regional supply chain, and they need production capacity in China.
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"Our production capacity is still far from meeting even 10% of their demand," he added.
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But the company still forecasts a higher gross margin compared with last year and expects its revenue growth to outperform the industry average this year.
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Blitzo

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ZeEa5KPul said:
It's a relative thing. Things should be fine so long as SMIC's profitability is not disadvantaged relative to its competitors. In fact, a crunch in profitability throughout the entire field can play to China's strengths since SMIC would have the backing to survive the storm while companies in other countries wouldn't. The concern is whether SMIC is a well-run company that can make use of its advantages, which it appears so far to be.

In terms of absolute profitability, the field has always been one of tight margins and brutal competition; it's why the US quit and left it to the likes of Korea and Taiwan. I see semiconductors as something of a public utility like high-speed rail - the trains themselves don't have to rake in the profits, their downstream economic effects are what's important. China having a world leading indigenous semiconductor sector has enormous benefits for downstream technology companies.
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Sure.
However, I think it is important to acknowledge that the ability to remain sufficiently profitable (to survive and ideally thrive as a successful company that are able to hit the ground running when the rest of the industry is able to provide leading edge fab equipment), will be a major factor as to the speed and scale with which China is capable of achieving a world leading indigenous semiconductor sector.

Other factors relating to that question (speed and scale of achieving a world leading indigenous semiconductor sector) have been addressed in this thread: the ability to develop and operationalize DUVL and EUVL, retaining a vibrant design knowledge base and industry, and retaining a large pool of domestic customers with demand that can be filled by the fab companies, among others.

Considering the extent of profitability and risks to said profitability of companies like SMIC, should also be one of those factors to keep an eye on.
 
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pecopls

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Butting in to share that the rotating chairman of Huawei (Ken Hu) says they have no plans to build their own chip factory. He just mentioned it at the Huawei Investor Conference.
 
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pecopls

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ansy1968 said:
@pecopls bro do you believed that ,IF you do then I have a bridge to sell you.
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Well I heard it directly from the mouth of Huawei's current chairman, haha. If he wanted to sell me a bridge I'd probably buy it :p He specifically said he believes in the advantages of letting others specialize in certain areas, such as semiconductor manufacturing.

Edit: Here's an article summarizing what he said:
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ansy1968

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pecopls said:
Well I heard it directly from the mouth of Huawei's current chairman, haha. If he wanted to sell me a bridge I'd probably buy it :p He specifically said he believes in the advantages of letting others specialize in certain areas, such as semiconductor manufacturing.

Edit: Here's an article summarizing what he said:
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@pecopls no problem just want to lightened up the mood. ;) Brother the only road Huawei need to take to survived is do an IDM. No FAB using "some" American technology will FAB chip for them. The reward is obvious , the symbolism it creates , the only tech company that dare challenge the might of a superpower that survived and thrived.:cool:
 
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AndrewS

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ZeEa5KPul said:
It's a relative thing. Things should be fine so long as SMIC's profitability is not disadvantaged relative to its competitors. In fact, a crunch in profitability throughout the entire field can play to China's strengths since SMIC would have the backing to survive the storm while companies in other countries wouldn't. The concern is whether SMIC is a well-run company that can make use of its advantages, which it appears so far to be.

In terms of absolute profitability, the field has always been one of tight margins and brutal competition; it's why the US quit and left it to the likes of Korea and Taiwan. I see semiconductors as something of a public utility like high-speed rail - the trains themselves don't have to rake in the profits, their downstream economic effects are what's important. China having a world leading indigenous semiconductor sector has enormous benefits for downstream technology companies.
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As per the Economist, China has lower semiconductor production costs than Korea, Taiwan and Japan.
Europe and the US are even more expensive.

If there is a shakeout, the Chinese fabs should be fine.
 
FriedButter

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pecopls said:
Butting in to share that the rotating chairman of Huawei (Ken Hu) says they have no plans to build their own chip factory. He just mentioned it at the Huawei Investor Conference.
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pecopls said:
Well I heard it directly from the mouth of Huawei's current chairman, haha. If he wanted to sell me a bridge I'd probably buy it :p He specifically said he believes in the advantages of letting others specialize in certain areas, such as semiconductor manufacturing.

Edit: Here's an article summarizing what he said:
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The translated article doesn’t mention anything in regards to a chip factory. It only says that Huawei can’t solve the manufacturing supply chain by themselves, which is hardly surprising.

In addition, Wang Tao, Huawei's executive director and director of the ICT Infrastructure Business Management Committee, explained that the chip industry chain is very long, including design, manufacturing, packaging, etc. There are also many links in manufacturing, and any company, including Huawei, will It is impossible to solve it by yourself, and it requires the joint efforts of the whole industry chain upstream and downstream.

Wang Tao also said that one of the benefits brought by the decoupling of chip supply in the United States is that China and many overseas countries and regions have increased investment in the semiconductor manufacturing chain. It is believed that the shortage of chip supply may be resolved in the next few years. In this way, Huawei's chip problem can also be solved.
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