China has been seeking in recent years to shore up its self-reliance in the increasingly vital field of semiconductors, and Shanghai-based SMIC is the country’s chipmaking champion.
The firm faces pressure from Washington, which has taken steps in recent years to cut off China’s access to advanced US technology, working with its allies to impose tough restrictions on the flow of state-of-the-art chips and the equipment needed to make them.
“Unaudited profit attributable to owners of the Company was US$492.7 million in 2024,” SMIC reported in a filing to the Hong Kong Stock Exchange.
The figure represented a decrease of 45.4% from US$902.5 million in 2023, according to the firm, which added that the fall was “mainly due to the decrease of investment income and financial income”.
Profit in the final quarter of 2024 also slumped, the filing showed, dropping 38.4% year-on-year to US$107.6 million.
SMIC’s fourth quarter (Q4) revenue, meanwhile, grew 31.5% to reach a total of US$2.2 billion, it added.
Unaudited revenue for the whole of last year reached US$8 billion, up from US$6.3 billion in 2023.
Looking forward, the firm said it anticipates sequential revenue growth of 6% to 8% during the first quarter (Q1) of this year.
SMIC also said that “based on the premise that there are no significant changes in the external environment”, it expects revenue growth in the year ahead “to be higher than industry average in the same markets”.
Geopolitical tensions
Computer chips – used in everything from refrigerators and vacuum cleaners to smartphones and electric vehicles – now occupy a crucial position in the global economy.
In particular, competition over the most advanced chips needed to power applications involving complex artificial intelligence has emerged in recent years as a key point of contention between Beijing and Washington.
Experts have long considered China to be lagging behind the US in the race to secure sufficient access to cutting-edge semiconductors.
But the shock release last month of an AI chatbot developed by Chinese firm DeepSeek, apparently at a fraction of the cost needed for US-based OpenAI to produce its ChatGPT tool, has suggested that US curbs have not been entirely successful.
The ability of Chinese firms to develop AI products also could ease pressure on domestic chipmakers in their efforts to manufacture large quantities of the most advanced semiconductors.
Still, SMIC is likely to encounter persistent headwinds this year, with the return of Donald Trump as US president already exacerbating trade tensions between the world’s top two economies.
Moreover despite Beijing pouring tens of billions of dollars into the domestic semiconductor sector, the technical performance of SMIC and China’s other top firms still lags that of TSMC, the Taiwanese giant responsible for over half of global chip production.
TSMC said last month that its net profit rose 57% year-on-year in Q4 of 2024, beating expectations.