[Salon] China’s SMIC downplays impact of Trump’s plan to impose 100% tariff on chip imports

[Chas Freeman <cwfresidence@gmail.com>]

China’s SMIC downplays impact of Trump’s plan to impose 100% tariff on chip imports

China accounted for 84.1 per cent of SMIC’s sales in the second quarter, compared with 12.9 per cent from the Americas

Wency Chen in Shanghai

8 Aug 2025

Semiconductor Manufacturing International Corp (SMIC), mainland China’s largest contract chipmaker, on Friday downplayed the potential impact of US President Donald Trump’s proposed 100 per cent tariff on imported chips, as stout domestic demand is expected to continue.

“Our overall capacity remains in a state of demand exceeding supply,” SMIC co-CEO Zhao Haijun said in a briefing after the company reported its second-quarter financial results. “[Even if growth in demand slows], there will be no significant impact on our utilisation rate.”

He said the company has already helped clients build up a certain level of inventory in the first three quarters of the year. Orders and shipments are expected to slow in the fourth quarter, which is the typical off-season for the industry.

Apart from citing SMIC’s limited exposure to the US market and production at its factories running at full capacity, Zhao pointed out that previous tariff disputes resulted in a less than 10 per cent impact on SMIC’s overseas clients.

His assessment reflected Shanghai-based SMIC’s strong confidence in its current global market mix, as China accounted for 84.1 per cent of the firm’s sales in the three months to June. Revenue share from the Americas fell to 12.9 per cent last quarter, from 16 per cent a year earlier.

SMIC reported second-quarter revenue of US$2.21 billion, up 16.2 per cent from US$1.9 billion a year earlier, but down 1.7 per cent from the previous quarter’s US$2.25 billion.

Net profit attributable to shareholders reached US$132.5 million last quarter, down 19.5 per cent from US$164.6 million a year ago. That also marked a 29.5 per cent decline from US$188 million in the first quarter.

Semiconductor Manufacturing International Corp’s workers inside a clean room at one of the company’s production facilities. Photo: SMIC

Wafer shipments, measured in standard 8-inch equivalent units, reached 2.4 million in the June quarter, with a utilisation rate of 92.5 per cent. Monthly capacity stood at 991,250 wafers.

The company’s Hong Kong-listed shares closed down 8.19 per cent to HK$48.66 on Friday.

Still, the chipmaker forecast revenue to increase from 5 per cent to 7 per cent in the third quarter, driven by both higher shipment volumes and an increase in average selling prices. Gross margin is expected to remain in the 18 per cent to 20 per cent range.

Zhao said that strong demand was expected to remain steadfast until at least October and that growth was sustainable. He pointed out that part of SMIC’s capacity was reserved for research and development, which meant that utilisation would “never exceed 95 per cent”.

The company had also not asked for customer feedback on Trump’s proposed 100 per cent tariffs on imported chips, he added.

Trump’s tariff plan would exempt companies that were manufacturing in the country or had pledged to invest in new US factories. Those would include major tech firms such as Nvidia, Taiwan Semiconductor Manufacturing Co, Samsung Electronics, SK Hynix, Micron Technology and Apple, which committed to invest another US$100 billion into US manufacturing.

Hua Hong Semiconductor, the mainland’s No 2 chip foundry, on Thursday reported second-quarter revenue of US$566.1 million, up 18.3 per cent from US$478.5 million a year earlier. Net profit was US$8 million, a 19.2 per cent increase from US$6.7 million a year ago.

Hua Hong’s Hong Kong-listed stock closed down 1.74 per cent to HK$44 on Friday.

Wency Chen

Wency tells stories that explore how technologies are reshaping society, with a focus on cross-border e-commerce, AI, the supply chain and others. Before joining SCMP, Wency contributed to