SMIC Q2 Profits Drop Amid US Tech Restrictions

BEIJING: Semiconductor Manufacturing International Corporation (SMIC), China’s largest chipmaker, posted a significant drop in second-quarter profits on Thursday, as escalating US-China tensions over critical technologies continue to strain the global semiconductor industry.

According to the company’s filing to the Hong Kong Stock Exchange, SMIC reported a profit of $132 million for the April-June 2025 period — a 19.5% decrease compared to the same quarter last year. The earnings decline marks a sharp reversal from the first quarter of 2025, when the company’s profit soared by 161.9% year-on-year.

While Q2 revenue rose 16.2% year-on-year to $2.2 billion, it still saw a 1.7% drop compared to the previous quarter, reflecting slowing momentum amid export restrictions and rising geopolitical risks.

SMIC has been a central target of the United States’ tightening export controls aimed at curbing China’s access to cutting-edge semiconductor technologies. These include restrictions on the sale of advanced chipmaking equipment and high-performance chips that are essential for applications in AI, military, and next-generation computing.

The company’s struggles were further compounded when US President Donald Trump announced a 100% tariff on semiconductors from firms not investing in the US, directly affecting foreign chipmakers like SMIC.

Despite the external headwinds, SMIC remains a vital player in China’s push for semiconductor self-reliance — a priority sector for Beijing’s long-term industrial strategy. Notably, more than 84% of SMIC’s Q1 revenue came from domestic Chinese clients, highlighting its role in supporting China’s internal supply chains.

Looking ahead, SMIC expressed cautious optimism, forecasting a 5% to 7% increase in revenue for the third quarter, buoyed by continued domestic demand and Beijing’s backing for the sector.

The latest figures underscore how US-China tech decoupling is reshaping the global chip landscape, with major players like SMIC navigating a rapidly changing regulatory and economic environment.