The demand for smartphones and personal computers has decreased significantly
SMIC said that the severe restrictions caused by the recent quarantines in China, along with the ongoing war in Ukraine, have caused the demand for smartphones and personal computers to decrease significantly. Even the global crisis of the shortage of chips does not affect these conditions; Because the company’s factories in Shanghai are forced to operate at reduced capacity.
SMIC CEO Zhao Haijun told analysts that demand for smartphones and PCs and home appliances has fallen sharply. Currently, SMIC is the largest contract chip manufacturer in China and the fifth largest chip manufacturer in the world, with a market share of 5.3% last year.
According to TechSpot, Zhao claims war in Ukraine It is partly the reason for this stagnation; Because many companies have stopped selling their products in Russia; While Ukrainian citizens have also reduced their unnecessary expenses.
However, strict quarantines In China, it has had the greatest impact on SMIC customers; As the CEO of this company has claimed, Chinese smartphone sellers will reduce the production of their products by 200 million units this year, and as a result, their orders for chip manufacturing will decrease. Smartphone chips only account for 29% of SMIC’s total production capacity; While this figure was 50% last year.
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China quarantines will also affect SMIC production; Because this company has several factories in Shanagai, which has been able to keep them active only thanks to its special closed system. Reports indicate that about 60% of the workers of these factories sleep in the workplace and live there. Although SMIC is taking steps to mitigate the impact of quarantines and raw material prices, the company still expects its production to decline by 5% in the second quarter. It has been considered, this company achieved significant financial results in the first quarter. The company managed to achieve a revenue of 1.84 billion dollars in the first quarter of 2022, which has grown by 67% compared to last year. The net profit of this chip maker was 447 million dollars in the first quarter of this year, which has increased by 182% compared to the same period last year.