Chinese chipmaker SMIC has achieved a significant milestone, ranking as the world’s third-largest foundry by sales in the first quarter of 2024. SMIC Achieves Milestone as World’s Third-Largest Foundry against the backdrop of ongoing US trade restrictions.
The Shanghai-based company captured 6% of the global chip foundry market share according to a report by tech research firm Counterpoint. Industry leaders TSMC of Taiwan and Samsung of South Korea hold the top two spots with 62% and 13% market share respectively.
SMIC achieved success by focusing strategically on the domestic Chinese market. This shift helped offset the impact of US sanctions and navigate the typical seasonal slowdown experienced by the global semiconductor industry in the first quarter.
Financial results released by SMIC earlier this month reveal that 82% of their first-quarter revenue, totaling US$1.75 billion, originated from mainland China. This represents a rise from 75.5% in the same period last year and 80% in the previous quarter.
The company’s progress sparked debate, particularly about a Huawei smartphone processor. Last year, a teardown of Huawei’s Mate 60 Pro revealed a SMIC chip, prompting calls in the US for an investigation into potential violations of tech restrictions.
SMIC and Huawei have not commented on the matter. Meanwhile, Chinese social media users celebrate the domestically produced Kirin 9000s processor. They view it as a symbol of defiance against US sanctions.
The broader chip foundry sector experienced a 5% decline in revenue during the first quarter. Consequently, this decline resulted from sluggish demand for non-AI semiconductors. Specifically, these semiconductors are used in smartphones, IoT devices, and automotive applications.
However, the outlook for AI chips remains positive. Counterpoint analyst Adam Chang points to rising capital expenditure by cloud service providers and enterprises adopting AI hardware as evidence of sustained demand. This trend is expected to continue through 2025.
Nvidia leads in the AI chip market, exemplifying growth. Their data center GPU sales surged over 400% to US$22.6 billion. Nvidia controls over 80% of the global AI accelerator chip market, according to TrendForce. TSMC plans to increase its advanced packaging capacity by 150% to meet demand. SMIC Achieves Milestone as World’s Third-Largest Foundry, highlighting the competitive landscape.
SMIC Achieves Milestone as World’s Third-Largest Foundry, facing potential service cuts from Dutch supplier ASML. Counterpoint analyst Brady Wang acknowledges the potential impact. Spare parts availability would determine the disruption’s severity. Higher inventory levels could mitigate negative effects. Lower stockpiles could lead to significant disruptions in SMIC’s operations..