SMIC unable to keep up with demand amid shortage and sanctions

Even with the SMIC’s plants running at full capacity for several quarters, the company struggles to meet the demand, Zhao Haijun, co-CEO of China's largest chipmaker, said during a conference call after its latest quarterly results, according to a Reuters reports. According to the co-CEO, external sanctions will continue to affect the company's revenue growth. In the last quarter of 2020, the Chinese semiconductor manufacturer reported sales of USD 981 million, which is an increase of 16,9% from 2019. However, SMIC is now expecting its revenues to increase in the “mid-to-high” single digits in 2021. Zhao reportedly said that without these influences, the company would be able to maintain the growth momentum from last year. “Although we cannot control external forces, we will cultivate new possibilities and opportunities in the face of crisis and changes,” Zhao said. SMIC has been trying to build up its domestic manufacturing capabilities for some time now, but the sanctions imposed by the former Trump administration put a halt to US companies supplying equipment and technology to SMIC. However, work to solve this situation has not stopped and according to the report, the company remains in talks with suppliers and the U.S. government in hopes of obtaining licenses which would allow SMIC to purchase equipment and boost production. SMIC has previously stated that it looking to expand its capacity this year at its 12-inch fabrication plant by 10’000 wafers per month and by 45’000 wafers per month at its 8-inch fabrication plant. But the scheduling for this has taken a few hits due to the sanctions and de difficulties to acquire equipment. According to Zhao, most of the missing pieces wont be in place until the second hald of 2021 – which means that the expansion will not be able to contribute much to the company’s 2021 revenues.