Huawei’s Chipmaker Warns Global Tensions Creating a Chip Glut
Semiconductor Manufacturing International Corp. warned that a hoped-for smartphone market recovery is another year out, and that geopolitical tensions are fomenting a serious glut in global chipmaking capacity.
That outlook clashes with more upbeat comments from Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. about mobile demand bottoming soon. China's largest chipmaker on Thursday reported its third consecutive fall in quarterly revenue, reflecting the depth of the downturn as well as Washington's broadening campaign to curb China's tech sector. That result disappointed investors who'd hoped the surprise popularity of Huawei Technologies Co.'s latest smartphones would help offset lost sales.
SMIC is one of the highest-profile companies at the heart of Beijing's ambitions to build a world-class tech sector less reliant on American innovations. It helped Huawei build the 7-nanometer processor for the Mate 60 Pro, regarded as a breakthrough for two companies the US blacklisted years ago over national security concerns. Riding nationalist fervor, the device sold out rapidly, taking business away from Apple Inc.'s iPhone.
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No analysts invoked Huawei during Friday's post-results briefing. Instead, SMIC executives spoke about how political tensions had spurred a global build-up of domestic chipmaking capacity. They didn't name any countries but the US, China, Japan and Europe are among those shelling out incentives to attract local manufacture.
“From a global perspective, capacity will be excessive. It will take a lot of time to digest the new capacities built in recent years,” SMIC co-CEO Zhao Haijun told analysts on a conference call.
SMIC's shares slid as much as 6.6%
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