AI demand drives triple-digit profit growth for Chinese chip foundries SMIC, Hua Hong

SMIC and Hua Hong Grace reported triple-digit profit growth in the June quarter, with net profits up 261.7% to US$479.2 million and 385.9% to US$38.6 million respectively, driven by surging AI demand. SMIC's revenue rose 36% year on year to US$3 billion, while Hua Hong's revenue hit a record US$717.5 million, up 26.8%, as both foundries run at full capacity to meet domestic needs for AI computing power.

AI demand drives triple-digit profit growth for Chinese chip foundries SMIC, Hua Hong SMIC, Hua Hong Grace results highlight how local foundries are aggressively running their plants at full capacity to meet domestic needs Ann Cao /author/ann-cao in Shanghai free of US export controls https://sc.mp/7rgfy?utm source=copy-link&utm campaign=3362825&utm medium=share widget . Net profits for SMIC and Hua Hong jumped 261.7 per cent and 385.9 per cent year on year to US$479.2 million and US$38.6 million, respectively, in the June quarter. the country’s largest foundry https://sc.mp/4ayso?utm source=copy-link&utm campaign=3358332&utm medium=share widget , said Thursday that revenue for the three months ending June increased 36 per cent year on year to US$3 billion, in line with the consensus estimate of US$2.9 billion compiled by Bloomberg. Meanwhile, revenue at its smaller rival Hua Hong reached a record US$717.5 million in the quarter, up 26.8 per cent from a year earlier, compared with the consensus estimate of US$702.7 million. The results highlight how local foundries are aggressively running their fabrication plants at full capacity to meet domestic needs, as tech giants and start-ups scramble for computing power to train their large models and power AI applications. “Looking ahead to the second half of this year, the industrial momentum and spillover effects generated by AI will persist, driving broad-based demand for integrated circuit manufacturing,” SMIC said in a filing to the Hong Kong stock exchange on Thursday, adding that it would flexibly allocate existing capacity and accelerate new capacity to ease supply constraints.