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China's largest chip manufacturer, the Semiconductor Manufacturing International Corporation (SMIC) surged to the third place in the global ranking of contract chip manufacturers according to data from research firm TrendForce. At the top of the list is TSMC, which commanded more than half of the market and accounted for 61.7% of the sector's revenue during this year's first quarter. SMIC has been under strict US sanctions to prevent the Chinese military from acquiring advanced chips, and according to TrendForce, growth in local orders enabled it to overtake GlobalFoundries and the Taiwanese chip maker United Microelectronics Corporation, or UMC.
China's SMIC Rakes In $1.7 Billion In Revenue In Q1 To Account For 5.7% Of Global Contract Chip Manufacturing Market
According to the data, SMIC earned $1.7 billion in revenue during the first quarter, which allowed it to rank third among the world's largest contract chip manufacturers. This marked a rare win for the Chinese firm which had to deal with the impact of US sanctions on its ability to manufacture and sell advanced chips. TrendForce's data shows that the $1.7 billion revenue enabled SMIC to capture 5.7% of the global market, which led to to beat UMC and GlobalFoundries.
In the previous quarter, UMC and GlobalFoundries commanded 5.4% and 5.8% of the global market, respectively. GlobalFoundries' share marked a considerable drop, as it stood at 5.1% during the first quarter. This was unsurprising, given the firm's decision to stop development of process technologies smaller than 10-nanometer.
The firm took this decision in 2018 as it struggled with cost control, and in its earnings call for Q4 2023, management had shared that some customers, particularly those in the "communications infrastructure and data center" industries, were migrating to "single-digit nanometers."
On the other hand, TrendForce believes that SMIC benefited from an uptick in local Chinese demand. Some of the popular products include integrated circuits, image sensors and display panels for smartphones. This enabled it to sequentially grow its revenue by 4.3% to capture the third spot in the global semiconductor contract manufacturing industry. The research firm adds that the current quarter could also prove to be a good one for SMIC since an upcoming Chinese shopping season can further stimulate demand for consumer electronics and other products to allow it to retain the third spot.
At the top of the food chain is TSMC with $18.8 billion in revenue. TSMC's business is seasonal, with the first quarter typically being slow as its customers build their inventories later during the year. In Q4, TSMC commanded 61.2% of the market and this grew slightly to 61.7% in Q1 2024.
Among the top ten contract chip manufacturers, four companies gained market share while two lost share. Those that gained were TSMC, SMIC, UMC and the Shanghai based foundry HuaHong Group. Samsung and GlobalFoundries were the only firms that lost market share.
SMIC shared its first quarter earnings last month, which saw it miss profit expectations and report a 68.9% annual profit drop to $71.2 million. However, its $1.75 billion Q1 revenue marked a 20% annual growth and beat consensus estimates of $1.68 billion.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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