TAIPEI -- China's top contract chipmaker Semiconductor Manufacturing International Co. on Thursday said its second quarter net profit jumped nearly 400% on the year, a stronger than expected result given the company's access to American technologies has been restricted since last year.
SMIC's revenue for the April-June period grew more than 43% on the year to $1.34 billion, while net profit surged 398.5% to $687.8 million. Gross margin was 30.1% in the period, compared with 26.5% a year ago.
The Chinese chip champion said in the stock exchange filing that its revenue is forecast to grow in the current quarter from the three months ending in June, while gross margin would rise to between 32% and 34%, its highest in years.
The results come as the global electronics and automobile industries battle an unprecedented chip shortage, a situation that has led to significantly higher prices for semiconductor production services. SMIC is a key production partner for many Chinese chip developers as well as U.S. chip developer Qualcomm.
"SMIC has been working in a difficult situation since we were added to the Entity List last year," SMIC co-CEOs Zhao Haijun and Liang Mong-song said in a joint statement, referring to Washington's trade restriction on the company. "We are still subject to impacts brought by the Entity List and we still see a lot of uncertainties."
SMIC said it has been working closely with suppliers to ensure business continuity and lower risks of disruption in "mature chip production technologies" since the U.S. blacklisting.
The company said its capacity expansion plans are still on track, implying it has already secured certain key production equipment and materials, though it added that regulatory approval processes, constrained supply chains and disrupted logistics amid the pandemic will "inevitably" affect the arrivals of chip tools.
SMIC's revenue from its home market, including Hong Kong, accounted for nearly 63% of its total during the June quarter, SMIC's stock filing showed. The figure was 55.6% in the January-March period. North America-based clients contributed around 23% of SMIC's total revenue, the second-largest source of revenue after China.
SMIC was added to the U.S. Commerce Department's Entity List last September, which bans the unlicensed exports of American technologies to the company without Washington's approval. This was a major setback for SMIC and China's tech advancement ambition, as the world's leading chip production tools are controlled by a handful of U.S. companies.
As a smaller rival to Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, SMIC is China's most promising contract chipmaker that shoulders Beijing's hope to help the country build a self-reliant and controllable chip industry.
However, its technology is still several generations behind those of its Taiwanese and South Korean rivals.