Smic, China's largest contract chipmaker, has reported its best results ever, Posting a surge in revenue and net profit in the third quarter. In the latest earnings release, co-CEO Zhao Haijun said that global chip factory capacity is limited, Hefei IC but China chip factory efforts have basically met the strong demand of the Chinese market. Smic reported a 21.5 per cent year-on-year increase in third-quarter revenues. Net profit rose 137.6% from the same period last year, thanks to its full capacity and a global chip shortage that has pushed up foundry prices since last year.
Due to the chip shortage, European and American automotive chip companies offered to raise chip OEM prices by 20% in the fourth quarter of 2020. But it requires TSMC to shift more of its production capacity toward automotive chips. So TSMC again raised the price of its chips by almost 20 per cent. Soaring global chip prices have boosted SMIC's profits. Chip factories from Taiwan and the Chinese mainland, which are popular among global chip companies, because the two chip factories can operate normally because the two places have done better in epidemic prevention and control, Hefei IC so chip manufacturers are very bullish on Chinese chip manufacturers. By contrast, many countries in Europe and the Americas will have to implement stay-at-home measures by 2020. For several months, chip factories have not even been producing, and chip production capacity has plummeted, further deepening the global chip market's dependence on Asian chip production capacity.
It can also be seen that in many industries in China, self-reliant Chinese chips effectively meet some of the domestic demand for chips, China's chip demand accounts for about 40% of the country's chip capacity, and China can also be self-sufficient for 20%. Notably, BYD relies on its own IGBT chips for all of its needs, as well as to sell them to the outside world. In the mobile phone industry, Samsung and Apple's factories in India and Southeast Asia have suffered severe capacity cuts, and Apple has once again been forced to place all its orders with contract manufacturers such as Foxconn and Pegatron in mainland China. China's mobile phone companies also benefited from normal domestic production capacity, thus achieving an increase in market share.
By comparing these industries, we can clearly see that Chinese chip has provided strong support for the development of Chinese manufacturing industry, which means that China's chip industry has achieved great development. At present, China's chip production capacity has accounted for 15% of the world's total production capacity, ranking the third in the world. China's chip capacity under construction accounts for the highest proportion of new chip capacity in the world and is expected to be close to 20 per cent in three years' time, putting it in the top two in the global market.