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China's top chipmaker SMIC says smartphone, PC demand has 'dropped like a rock'

China’s top chipmaker SMIC says smartphone, PC demand has ‘dropped like a rock’

China’s top chipmaker SMIC says smartphone, PC demand has ‘dropped like a rock’
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A man visits a booth of Semiconductor Manufacturing International Corporation (SMIC), at China International Semiconductor Expo (IC China 2020) following the coronavirus disease (COVID-19) outbreak in Shanghai, China October 14, 2020. REUTERS/Aly Song

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SHANGHAI, May 13 (Reuters) – China’s top chipmaker Semiconductor Manufacturing International Corp (0981.HK) said on Friday it anticipates smartphone sales from its clients this year to fall by at least 200 million units due to the Russia-Ukraine war and China’s COVID lockdowns.

While SMIC previously had issues fulfilling orders due to high demand amid a global chip shortage, customers from the smartphone, personal computer and household appliance sectors were now canceling orders due to these two events, CEO Zhao Haijun told analysts after the company’s quarterly results.

Demand for such products “dropped like a rock” as sales in Russia and Ukraine were heavily impacted while China’s COVID lockdowns meant that companies had trouble delivering products or had to shut stores, he said.

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“This year we expect (demand for) smartphones to fall by at least 200 million units, and the majority of these 200 million are from our domestic Chinese phone makers. So many orders have been cancelled.”

This meant that the proportion of SMIC’s manufacturing capacity dedicated to smartphones and such products had fallen to 29%, he said, from around 50% previously.

His comments provide a glimpse into how Russia’s invasion of Ukraine and China’s attempts to stamp out COVID are impacting both global supply chains as well as consumer demand. SMIC, which has factories in Shanghai, has managed to keep these open through the city’s lockdown via closed loop management.

SMIC posted a 66.9% jump in first quarter revenue and said net profit rose 181.5% to $447.2 million.

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Reporting by Brenda Goh

Our Standards: The Thomson Reuters Trust Principles.

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