Chipmaker SMIC says tariff war sparking ‘rush orders’

China’s top chipmaker says clients are stockpiling inventory and asking to move up delivery of orders scheduled for later in the year due to concerns over U.S. tariffs and broader geopolitical tensions.

Zhao Haijun, co-CEO of Semiconductor Manufacturing International Corp., told investors and reporters yesterday that his company has seen a rush in orders in the first two quarters of 2025, as reported by NikkeiAsia.

“We see many [customers] want to ship the products to their export destinations as soon as possible, so they are building up inventories for the second half or even the full year. … They are hoping to prepare as many parts for their products in advance as soon as possible,” Zhao said. “Currently the ocean shipping is very crowded to fulfill all these rush orders as well. … But we don’t know how long this could last, given the dynamics of global uncertainties.”

U.S. President Donald Trump has started a broad tariff war against China and other nations, including imposing an additional 10% blanket tariff on Chinese imports.

Zhao said a rapid acceleration of local chip production has raised SMIC’s revenue to a record level, but warned of a price war and tariff uncertainties in the second half of 2025.

Efforts to boost local production in critical areas, including automotive applications, are bearing fruit, with some chip products now being produced in large volumes.

China has instructed domestic carmakers, including BYD, to use up to 25% locally made automotive chips to boost local self-sufficiency, Nikkei Asia reported earlier.

The industry reoriented toward the domestic supply chain at “a relatively rapid pace,” Zhao said. “Our Chinese customers’ market share expanded, and revenue from these customers grew 34%, year over year.”

Beijing’s economic stimulus measures have also encouraged clients to restock chips used in products like smartphones, notebooks, electric vehicles and bicycles, he said. “Our 8-inch wafer capacity is running at full utilization, beating the traditional seasonality for the first quarter.”

“However, we are worried that the rush orders for the first half of this year would result in soft demand in the second half, when many peers will have new capacity go online at the same time,” Zhao said. “That means there might be intensified price competition to fight for orders later in the year. … The trend for the price is unclear for the second half, but it will not go up.”

SMIC estimates its 2025 annual revenue will grow 6% to 8%, higher than the industry average in the same markets.

It plans capital investment in 2025 on a similar level as last year’s $7.3 billion, much higher than its foreign contract chipmaking peers, such as United Microelectronics Corp.

SMIC’s revenue for the last quarter of 2024 rose 31.5% to $2.2 billion, with operating profit nearly doubling from a year earlier. However, its net profit declined 38.4% to $108 million compared with the same period the previous year. The chipmaker attributed this to higher expenses from the startup of new plants.

Its full-year revenue for 2024 was $8.03 billion, up 27% from 2023, with net profit down 45%.

American rival Globalfoundries reported a net loss on Wednesday for the quarter ended Dec. 31. Its full-year revenue came to $6.75 billion, with a net loss of $262 million.

Nearly 90% of SMIC’s revenue from the last quarter of 2024 came from China. The figure for the full year was 85%. MDT/Nikkei Asia