AI Demand and US Sanctions Impacting China's Semiconductor Manufacturing Industry
Impact of US Sanctions on AI Aspirations
AI demand is dramatically altering the landscape of semiconductor manufacturing. The Semiconductor Manufacturing International Corporation (SMIC), China's leading foundry, is grappling with US sanctions that obstruct its ability to fully capitalize on the booming artificial intelligence (AI) market. Co-CEO Zhao Haijun expressed concerns during a recent earnings call, stating, “We can’t produce competitive products such as GPUs due to caps on manufacturing nodes.”
Record Revenue Amid Challenges
Despite these hurdles, SMIC reported record revenue in the third quarter, driven by high demand for legacy chips, especially for auto sectors and electric vehicles (EVs). Zhao predicted a 10% growth for the chipmaking industry in 2024, highlighting that this figure could drop to 4% without AI demand. He noted: “AI is a blessing for semiconductor manufacturing.
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