[September 4, 2023] – Semiconductor Manufacturing International Corporation (SMIC), China’s leading chipmaker, has significantly reduced its capital expenditures (capex) in the first half of 2024, despite a surge in semiconductor equipment spending by China overall.
SMIC’s H1 capex dropped from $12 billion in H1 2023 to $8 billion in H1 2024, while China’s total spending on semiconductor manufacturing equipment reached $25 billion this year, surpassing the combined spending of Korea, Taiwan, and the US.
The company’s reduced spending is attributed to the lack of availability of leading-edge equipment from Western suppliers due to political restrictions. SMIC’s H1 spending on buildings and facilities decreased from $1.07 billion to $363 million, and spending on machinery and equipment fell from $11 billion to $7.4 billion.
SMIC’s R&D spending also declined, reaching 10.1% of revenues in H1 2024 compared to 11.4% in H1 2023.
Despite SMIC’s cutbacks, China’s overall equipment spending is driven by approximately ten smaller foundries gearing up to manufacture legacy chips. According to SEMI, China is expected to spend $50 billion on back-end and front-end facilities this year.
This development highlights the complex dynamics within the global semiconductor industry, with China’s rapid investment in legacy chip production contrasting with SMIC’s challenges in accessing advanced technologies. The future of China’s semiconductor ambitions remains uncertain as the country navigates geopolitical tensions and technological restrictions.
