SMIC

The semiconductor industry has pressed the panic button. Unlike the chip crisis of 2020the new one has not been caused by a ‘perfect storm’ and has a first and last name: artificial intelligence. The push for this technology and the rampant construction of data centers has caused a stock out of all computer components. And if the world’s leading companies have been caught on the wrong foot, the Chinese ones are no exception. To the point that SMIC has confirmed the lean times. The Chinese industry has activated “crisis mode.” Crisis (don’t bother…). At this point, introductions are unnecessary. The RAM market is broken because the main players (Samsung, Micron and SK Hynix) have focused on creating memory for data centers. The reports point to an NVIDIA that would ‘pass’ on launching consumer GPUs this year because you need all possible wafers to create GPUs focused on AI. And after the SSD price risethe following can be the processors. A few days ago, a report from Reuters noted that Intel and AMD were beginning to notify Chinese customers to sit tight for new shipments of server CPUs. Because we always talk about NVIDIA as if it were the only one that creates components for data centers, but the chips Threadripper from AMD and Xeon from Intel are key parts of servers. According to Reuters sources, AMD has warned of an increase in delivery times from eight to ten weeks. And if we look at an Intel whose sales in China represent 20% of its general income, they point out that the price of the fourth and fifth generation Xeons are being rationed and, in addition, increasing the price by 10%. As with other components, they are not enough. From hope to victim. From Reuters they point out that AMD hopes that its relationship with TSMC will allow it to maintain the supply chain. The problem is that TSMC has to be working hard to supply all its customers. NVIDIA is putting pressureQualcomm also needs its premium range mobile processors this year and they are the ones that make Apple’s processors. SMIC -Semiconductor Manufacturing International Corp- is the main Chinese semiconductor company. It is the one that in recent years has gained prominence defy US restrictions and provide high-performance chips to Huawei. It is also the great hope, together with Huawei itself, to develop a GPU that can cope with NVIDIA. Zhao Haijun is the co-CEO of SMIC and has come forward to be anything but reassuring. Double reservation. SMIC is winning more money thanks to demand, but production capacity is limited, to the point that he considers that the industry has entered “crisis mode.” “Customers are hesitant to place orders because no one knows how many memory chips will be available and, therefore, how many orders for phones, cars or other products they will be able to build,” stated to investors. In fact, analysis from Counterpoint reflect this crisis with a figure: 2.5%. This is what would have lowered the shipping forecast for Honor, OPPO and Vivo phones for the coming months. That leads manufacturers to book with multiple suppliers, something Zhao has compared with the “double booking” behavior that can be seen on an airline. “If one airline is fully booked, passengers will immediately book another, making total bookings appear inflated even though actual demand has not increased proportionately.” In essence, if the production capacity is limited, but the companies that need chips reserve several suppliers that draw from the same source, it seems that the demand is beastly, although, in reality, this is not so much the case. The result is the same: the system collapses. Car-free highways. The note of the double reservation is not the only pearl that Zhao has left. It is evident that, whether they can handle the demand or not, it is good for SMIC because Chinese companies eager for chips to develop their AI (of which They don’t stop releasing new models) are purchasing components for their data centersand the executive commented that “no one has really thought about what exactly those data centers will do, but companies would love to build the total capacity of the next 10 years in just one or two years.” “It’s like building train stations and high-speed highways even if there aren’t that many cars that need them yet” – Zhao Haijun Three billion dollars. But it’s about being there, having a place at the table where the conversation that, they hope, will shape the future is being defined. American Big Tech plans burn more than 650 billion dollars this 2026 alone, a brutal increase if we take into account that the investment was 400,000 million in 2025. But if we look at the global estimate, with Alibaba, Bytedance or Tencent in the equation, the estimate is three trillion dollars for the next five years. Crisistunity. In the face of crisis, opportunity. We have already commented that AMD, Intel or NVIDIA they are saturated. Also Samsung, SK Hynix and Micron on the memory boat, and in that scenario is where there are certain companies that can begin to carve out a space for themselves at an accelerated pace. SMIC is one of them, satisfying the demand of local customers, but memory manufacturers such as CXMT or YMTC that They had never painted anything in the conversationyou have a chance. We already know that PC manufacturers such as Asus, Dell or HP are considering buying CXMT memories and that Lenovo has already started to do so. And it is not only a window for Chinese companies: Intel has an adventure with the Japanese SoftBank to stand up to Samsung and its HBM4 memories. And even ByteDance would be working on your own AI chip. The problem is the same one we have been talking about for a long time: no matter how much they increase production and no matter how much new players appear, they are all playing in the same game, that of allocating most … Read more