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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 cancelling 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.
"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.
(Reporting by Brenda Goh)
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