The semiconductor industry has a new major player: China’s Semiconductor Manufacturing International Corporation (SMIC) has secured the title of world’s third largest chip foundry by revenue in the first quarter of 2024. This achievement comes amidst a period of strong domestic demand within China and highlights the country’s growing ambitions in the chipmaking sector.
Ranked by market share of major chip manufacturers in the world. Photo: Counterpoint
SMIC’s Rise to Third Place
SMIC’s ascent to the top ranks is a significant development. According to tech research firm Counterpoint, the company now holds a 6% market share in global chip foundry revenue, surpassing established players like GlobalFoundries and UMC of Taiwan. This growth can be attributed to several factors:
- Soaring Domestic Demand: China’s booming tech industry has fueled a surge in demand for domestically produced chips, bolstering SMIC’s sales.
- Strategic Focus: SMIC has prioritized expanding its production capacity and capabilities, focusing on chips used in smartphones, power management systems, and display drivers.
Giants Remain Ahead
Despite this impressive feat, SMIC still faces challenges. Industry leaders Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics hold a significant lead, with respective market shares of 62% and 13%. These companies possess a technological edge, having mastered the production of the most advanced chips.
The Road Ahead for SMIC
SMIC’s future hinges on its ability to bridge the technological gap with TSMC and Samsung. The company faces hurdles in acquiring the necessary equipment and expertise to manufacture the most cutting-edge chips. Additionally, ongoing trade tensions between the US and China could complicate SMIC’s access to vital resources and technology.
A Changing Landscape
SMIC’s rise to prominence signifies a shift in the global chipmaking landscape. China’s determination to become self-sufficient in chip production is a trend with significant implications for the future of the industry. As SMIC continues to grow, the competition for technological supremacy and market share is poised to intensify.
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