China's largest contract chipmaker SMIC reported a first-quarter revenue rise of 19.7 percent on Thursday, as its global customers rebuilt their inventories.
SMIC said in a statement that its revenue rose to US$1.75 billion (S$2.36 billion) for the three months through March, topping the US$1.69 billion (S$2.28 billion) forecast by analysts polled by LSEG.
The global semiconductor industry has shown signs of recovery from a post-pandemic era of slower growth.
"In the first quarter 2024, our global customers are more willing to build up inventory," SMIC said, adding that demand from some is expected to continue in the current quarter.
Global semiconductor sales rose by 15 percent to US$137.7 billion (S$186.3 billion) in the first quarter of 2024, the Semiconductor Industry Association said, with China experiencing a significant sales increase of 27.4 percent compared to the same period last year.
The boom in artificial intelligence (AI) has also led to a spike in demand for high-performance AI chips.
However, most of SMIC's manufacturing facilities are for making mature node chips, largely used in less-sophisticated electronic products like lower-end smartphones, meaning that it has not been able to benefit from the AI boom as much as international competitors such as TSMC.
Competition has also been fierce, especially around mature node chips, where companies including SMIC have built up capacities at a rapid speed. China's total integrated circuit output surged 40 percent to 98.1 billion units in the first quarter of 2024, official data showed.
However, other countries have expressed concerns over the cash China has been putting towards makers of high-tech products such as semiconductors, raising fears that it will cause overcapacity that could fuel a new wave of cheap exports.
SMIC came into the spotlight last year after teardown analysts revealed it had assisted Huawei in developing one of the most advanced chips ever manufactured in China.
Huawei's latest smartphone, the Pura 70, also features a chip produced by SMIC, a teardown of the phone showed.
Unaudited profit attributable to owners of China's largest chip foundry fell to US$71.79 million (S$97.16 million) from US$231.1 million a year before and below the $80.49 million expected by analysts polled by LSEG.
SMIC's capital expenditure was US$2.2 billion, compared to US$2.34 billion for the first quarter of last year.
