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For China’s Chip Champion, the Easy Part Is Over

China’s chip champion had some bumper years thanks to the pandemic. Now it has to grapple with two big problems at once: a drop-off in demand and intensifying geopolitical risks.

Semiconductor Manufacturing International China’s top contract chip maker, warned Friday of a chip downturn ahead after it reported slowing revenue for the quarter ending in June. The company’s sales in that April-June period rose 3.3% quarter on quarter. It expects growth to slow further between 0% and 2% this quarter. SMIC benefited enormously from the chip shortage of the past couple of years: Its revenue last quarter was more than double that of the same period in 2019.