China-based Semiconductor Manufacturing International Corp’s (SMIC) full-year capex commitment dropped sharply at end-June, with planned spending on machinery and equipment falling 36 per cent year-on-year to $7.4 billion.

In its interim report, the chipmaker noted at the end of Q2 total funds committed to capex for the year fell to $8 billion from nearly $12.3 billion a year earlier.

Its commitments for facilities and buildings construction plunged to $363.3 million from nearly $1.1 billion at end-June 2023, while the forecast outlay on capital contributions dropped 27.2 per cent to $122.4 million.

The only category to register a gain was intangible assets, which rose 27.8 per cent to $15.7 million.

SMIC’s R&D costs were up 6.8 per cent year-on-year to $369.8 million, but as a percentage of revenue the spending was down 1.3 percentage points to 10.1 per cent.

Increased restrictions
The drop in capex committed (not actually spent) likely stems from the company facing increased restrictions from a growing list of equipment makers in the US, the Netherlands and Japan.

ASML, an advanced chip equipment supplier based in the Netherlands, is under pressure from the Dutch government, which has indicated it likely won’t renew some of the company’s China export licences at the end of the year, which cover maintenance and spare parts for deep ultraviolet (DUV) lithography equipment.

Radio Free Mobile founder Richard Windsor highlighted a complete ban on after-sales service could cause additional serious problems for China in its quest to become self-sufficient in advanced semiconductors.

Existing export controls ban the export of ASML’s most advanced equipment to China.