12/02/2026

BIZ & FINANCE THURSDAY | FEB 12, 2026

16

China consumer inflation rises less than expected

SMIC to add wafer capacity, warns of margin hit

BEIJING: China’s largest contract chipmaker, Semiconductor Manu facturing International Corp, warned of margin pressure this year as it expects a surge in depreciation costs due to a massive capacity expansion to meet strong demand for chips. The company’s Hong Kong-listed shares dropped nearly 4% yesterday after the company said it expected flat revenue growth in the current quarter from the previous quarter and warned of a 30% jump in depreciation costs this year. “We maintained high capital spending, which drove rapid revenue growth but also placed considerable depreciation pressure on gross profit margins,” SMIC’s CO-CEO Zhao Haijun said during an earnings call yesterday, citing efforts to capitalise on demand from Chinese chip designers. The semiconductor supply chain – previously based on overseas design and manufacturing for the Chinese market – shifted to Chinese production throughout the year, Zhao said. Analog circuits saw the fastest transition, followed by display drivers, image sensors and memory, microcontrollers (MCUs), and logic chips. SMIC would add about 40,000 12-inch equivalent wafers in new monthly capacity by the end of this year, Zhao said. It added 50,000 12-inch wafers in monthly capacity in 2025. Zhao said strong AI memory demand was squeezing supply to other sectors, especially mid-to-low end phones, causing memory shortages and cost increases for manufacturers. China remained SMIC’s biggest market, accounting for 87.6% of its revenue in the fourth quarter, while the U.S. contributed 10.3%. The company pre-purchased critical equipment, while ancillary equipment remained pending, creating timing mismatches, Zhao said. As a result, already-acquired equipment might not translate into full production capacity this year. SMIC reported a 60.7% jump in fourth-quarter profit on Tuesday, beating analyst estimates. Revenue rose 12.8% to US$2.49 billion, also topping forecasts. – Reuters

o Leaders unveil ‘New Year’s gifts’ to boost sluggish spending BEIJING: Growth in China’s consumer prices slowed last month and missed forecasts, official data showed yesterday, as leaders unveiled a batch of measures to boost sluggish spending during the upcoming Lunar New Year holiday. The world’s number-two economy has been hamstrung by lacklustre domestic consumption since the end of the Covid-19 pandemic, presenting a major hurdle to government growth targets. But this year’s nine-day public holiday – the longest in history – starts on Sunday and has been touted by officials as a chance to kickstart activity. In the latest blow to efforts to revive economic activity, figures from the National Bureau of Statistics (NBS) yesterday showed the consumer price index, a key measure of inflation, slowed to 0.2% on-year in January. That was well down from December’s 0.8%, which was the quickest in almost three years, and short of the 0.4% rise forecast in a Bloomberg survey. China’s vast economy has stagnated in recent years, despite a historic boom in exports. Authorities have adopted measures to boost consumption, including a subsidy scheme for household goods, but results have been muted. Consumer inflation is “likely to bounce back in February”, wrote Zichun Huang of Capital Economics. But the economist added that “with the imbalances between supply and demand set to persist, we doubt China’s deflationary

A woman uses her mobile phone as she rides an escalator at a mall in Beijing. – AFPPIC

The producer price index’s 1.4% year-on-year decrease was the slowest pace of deflation since July 2024. It was also slightly better than the 1.5 decrease forecast in the Bloomberg survey. Improvements were “concentrated in non-ferrous metals, likely reflecting recent volatility in global commodity markets”, wrote Huang. PPI expanded 0.4% month-on-month. That growth “suggests the deflationary pressure in the manufacturing sector may have become less severe”, wrote Zhang Zhiwei, president and chief economist of Pinpoint Asset Management. Official data released last month showed China’s economy grew 5% in 2025, meeting the government’s target but among the slowest rates in decades. – AFP

pressures will fade any time soon”. Officials vowed at a news conference in Beijing yesterday to enact further measures to encourage domestic spending. Local authorities across China have allocated 2.05 billion yuan (RM1.2 billion) to “directly benefit consumers” during the upcoming holiday, said Vice Minister of Commerce Sheng Qiuping. The “New Year’s gifts” will be distributed through vouchers, subsidies and traditional red envelopes containing money, state broadcaster CCTV said. Other data released yesterday suggested a recent easing of persistent deflation in the manufacturing sector. Prices at the factory gate – stuck in negative territory since October 2022 – fell at a slower rate last month, NBS data showed.

Stellantis mulls exit from Samsung EV battery deal: Reports SEOUL: Troubled automaker Stellantis is reportedly looking to exit a joint venture with South Korea’s Samsung SDI to manufacture electric vehicle batteries in the United States. The companies pledged in 2022 to pour billions of dollars into building batteries through jointly owned StarPlus Energy, capitalising on surging enthusiasm for planet-friendly electric vehicles. expected projections, Bloomberg reported on Tuesday evening. “We are continuing to have collaborative discussions with Samsung on the future of our StarPlus Energy joint venture,” Stellantis said in a statement. Samsung offered no further comment yesterday, referring AFP back to the earlier statement from Stellantis. Electric vehicle demand has been particularly soft in the United States – a key Stellantis market – where President Donald Trump’s administration has wound back policies designed to stimulate the market. Stellantis last week reported a US$26 billion hit after writing down the value of its EV operations, conceding it had overestimated sales.

The company was formed in 2021 through a merger of France’s PSA Group and Italian-American company Fiat-Chrysler. – AFP

The StarPlus Energy venture would make electric vehicle batteries at two massive plants based in the US city of Kokomo, Indiana.

But Stellantis – which owns popular brands like Jeep and Fiat – is now mulling options to cut its losses as it confronts gloomier than

ByteDance said to be developing AI chip BEIJING: China’s ByteDance is developing an artificial intelligence chip and is in talks with Samsung Electronics to manufacture it, two people familiar with the matter said, as the TikTok parent seeks to secure supply of advanced processors. ByteDance aims to receive sample chips by end-March, they said. build-out, making the deal particularly attractive, one of the sources said. The information about ByteDance’s in-house chip project is inaccurate, a spokesperson for the company said in a statement, without elaborating. Samsung declined to comment. The work would mark a milestone for ByteDance, which has long sought to develop chips to support its AI workloads.

short video, e-commerce and enterprise cloud services. The firm founded Seed in 2023 to develop AI models and promotes their applications. ByteDance plans to spend over 160 billion yuan (RM86 billion) on AI-related procurement this year, with more than half allocated to purchasing Nvidia chips, including H200 models, and advancing its in-house chip, one of the sources said. ByteDance executive Zhao Qi told employees at a January all-hands meeting that the firm’s AI investment would benefit all divisions, according to a fourth source briefed on the meeting. Zhao, who oversees ByteDance’s Doubao chatbot and its overseas version Dola, acknowledged the firm’s AI models lagged behind global leaders like OpenAI but pledged continued support for AI development this year, the person said. – Reuters

their own AI chips to reduce reliance on Nvidia, the dominant supplier of advanced chips essential for AI development. For Chinese tech companies, US export controls on advanced chip sales to China have also added urgency to develop their own AI chips. While Bytedance has yet to launch its own chip, its rivals Alibaba and Baidu are ahead in AI chip development: Alibaba last month unveiled its Zhenwu chip for large-scale AI workloads. Baidu sells chips to external clients and plans to list its chip unit Kunlunxin soon. The chip project, codenamed SeedChip, is part of ByteDance’s broader push to channel resources into AI development, from chips to large language models, betting the technology will transform its business portfolio spanning

The company plans to produce at least 100,000 units of the chip, designed for AI inference tasks, this year, according to one of the sources and another person. One of the sources said Bytedance is looking to progressively ramp production to up to 350,000 units. Negotiations with Samsung include access to memory chip supplies that are in exceptionally short supply amid the global AI infrastructure

The company’s chip efforts date back to at least 2022, when it began hiring chip-related staff in earnest. Reuters reported in June 2024 that ByteDance was working with US chip designer Broadcom on an advanced AI processor, with manufacturing planned to be outsourced to Taiwan’s TSMC. Global tech giants including Alphabet’s Google, Amazon and Microsoft have developed