SMIC stock: China’s largest chipmaker has seen its profit cut in half, so why is its stock up 69% in 2025?
The U.S. trade war dealt a heavy blow to China’s largest chipmaker, Semiconductor Manufacturing International (SMIC), dragging its 2024 profits down 45%. Yet, the stock has surged 69% in 2025.
The rally comes on the back of Beijing’s stimulus as China's leader Xi Jinping pushes to hit 5% GDP growth at any cost. Meanwhile, SMIC’s unaudited profits sank to $492.7 million in 2024, down from $902.5 million the year prior.
The company attributed its declining profitability to a drop in investment after former U.S. President Joe Biden tightened restrictions on China’s access to advanced U.S. semiconductor technology.
On Dec. 2, the Biden administration slapped export controls on 24 types of semiconductor manufacturing equipment and three types of semiconductor software bound for China.
Biden also added 140 Chinese companies to the Commerce Department’s Entity List, blocking their access to critical U.S. technology. With the embargo still front and center, Chinese semiconductor firms are increasingly leaning on domestic stimulus.
China's pivot
Last year, it became clear that Beijing’s stimulus wasn’t enough to heal its ailing economy—not after a collapsing property market, plunging foreign direct investment, and rising consumer debt levels dampened its growth prospects.
Policymakers responded with new monetary and fiscal measures to backstop the economy and improve investor confidence, which resulted in a broad boost to domestic stocks.
“China’s recent rally can be attributed to a blend of factors, with its economic stimulus having an overarching impact on the economy,” said Vaibhav Porwal, co-founder of investment manager Dezerv.
The combination of “rate cuts, property sector support and liquidity injections” helped stabilize China’s economy in the short term, he said.
In addition, Chinese President Xi Jinping recently re-engaged the country’s top tech and AI leaders, sparking hopes of renewed government support for the private sector, according to UBS.
The meeting was especially notable because it included Alibaba founder Jack Ma, who had spent years under the radar facing regulatory pressures.
“DeepSeek’s success in AI has revived investor hopes for broader AI adoption and increased enterprise demand in China. We see opportunities in internet platforms, IT hardware, data centers, and power infrastructure names,” UBS said following Xi’s meeting.
President Xi will attend Beijing’s upcoming parliamentary meeting, which is scheduled to begin on March 5. Policymakers are likely to keep their official GDP growth target unchanged at “around 5%.”