(Yicai) May 9 -- After a rough year and a half for earnings, China’s chipmakers may be turning the corner thanks to the increasing demand for consumer gadgets such as smartphones and personal computers.

First-quarter net profits at China’s 153 listed semiconductor firms rose by an average of 11 percent from a year earlier, compared with a 52 percent slump in the same period of last year, according to data from Wind Information. Revenues managed a 32 percent uptick, versus a 9.2 percent drop a year ago.

China shipped 69.3 million smartphones in the first quarter, a 6.5 percent year-on-year gain, according to International Data Corporation figures. Market researcher Canalys also predicts green shoots in China’s PC market this year and annual growth of 3 percent next year.

But the chip industry is expected to remain in the recovery period at least until the end of the first half of this year, and profits are unlikely to improve significantly for the time being, a market source told Yicai. Only 25 of the 153 chipmakers had net profit in excess of CNY100 million (USD13.8 million) in the March quarter.

Chip demand from the new energy sector has climbed for several years, industry insiders noted, adding that downstream demand, spurred by the boom in artificial intelligence, will likely replace new energy as the main demand driver for the semiconductor industry.

Demand is also expected to rise as AI-generated content models, such as OpenAI’s ChatGPT, are adopted across industries, according to an executive in the telecoms, media, and tech sector. AI’s fast-growing need for basic hardware is key to the chip sector’s prosperity, he added. 

Editor: Futura Costaglione