(Yicai) Aug. 28 -- The artificial intelligence boom is creating winners and losers in China’s consumer electronics industry. Profits are soaring at semiconductor firms, particularly those that make AI computing chips and and memory chips, while manufacturers of smartphones, cameras, and other devices are having to contend with higher component costs and softer demand.

Across the industry, profit surged 110 percent in the January to July period from a year earlier, contributing 9.3 percentage points to earnings growth at all industrial enterprises above a designated size, according to data the National Bureau of Statistics released yesterday. The integrated circuit segment was the main driver, soaring 1,850 percent to account for more than 80 percent of the industry’s bottom-line growth.

Corporate earnings reports paint a similar picture. Marketingforce Management, a Shanghai-based AI services provider whose clients include consumer electronics firms, saw net profit skyrocket 466 percent to CNY200 million (USD29.8 million) in the first half, while revenue more than doubled to almost CNY2 billion (USD297.6 million), the Shanghai-based company’s financial statement showed.

At the same time, many consumer device businesses are seeing profits shrink as component costs increase. Global smartphone shipments fell 6.7 percent in the three months ended June 30 from a year ago, down for the second straight quarter, according to the latest 5G/6G Industry Development Report released by the TD Industry Alliance. Chinese makers have logged steep declines, the report noted.

The impact of soaring chip prices is evident in the first-half results of Insta360. The smart imaging devices producer reported a 94 percent plunge in net profit to CNY30.4 million (USD4.5 million), despite revenue jumping 50 percent to CNY5.5 billion. Sustained price increases for double data rate and other memory chip drove up production costs and weighed on short-term profitability, the Shenzhen-based firm said.

Confronted by soaring costs and softening demand in some parts of the market, businesses across China’s consumer electronics supply chain are looking to expand in overseas markets to support their earnings growth.

Marketingforce has set up subsidiaries in Hong Kong, the United States, Singapore, and Japan, Senior Vice President Liu Huan told Yicai. It plans to further expand into Southeast Asia, the Middle East, Europe, South America, and other regions, develop local channel partners, and make overseas business a new growth driver, Liu pointed out.

China’s home appliance exports rose 5.9 percent by volume and 6.2 percent by value in the first seven months from a year earlier, according to customs data. Phone exports dipped 6.6 percent by volume but climbed 12 percent by value thanks to price hikes, while exports of audio and video equipment and related components jumped 13 percent by value.

Editor: Martin Kadiev