China’s largest chipmaker Semiconductor Manufacturing International Corp (SMIC) reported strong sales growth in the second quarter as customers rushed to place orders amid rising geopolitical tensions, company and board statements showed.

The Shanghai-based foundry’s revenue rose 22 percent year-on-year to $1.9 billion in the second quarter, according to financial results released Thursday. Profit was $165 million, down 59 percent from a year earlier but up 129 percent from the first quarter.

Zhao Haijun, co-CEO of SMIC, told analysts in a conference call on Friday that “due to disruptions and changes in the supply chain as a result of geopolitical tensions,” some customers have taken the opportunity to enter the industrial market, creating “additional demand” for the company.

The company’s share price in Hong Kong closed Friday up 5.3 percent at HK$16.64 (US$2.13).

SMIC, which made the 7-nanometer chip for Huawei Technologies last year, had a monthly capacity of 837,000 8-inch equivalent wafers in the second quarter, with capacity utilization rising to 85 percent from 81 percent in the first quarter, the highest since the third quarter of 2022.

In the past five quarters, around 80 percent of sales came from Chinese customers, while the share of sales from America and Eurasia rose to 16 percent and 3.7 percent respectively in the past quarter.

“Some foreign customers need to build up their inventories to stabilize their market share, hedge against market risks for geopolitical reasons and respond to the demand of the Chinese market,” Zhao said, adding that some customers had brought products back from the second half of the year to the first half.

Zhao forecast a quarterly sales increase of up to 15 percent.

“Particularly on certain 12-inch (300 millimeter) lines, capacity is tight as demand for localization has increased,” he said, providing new evidence that U.S. export restrictions may have accelerated the development of China’s chip industry.

Reports that Washington is considering even tighter restrictions on technology exports to China are casting a shadow over the country’s semiconductor industry. According to Bloomberg, the Biden administration has told the Netherlands and Japan that it will resort to the toughest trade restrictions available if companies like ASML continue to supply advanced chip manufacturing technology to China.

In the first half of the year, SMIC’s capital expenditure and construction costs totaled $4.5 billion, compared with $3.8 billion in the same period last year. The company said it will add about 60,000 12-inch wafer equivalents to the new capacity by the end of the year to meet growing customer demand. This is a faster expansion rate than the original plan of 30,000 to 50,000 12-inch wafer equivalents per year, Zhao said.

Zhao did not mention the impact of U.S. sanctions, but said SMIC had accelerated construction of the factory and was demanding faster deliveries from its suppliers.