BEIJING, May 10 (Reuters) - SMIC, China's

largest contract chipmaker, said first-quarter revenue surged by

a fifth as both domestic and global customers rebuilt

inventories, but expressed caution about the outlook for demand

in the second half of the year.

Revenue came in at $1.75 billion, the company said on

Thursday. That topped an LSEG consensus estimate for a 16% gain

from a year earlier and marked a second quarter in a row of

growth after steep declines for much of 2023.

"Compared to the fourth quarter, our global customers were

more willing to build up inventory...while in the domestic

market, some customers managed to boost their market share and

wanted to lock in orders to solidify their position," Co-CEO

Zhao Haijun said during an earnings call on Friday.

Domestic customers account for roughly 80% of SMIC's

revenue.

Zhao added, however, that the outlook was unclear and SMIC

was monitoring whether its customers had overestimated demand

for the second half. He predicted a much milder rate of more

than 8% revenue growth for 2024 overall.

Shares in SMIC climbed 1.1% in Friday morning trade.

The company mostly makes basic chips largely used in

less-sophisticated electronic products but has gained more

attention after a teardown of a Huawei smartphone last

year revealed an SMIC-manufactured chip that is one of the most

advanced chips ever made in China. Huawei's latest smartphone,

the Pura 70, also features a chip produced by SMIC.

As tensions with the U.S. have escalated, China has poured

massive amounts of capital into bolstering its chip sector in

pursuit of technological self-sufficiency, leading to a huge

expansion in production capacity.

China's total integrated circuit output surged 40% to 98.1

billion units in the first quarter of 2024, official data

showed. That in turn has led to concern that excessive capacity

will fuel a new wave of cheap exports.

Zhao said he wasn't concerned about oversupply, adding that

SMIC's plants are currently operating at high utilisation rates

and are not facing a shortage of orders.

In contrast to the strong revenue growth, SMIC's unaudited

profit attributable to owners plunged 69% to $71.8 million,

undershooting forecasts as the company logged significant

depreciation costs for plant and equipment.