BEIJING, CHINA – DECEMBER 04: A logo hangs on the building of the Beijing branch of Semiconductor Manufacturing International Corporation (SMIC) on December 4, 2020 in Beijing, China. (Photo by VCG/VCG via Getty Images)
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Semiconductor Manufacturing International Corp. reported a decline in second-quarter revenue due to ongoing U.S. sanctions and a slow recovery in global chip demand.
Here are SMIC’s second-quarter results compared to Refinitiv consensus estimates:
- Revenue: $1.56 billion, vs. $1.55 billion expected
- Net income: $402.76 million, vs. $184.2 million expected
SMIC’s second-quarter revenue was $1.56 billion, a decrease of 18% from the $1.9 billion recorded in the same period last year. Net income was $402.76 million, a 21.7% decrease compared to the second quarter of 2022.
SMIC, China’s largest foundry, competes with TSMC and Samsung, but its technology is considered outdated. The company has faced U.S. sanctions since 2020, limiting its access to key foreign technology necessary for producing advanced chips at lower costs.
SMIC’s inability to obtain extreme ultraviolet lithography machines, which only ASML is capable of making, has further hindered its chip production capabilities. Additionally, a decline in demand for certain consumer product chips, such as memory, has impacted SMIC, TSMC, and Samsung.
According to the Semiconductor Industry Association, global semiconductor sales totaled $124.5 billion in the second quarter of 2023, a 4.7% increase from the previous quarter but a 17.3% decrease from the same period in 2022.
Recovery Underway
In the second quarter of 2023, SMIC experienced a 6.7% increase in revenue compared to the previous quarter and achieved a gross margin of 20.3%, consistent with the company’s guidance of a 5-7% revenue increase and a 19-21% gross margin range.
SMIC attributed the increase in quarterly revenue to the high capacity utilization of its 12-inch wafer fabs, while demand for its 8-inch wafers remained weak. The company’s utilization rate for 8-inch wafers was still better than the industry average.
SMIC expects further shipment growth in the third quarter, projecting a 3%-5% sequential increase in revenue and a gross margin range of 18%-20%.
The company anticipates better revenue performance in the second half of the year compared to the first half. It aims to strengthen technology R&D, develop new products quickly, expand capacity, and prepare for future growth.
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