- The largest chipmaker in China, SMIC, reported an 80% drop in third-quarter profit as semiconductor challenges continue.
- SMIC serves as China’s biggest foundry, producing semiconductor chips designed by other companies.
- SMIC stated, “In the China market, the high product inventory problem that started in the third quarter of last year has been mitigated and the inventory has decreased to a relatively healthy level.”
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)
Vcg | Visual China Group | Getty Images
The chipmaker SMIC experienced an 80% drop in third-quarter profit due to global demand weakness impacting foundries.
Net income for the quarter ended September plunged 80% compared to a year ago — larger than the 64% drop posted in second quarter 2019, according to company figures.
Here are SMIC’s third-quarter results versus LSEG consensus estimates:
- Revenue: $1.621 billion, vs. $1.625 billion expected
- Net income: $93.98 million, vs. $165.1 million expected
SMIC posted revenue of $1.62 billion in the third quarter, down 15% year-on-year, and net income for that period was $93.98 million, far below analysts’ expectations.
SMIC serves as China’s largest foundry, manufacturing semiconductor chips that are designed by other companies. It is an essential part of Beijing’s ambitions to boost its domestic semiconductor industry and catch up with global rivals.
The ongoing slump in demand for certain chips has impacted SMIC, as well as other Asian rivals such as TSMC and Samsung.
Consumers’ cutting back on purchases of consumer devices due to inflation led to a surplus of chip inventories and falling memory chip prices.
SMIC, also manufacturing automotive chips, mentioned that inventories for such chips are “now in relatively high level after a short supply for three years” and caused major customers to “tighten their orders.”
SMIC stated, “After more than one year’s ups-and-downs in the market, customers have experienced the shift from aggressive expansion two years ago to defense this year.”
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