Semiconductor Foundry Giant SMIC’s Q1 Net Profit Decreases by 44% YoY
On May 11th, Semiconductor Manufacturing International Corporation (SMIC), a prominent Chinese semiconductor foundry company, released its financial report for the first quarter. The company reported an operating revenue of 10.209 billion yuan ($1.47 billion), which is a decrease of 13.9% compared to the previous year’s figures. Additionally, its net profit was reported at 1.591 billion yuan, indicating a year-on-year decline of 44%.
SMIC’s performance change was due to a decrease in wafer sales volume and capacity utilization. In Q1, the proportion of smartphone revenue decreased by 5.2% YoY to 23.5%, while IoT revenue accounted for 16.6%, down 1.1% YoY, consumer electronics revenue accounted for 26.7%, down 1.1% YoY, and other revenues accounted for 33.2%, up by 7.4% YoY.
In Q1, SMIC’s revenue was primarily generated from China, accounting for 75.5% of the total revenue. This represents a slight increase of 0.1 percentage points compared to the previous year. The proportion of revenue from the US also increased by 0.6 percentage points year-on-year, reaching 19.6%. However, there was a decrease in the proportion of revenue from Europe and Asia by 0.7 percentage points to reach only 4.9%.
The management team of SMIC has stated that they anticipate higher capacity utilization and shipment volume in the second quarter compared to the first. They also expect a 5% to 7% increase in sales revenue, despite an expected decrease in average wafer prices due to changes in product mix. The gross margin is projected to be between 19% and 21%.
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SMIC has several advantages, including mature processes, production capacity, and services. The company has invested more than 100 billion yuan in building chip factories with mature processes in Beijing, Shenzhen, and Shanghai. Once all four of the company’s under-construction 12-inch wafer fabs are operationalized, the monthly wafer production capacity can increase by 360,000 pieces.
SMIC has provided guidance for the full year of 2023, stating that it is uncertain how much recovery will occur in the second half of the year and there has not been a comprehensive market rebound yet. As a result, SMIC’s guidance for the full year remains unchanged: sales revenue will decrease by less than 10% compared to last year and gross profit margin will be around 20%.