The outlook followed strong third-quarter results, released on Thursday after the market close, with revenue rising to US$2.38 billion and a gross margin of 22 per cent, as downstream clients accelerated the shift to home-grown supply chains amid geopolitical tension.<\/p>\n
Quarterly revenue rose 7.8 per cent quarter on quarter, surpassing management’s earlier forecast of 5 to 7 per cent. Gross margin also exceeded guidance.<\/p>\n
SMIC’s monthly capacity expanded to 1,022,750 standard 8-inch-equivalent wafers in the third quarter, up from 991,250 in the previous quarter. Its capacity utilisation rose to 95.8 per cent, up 3.3 percentage points from the previous quarter.<\/p>\n
As the only fab in mainland China capable of processing 7-nanometre-grade chips, SMIC is at the centre of China’s ambitions to overcome US technology restrictions.<\/p>\n
While its technology is years behind international leaders such as Taiwan Semiconductor Manufacturing Company, it is benefiting from surging demand for advanced chip foundry services from local fabless chip developers.<\/p>\n
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An aerial view of the Shenzhen branch of Semiconductor Manufacturing International Corporation. Photo: Getty Images alt=An aerial view of the Shenzhen branch of Semiconductor Manufacturing International Corporation. Photo: Getty Images><\/p>\n
Gross profit for the quarter climbed 17.7 per cent year on year to US$522.8 million, while profits attributed to SMIC rose 28.9 per cent year on year to $191.75 million. The company said the average selling price increased 3.8 per cent quarter on quarter, driven by a higher contribution from more advanced process nodes in its product mix.<\/p>\n
By geography, mainland China, the Americas and Eurasia accounted for 86 per cent, 11 per cent and 3 per cent, respectively, of third-quarter sales.<\/p>\n
Revenue from China rose 11 per cent quarter on quarter, as “the pace of supply-chain localisation continues to accelerate and the domestic market keeps expanding, leading customers to pull in more orders,” Zhao said, referring specifically to the consumer electronics category.<\/p>\n
By wafer size, 8-inch-equivalent products contributed 23 per cent of sales, while 12-inch wafers accounted for 77 per cent.<\/p>\n
For the first nine months of the year, unaudited revenue reached US$6.84 billion, up 17.4 per cent from a year earlier.<\/p>\n
For the fourth quarter, SMIC expected revenue to be flat to up 2 per cent quarter on quarter, with gross margin at 18 to 20 per cent.<\/p>\n
Zhao said the ongoing price hikes and shortages in memory chips had made smartphone makers more cautious about purchasing other semiconductor components.<\/p>\n
He added that expanding production capacity was a broader trend across China’s wafer foundry industry.<\/p>\n
“Next year, the pace of domestic capacity expansion will only accelerate, not slow down,” he said.<\/p>\n
Buoyed by the upbeat outlook, SMIC’s Hong Kong-listed shares briefly climbed to HK$77.3 in early Friday trading before reversing course to close at HK$73.5, down 2.8 per cent. Its Shanghai-listed stock fell 4 per cent, ending at 118.2 yuan.<\/p>\n
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