BEIJING, CHINA – DECEMBER 04: A symbol hangs at the construction of the Beijing department of Semiconductor Production Global Company (SMIC) on December 4, 2020 in Beijing, China. (Photograph through VCG/VCG by way of Getty Pictures)
Vcg | Visible China Crew | Getty Pictures
Semiconductor Production Global Corp. posted on Thursday a drop in second-quarter earnings towards a backdrop of ongoing U.S. sanctions and a slow restoration in world chip call for.
Listed below are SMIC’s second-quarter effects as opposed to Refinitiv consensus estimates:
Earnings: $1.56 billion, vs. $1.55 billion expectedNet source of revenue: $402.76 million, vs. $184.2 million anticipated
SMIC mentioned that second-quarter earnings totaled $1.56 billion, down 18% from the $1.9 billion logged in the similar duration of ultimate yr. Internet source of revenue was once $402.76 million, down through 21.7% from the $514.33 million recorded in the second one quarter of 2022.
SMIC is China’s greatest foundry, production semiconductor chips that different companies design. The Chinese language company competes with the likes of Taiwan’s TSMC and South Korea’s Samsung, however analysts say its generation is a number of generations in the back of.
The Chinese language foundry has been the objective of U.S. sanctions since 2020. It was once put on an U.S. industry blacklist that restricts its get admission to to key overseas generation, which might permit it to provide cost-efficient complicated chips.
SMIC has now not been in a position to acquire excessive ultraviolet lithography machines, which most effective Dutch company ASML is recently in a position to making. With out EUV machines, SMIC is not able to provide complicated chips on a big scale at decrease prices.
An ongoing hunch in call for for positive chips that cross into shopper merchandise, equivalent to reminiscence, has additionally badly impacted SMIC, in addition to the likes of TSMC and Samsung.
The Semiconductor Business Affiliation mentioned that world gross sales of semiconductors totaled $124.5 billion all the way through the second one quarter of 2023. This represents a 4.7% building up from the primary quarter however is 17.3% underneath the second one quarter of 2022.
Restoration underway
In the second one quarter of 2023, SMIC revenues larger through 6.7% quarter-on-quarter and logged a gross margin of 20.3% — consistent with the corporate’s steering of a 5-7% earnings hike and a 19-21% gross margin vary.
SMIC mentioned quarterly earnings larger as a result of its 12-inch wafer fabs — processing amenities chargeable for generating semiconductors — met “somewhat complete” capability.
“The capability call for of 12-inch had been somewhat complete, whilst the buyer call for of 8-inch had been susceptible. The usage price for 8-inch was once not up to 12-inch, however nonetheless higher than the trade moderate,” SMIC mentioned on Thursday.
The Chinese language company expects shipments to extend additional within the 3rd quarter.
“3rd quarter’s earnings is anticipated to develop through 3%-5% sequentially, and gross margin is anticipated to be within the vary of 18%-20%,” it added.
The corporate expects its earnings in the second one part of the yr will probably be “higher than that within the first part” and objectives to “make stronger our generation R&D and platform building, examine new merchandise briefly, prepare the supporting capability once imaginable, and entirely get ready for the following spherical of enlargement cycle.”