China's top chipmaker SMIC reports a 55% fall in quarterly net profit

BEIJING/SHANGHAI: China's largest chipmaker Semiconductor Manufacturing International Corp (SMIC) on Tuesday reported a 55% fall in fourth-quarter profit, missing analyst expectations as it cited weak global demand and fierce industry competition.

Unaudited profit attributable to owners of the company during the quarter came in at $174.68 million, down from $385.53 million in the quarter and missing the consensus estimate of $277 million, according to the LSEG poll of analysts.

Revenue for the quarter rose 3.5% to $1.68 billion, slightly above the consensus revenue estimate of 1.66 billion yuan in the poll.

For the full year, revenue was $6.32 billion, down from $7.27 billion in 2022. Net income fell to $902.5 million in 2023 from $1.82 billion in the previous year, SMIC said.

Through 2023, capital expenditure stood at $7.47 billion yuan. That compares with $6.35 billion for 2022, representing a 17.6% increase on the year.

It expects capital expenditure to be roughly flat this year compared with the previous year, it added.

The semiconductor industry entered a slump in recent years after a pandemic-driven shortage of chips turned into a glut as the economy slowed and demand for these products fell.

But there are signs that the industry may recover in the coming year due to increased demand for products that use semiconductors, such as smartphones and other consumer electronics.

SMIC expects a gross margin of between 9-11% in the first quarter of this year, compared with 16.4% in the fourth quarter of 2023.

The company entered the international spotlight last year when analysts said that the company had assisted Huawei in developing one of the most advanced chips ever manufactured domestically in China. This chip was used in Huawei's Mate 60 smartphone series released last August. - Reuters

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SMIC , China , semiconductor , profit


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