SMIC, China's largest pure-play semiconductor foundry, recorded US$2 billion in revenue in a single quarter, with its utilization rate surpassing 90%. However, its relatively limited gross margin, trailing behind that of its peers, highlights the intense competition in China's semiconductor market despite strong demand from IC design houses.
On November 7, SMIC reported a strong performance for the third quarter of 2024, with revenue reaching US$2,171 million, marking a 14.2% increase quarter-over-quarter from US$1,901 million in the second quarter of 2024 and a 34.0% rise year-over-year from US$1,621 million in the same period last year.
The company's gross margin stood at 20.5%, up from 13.9% in the second quarter and slightly higher than 19.8% in the third quarter of 2023. The company's profit from operations was US$170 million, more than double the US$87 million reported in both the second quarter of 2024 and the third quarter of 2023.
Profit attributable to SMIC totaled US$149 million, down slightly from US$165 million in the previous quarter but significantly up from US$94 million in the third quarter of 2023.
According to SMIC's statement, revenue in the third quarter increased by 14% quarter-over-quarter, reaching a record US$2.17 billion. This achievement marked the first time the company surpassed the US$2 billion threshold in a single quarter. SMIC also added 21,000 units of 12-inch wafer monthly capacity, optimizing its product mix and raising the average sales price. As a result, overall capacity utilization improved to 90.4%, and gross margin rose to 20.5%.
For its fourth-quarter guidance, SMIC expects its revenue to remain flat or grow by up to 2% quarter-over-quarter, with gross margins projected to range from 18% to 20%.
Bloomberg Intelligence analyst Charles Shum released a note saying that SMIC's fourth-quarter sales guidance, indicating sequential growth of up to 3%, exceeds consensus expectations, signaling strong demand from local chip designers attracted to its competitive pricing. This growth is helping to offset the impact of reduced orders from US clients. However, the company's gross margin forecast remains at 20%, trailing UMC, suggesting limited pricing upside. The persistent slow recovery in China's consumer semiconductor market also continues to weigh on performance.
SMIC financial summary (US$m) | ||||||
Financial | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 | Y/Y for 3Q24 (%) |
Sales | 1,620.60 | 1,678.30 | 1,750.20 | 1,901.30 | 2,171.20 | 33.98 |
Gross profit | 321.6 | 275 | 239.7 | 265.1 | 444.2 | 38.12 |
RD expenses | 172.8 | 189.1 | 188.1 | 180.7 | 179.4 | 3.82 |
Operating income | 87.4 | 107.3 | 2.4 | 87.1 | 169.9 | 94.39 |
Profit | 94 | 174.7 | 71.8 | 164.6 | 148.8 | 58.3 |
Source: SMIC, November 2024
SMIC wafer sales share by application (%) | |||||
Application | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 |
Consumers Electronics | 24.1 | 22.8 | 30.9 | 35.6 | 42.6 |
Smartphone | 25.9 | 30.2 | 31.2 | 32 | 24.9 |
Computer & Tablet | 29.2 | 30.6 | 17.5 | 13.3 | 16.4 |
Connectivity & IOT | 11.5 | 8.8 | 13.2 | 11 | 8.2 |
Industrial & Automotive | 9.3 | 7.6 | 7.2 | 8.1 | 7.9 |
Source: SMIC, November 2024
SMIC sales share by market (%) | |||||
Market | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 |
China | 84 | 80.8 | 81.6 | 80.3 | 86.4 |
America | 12.9 | 15.7 | 14.9 | 16 | 10.6 |
Eurasia | 3.1 | 3.5 | 3.5 | 3.7 | 3 |
Source: SMIC, November 2024
SMIC wafer revenue share by size (%) | |||||
Size | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 |
12-inch | 74 | 74.2 | 75.6 | 73.6 | 78.5 |
8-inch | 26 | 25.8 | 24.4 | 26.4 | 21.5 |
Source: SMIC, November 2024
SMIC capacity metrics | |||||
Metric | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 |
Utilization rate (%) | 77.1 | 76.8 | 80.8 | 85.2 | 90.4 |
Wafer shipments (8-inch equivalent wafers) | 1,536,845 | 1,675,002 | 1,794,891 | 2,111,880 | 2,122,266 |
Source: SMIC, November 2024
