2023-05-11 20:27:00
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Mykola Khizhnyak
Semiconductor Manufacturing International Corp (SMIC), China’s largest contract chip manufacturer, reported its biggest drop in quarterly revenue in more than a decade. The reason for this is a sluggish recovery in global demand for chips.
Image Source: Bloomberg
In the first three months of this year, SMIC’s revenue fell 20.6% year-over-year to $1.46 billion, beating the median estimate of analysts who had predicted a decline to $1.44 billion. The company’s quarterly profit fell 53%. .1% year-over-year to $267 million, higher than the consensus estimate of $186.6 million. SMIC’s decline in revenue came as major semiconductor manufacturers revised down their business plans.
Leading global semiconductor contract manufacturer TSMC has updated its revenue guidance for this year from slightly higher to lower in the low to mid single digits range. US chip giant Intel posted the biggest quarterly loss in the company’s history last month and said it still expects a 4-cent-per-share loss in the second quarter.
TrendForce forecasts that semiconductor manufacturers’ global revenue might fall by 4% in 2023 due to a slow decline in existing inventory, as well as lower orders from integrated circuit (IC) companies. “Demand for all types of mature and advanced process technology continues to decline”the research firm said in a recent note.
In the first quarter, SMIC’s capacity utilization rate, a key indicator of manufacturing activity, fell to 68.1%. Back in December it was 79.5%. In December, SMIC warned that it expects weaker demand for consumer electronics in the global market, which will affect its business outlook in the first half of 2023. “Overall, we do not see signs of a full market recovery”the company said Thursday.
Yet SMIC still expects to recover its capacity utilization and increase shipments of silicon wafers with chips in the second quarter, as well as revenue growth of 5% compared to the previous quarter. The Chinese contract manufacturer also said it would continue to pursue investment projects in line with its expansion plans.
SMIC expects mass production at its new 28nm manufacturing facility in Beijing to begin in the second half of the year. At the same time, the company continues to build a new factory in Shanghai. At the same time, the factory located in the southern technology center of Shenzhen started mass production of 28nm products.
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