2023-05-12 16:41:02
The largest Chinese semiconductor manufacturer Semiconductor Manufacturing International Corp. (SMIC) reported regarding the first drop in quarterly revenue in the last three years. In the first three months of the year, the Chinese company’s revenue fell 20.6% to $1.46 billion. Net income decreased 48% compared to the first quarter of 2022 to $231.1 million.
Behind the decline is weak demand for SMIC products amid an oversupply of semiconductors in the market. As noted CNBC, SMIC is China’s largest and most important chip maker and is the country’s government is counting on to increase its semiconductor output to compete with Taiwan’s TSMC and South Korea’s Samsung. However, due to US sanctions imposed on SMIC in 2020, the company has lost access to the latest chip manufacturing technologies and the necessary equipment, so it operates on older technologies than its foreign competitors. Nevertheless, all these years, SMIC has been making good profits, and in 2022 it even reached record revenue figures.
More than 50% of SMIC’s revenue comes from the production of chips that are used in smartphones and other consumer electronics, and it was for these products that demand fell at the beginning of this year. In the first quarter, Samsung also suffered from a decrease in demand and falling prices for chips once morest the backdrop of overproduction of semiconductors, whose profit fell by 95% in the quarter. Meanwhile, SMIC’s forecasts for the second quarter are quite optimistic. The company expects revenue growth of 5-7% and generally forecasts a recovery in demand in the second half of the year.
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