Benefiting from the continuous recovery in semiconductor demand, SMIC, a leading wafer foundry in Chinese mainland, recorded four consecutive quarters of quarter-on-quarter revenue growth, showing that in the midst of geopolitics, SMIC remains one of the most promising companies in China's advanced chip manufacturing field.
On Tuesday, February 6, SMIC announced its financial results for the fourth quarter of 2023.
According to the financial report, the company's revenue in the last quarter was 16$7.8 billion, slightly above guidance and up from $16.1 in the third quarter of last year$200 million, an increase of 36%, with a gross margin of 164%, in line with the guidance, to achieve a net profit of 1$74.7 billion, beating analysts' expectations by $1$48.6 billion.
For the full year, SMIC achieved revenue of 63US$200 million, down 13% year-on-year, with a gross margin of 193%, which is basically in line with the company's guidance at the beginning of the year. Looking ahead to the first quarter of 2024, SMIC expects revenue to grow 2% sequentially and gross margin in the range of 9% to 11%.
From the perspective of revenue**, the proportion of revenue contribution by region has not changed much, and it is more surprising that SMIC's revenue in China accounted for 808%, down slightly from 84% in the third quarter; The U.S. area has a share of 129% to 157%, but still nowhere near the 253%；The share of Eurasia has increased from 31% to 35%。
In terms of wafer application categories, smartphones and computer tablets remain SMIC's most important revenues**, accounting for 30% of revenue in the last quarter2% and 306%, followed by consumer electronics (22.)8%), smart home (88%) and the automotive industry (76%）。
The latter three categories are mostly chips with lower technical thresholds and relatively lower profit margins. However, in the past year, due to sluggish demand for mobile phones and PCs, SMIC has turned to these low-end chip orders to support revenue. Some analysts believe that the current sluggish demand for these components has put pressure on SMIC's profit margins.
Classified by wafer size, 12-inch wafer revenue accounted for 742%, 8-inch wafer revenue accounted for 258%。In terms of production capacity, SMIC's monthly production capacity increased from 79 in the third quarter of 2023The equivalent of 575 8-inch wafers increased to 80 in the fourth quarter of 202355 pieces of 8-inch wafers are about equivalent, and the new production capacity in 2023 is 9150,000 pieces of 8-inch wafers are about equivalent. The capacity utilization rate in the fourth quarter was 768%, with an average annual capacity utilization rate of 75%.
Since the end of the epidemic, the demand for smartphones and PCs, which account for the majority of the industry, has continued to decline, and the semiconductor industry has experienced a long period of destocking.
SMIC was no exception, with an unaudited net profit of 9 for the full year last year$02.5 billion, up from $18.5 billion in the same period in 2022$17.9 billion, a decrease of 504%。The company explained in the financial report that the semiconductor industry was at the bottom of the cycle last year, with weak global market demand, high industry inventory, slow destocking, and fierce competition in the industry. As a result, SMIC's average capacity utilization rate decreased, the number of wafers sold decreased, and the product mix changed. In addition, the Group's financial performance declined due to the increase in depreciation compared to 2022 due to a period of high investment.
In terms of capital expenditure, capital expenditure was 23$40.9 billion, compared to $2.1 billion in the third quarter$3.5 billion was a slight increase, compared to about 74.4 percent of capital expenditures for the whole of last year$700 million.
Today, according to ** citing sources familiar with the matter, SMIC will use existing equipment in the United States and the Netherlands to produce more advanced 5-nanometer chips. The production line will also produce Huawei's Kirin chips, which are used in Huawei's high-end smartphones.
In the fourth quarter of last year, Huawei's mobile phone shipments surged by 36%. Huawei was the only major mobile phone brand to see market share gains in the last quarter, according to data from consumer electronics consulting firm IDC, and another research firm, Counterpoint Research, also said that Huawei was the best-selling mobile phone brand in the Chinese market in the first two weeks of 2024.
According to the report, SMIC is expected to take over Huawei's most advanced AI processor chip, Ascend 920, and produce it in a 5nm process. But more advanced chips also mean additional production costs. It is reported that SMIC's 5nm and 7nm product costs are 40% to 50% higher than TSMC's products of the same level.
So far this year, SMIC's Hong Kong stock price has fallen nearly 21% due to the sluggish Hong Kong stock market.
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