China’s top chip maker SMIC reports mixed second quarter earning results and warns of some chaos in chip sector
China’s top chipmaker Semiconductor Manufacturing International Corporation (SMIC), reported mixed quarterly results as the company faced a slowdown in demand for electronic products and warned it expects such headwinds to persist in the near future.
The Shanghai and Hong Kong dual listed company reported a total revenue of $1.9 billion for the June quarter, representing year-over-year increase of 41.6 percent.
Net profits came in at US$514.3 million under global accounting standards, down 25 per cent from the same period last year, compared with US$447.2 million in the previous quarter.
Gross profit margin rose to 39.4 per cent year-on-year from 30.1 per cent last year, compared with 40 per cent in the March quarter.
“A slowdown in demand for smartphones in particular has driven down prices for certain chips, ” said Zhao Haijun, co-CEO of the company.
His statement echo comments from other chip companies which have warned that a weakening global economy and a re-balancing of supply and demand might soon lead to a oversupply for some types of semiconductors.
Memory chip maker Micron Technology has adjusted its current-quarter revenue forecast citing slowing demand for PCs and smartphones, while GPU chip maker Nvidia has warned a slowdown in gaming business due to weak demand.
In a separate announcement, SMIC said its co-CEO Zhao Zhao Haijun would step down as an executive board member to focus on his managerial duties.
SMIC makes chips for clients such as Huawei and other smart device makers. The chips are widely used in smartphones, TVs, cameras, home appliances, industrial devices and in the automotive industry. The Huawei Kirin 710A is now in commercial mass production and comes pre-installed with the Pride Play4T.
In June 2019, SMIC delisted from the New York Stock Exchange after trading there for 15 years, but the company kept its listing in Hong Kong Stock Exchange.
Shanghai-based SMIC has a market capitalization of more than 300 billion yuan , its largest shareholders are all state-owned enterprise.
SMIC has already built a fabrication plant in Shanghai’s free trade zone that is capable of producing 28 nm and advanced 14 nm chips through a cooperation agreement with a Shanghai government-backed entity
According to a new report from Canadian research firm TechInsights, SMIC has achieved the ability to make 7-nm chips, despite having no access to cutting-edge extreme ultraviolet lithography systems