SMIC posted a drop in second-quarter revenue on persisting weak chip demand

Semiconductor Manufacturing International Corp. posted connected Thursday a driblet successful second-quarter gross against a backdrop of ongoing U.S. sanctions and a sluggish betterment successful planetary spot demand.

Here are SMIC's second-quarter results versus Refinitiv statement estimates:

SMIC said that second-quarter revenue totaled $1.56 billion, down 18% from the $1.9 cardinal logged successful the aforesaid play of past year. Net income was $402.76 million, down by 21.7% from the $514.33 cardinal recorded successful the 2nd 4th of 2022.

SMIC is China's biggest foundry, manufacturing semiconductor chips that different firms design. The Chinese steadfast competes with the likes of Taiwan's TSMC and South Korea's Samsung, but analysts accidental its exertion is respective generations behind.

The Chinese foundry has been the people of U.S. sanctions since 2020. It was placed connected an U.S. commercialized blacklist that restricts its entree to key overseas technology, which would let it to nutrient cost-efficient precocious chips.

SMIC has not been capable to get utmost ultraviolet lithography machines, which lone Dutch steadfast ASML is presently susceptible of making. Without EUV machines, SMIC is incapable to nutrient precocious chips connected a ample standard astatine little costs.

An ongoing slump successful request for definite chips that spell into user products, specified arsenic memory, has besides badly impacted SMIC, arsenic good arsenic the likes of TSMC and Samsung.

The Semiconductor Industry Association said that global income of semiconductors totaled $124.5 billion during the 2nd 4th of 2023. This represents a 4.7% summation from the archetypal 4th but is 17.3% beneath the 2nd 4th of 2022.

In the 2nd 4th of 2023, SMIC revenues accrued by 6.7% quarter-on-quarter and logged a gross borderline of 20.3% — successful enactment with the company's guidance of a 5-7% gross hike and a 19-21% gross borderline range.

SMIC said quarterly gross accrued due to the fact that its 12-inch wafer fabs — processing facilities liable for producing semiconductors — met "relatively full" capacity.

"The capableness request of 12-inch were comparatively full, portion the lawsuit request of 8-inch were weak. The utilization complaint for 8-inch was little than 12-inch, but inactive amended than the manufacture average," SMIC said connected Thursday.

The Chinese steadfast expects shipments to summation further successful the 3rd quarter.

"Third quarter's gross is expected to turn by 3%-5% sequentially, and gross borderline is expected to beryllium successful the scope of 18%-20%," it added.

The institution expects its gross successful the 2nd fractional of the twelvemonth volition beryllium "better than that successful the archetypal half" and aims to "strengthen our exertion R&D and level development, verify caller products quickly, put the supporting capableness arsenic soon arsenic possible, and afloat hole for the adjacent circular of maturation cycle."