China chipmaker SMIC beats Q2 estimates despite steep profit fall

[Daniel Nenni]

People visit a booth of Semiconductor Manufacturing International Corporation (SMIC), at China International Semiconductor Expo (IC China 2020) following the coronavirus disease (COVID-19) outbreak in Shanghai, China October 14, 2020. REUTERS/Aly Song/File Photo

BEIJING, Aug 7 (Reuters) - Semiconductor Manufacturing International Corp reported a 59.1% fall in second-quarter net profit on Thursday though the result from China's largest chip foundry beat expectations.

SMIC reported $164.6 million in unaudited profit attributable to owners for the three months to June 30, topping the $103.8 million expected by analysts polled by LSEG, while revenue rose by 21.8% to $1.9 billion, also beating forecasts.

The results reflect signs of recovery in the global semiconductor industry after a prolonged slump that began in late 2022.
Global semiconductor sales rose 18.3% to $149.9 billion in the second quarter, with the Chinese market growing 21.6%, according to the Semiconductor Industry Association.

While SMIC primarily produces basic chips for less sophisticated electronics, it gained attention after a Huawei smartphone teardown revealed an SMIC-made chip among the most advanced produced in China.

However, advanced chip production remains limited, constraining SMIC's ability to fully capitalize on the AI boom driving growth for some rivals.

Industry leader TSMC reported a 40% increase in second-quarter revenue, largely attributed to strong demand for advanced chips in AI and high-performance computing.
SMIC forecast a 13% to 15% quarter-on-quarter revenue increase for the current quarter.

Capital expenditure was $2.25 billion in the quarter.

https://www.reuters.com/technology/smic-posts-59-fall-q2-profit-yet-beats-expectations-2024-08-08/

 

[Barnsley]

Thats the magic

 

[tooLongInEDA]

Am I alone in being somewhat baffled by these two statements ?

a) BEIJING, Aug 7 (Reuters) - Semiconductor Manufacturing International Corp reported a 59.1% fall in second-quarter net profit on Thursday though the result from China's largest chip foundry beat expectations.

b) SMIC reported $164.6 million in unaudited profit attributable to owners for the three months to June 30, topping the $103.8 million expected by analysts polled by LSEG, while revenue rose by 21.8% to $1.9 billion, also beating forecasts.

If - as I must assume - these relate to the same quarter, how could one "profit" fall by 59.1% and the other rise by around 60% ?

And what is "unaudited profit" exactly ? And why would any company be reporting unaudited figures here ?

But perhaps the "owners" are simply raking off more than their far share of the profits ? Seems to imply there are at least two tiers of shareholders/owners ...

 

[KevinK]

If - as I must assume - these relate to the same quarter, how could one "profit" fall by 59.1% and the other rise by around 60% ?

Not sure where you get the 60% rise ? It's a 60% rise in net profit over a survey of analysts' forecasts, but still down substantially vs the previous quarter.

 

[tooLongInEDA]

Not sure where you get the 60% rise ? It's a 60% rise in net profit over a survey of analysts' forecasts, but still down substantially vs the previous quarter.

Sorry - my mistake. The 60% fall was in fact 60% higher than the estimate.

However, that still leaves the curious fact that this company is apparently reporting *unaudited results*.

 

[KevinK]

However, that still leaves the curious fact that this company is apparently reporting *unaudited results*.

The SEC only requires yearly results to be audited. You don't see it spelled in the top of any 10Q / quarterly earning news releases, but the financial tables in most 10Q / quarterly earning news releases say "Unaudited" in the legend at the top or bottom. Guessing similar is tru on the Hong Kong exchange.