China's SMIC Q4 profit slumps 38.4%, misses estimates despite revenue growth

[Daniel Nenni]

BEIJING (Reuters) -Semiconductor Manufacturing International Corp., China's largest contract chipmaker, reported a 38.4% year-on-year fall in fourth-quarter profit. Profit attributable to owners of SMIC reached $107.6 million in the October-December quarter, compared with analysts' estimate of $193.45 million, according to LSEG data. Revenue rose 31.5% to $2.2 billion, compared to market expectations of $2.18 billion, according to LSEG.

SMIC's business remains overwhelmingly focused on mature-node chips for consumer electronics and home appliances, with advanced manufacturing projects like Huawei's smartphone chips representing only a marginal portion of its revenue.

As U.S. export controls restrict access to advanced chipmaking technology, Chinese foundries including SMIC have intensified their focus on this segment. The shift has paid off, with Chinese manufacturers gradually gaining market share in mature-node chips, challenging established players like Taiwan's Powerchip.

SMIC has ramped up capital investments over the past few years to expand its production capacity and strengthen China's domestic semiconductor capabilities. Its capital expenditure surged to $7.3 billion in 2023 from $4.5 billion in 2021, reflecting its aggressive expansion strategy. The company invested another $7.33 billion in 2024, according to its latest earnings release.

The heavy spending has squeezed profitability, with SMIC's gross margin declining to around 20% in 2023 from over 30% in 2021-2022.

SMIC reported a gross margin of 22.6% in the fourth quarter of 2024, compared with 16.4% a year earlier.

https://www.yahoo.com/finance/news/chinas-smic-q4-profit-slumps-093851375.html

 

[Barnsley]

When you cut your prices 40% isnt this where you end up?

 

[hasty2333]

Is SMIC state-owned or is it a private company like Huawei?

 

[Barnsley]

Is SMIC state-owned or is it a private company like Huawei?

I assume the local Govt have some inputs.

Its on Hong Kong Stock Market so should be majority private money , but really no ideA

 

[KevinK]

What did I say in this post back in Sept 2024 ?

HuaweiSMIC could risk profit to supply Kirin chip for Huawei Mate 70

Huawei Mate 70 series will soon step into the real world. The flagship lineup is getting support from all sides to result in huge success. But it seems a few Chinese suppliers including SMIC may face profit risks amid Huawei Mate 70 launch preparations...

semiwiki.com

Oh yeah ... I guess we're "seeing" the cost of producing chips at high litho costs and lower yields, for a cost-sensitive customer.

The real tell is what happens to SMIC revenues and profits if they put this Kirin chip into volume. We'll see.

 

[tonyget]

Revenue rose 31.5% to $2.2 billion, compared to market expectations of $2.18 billion, according to LSEG.

SMIC reported a gross margin of 22.6% in the fourth quarter of 2024, compared with 16.4% a year earlier.

So SMIC revenue beats market expectation，and gross margin also improved compare to last year

 

[tonyget]

BEIJING (Reuters) -Semiconductor Manufacturing International Corp., China's largest contract chipmaker, reported a 38.4% year-on-year fall in fourth-quarter profit.

It seems that there is an accounting difference in SMIC A share and SMIC H share. By SMIC A share’s accounting，the net profit fell 13.5% rather than 38.4%

值得留意是，A股的中芯按中国企业会计准则计，纯利仅按年跌13.5%，较H股的国际财报准则的38.4%跌幅轻，主要由于非控制性权益大增，影响国际财报准则入帐。

It is worth noting that the net profit of SMIC, an A-share company, fell by only 13.5% year-on-year according to Chinese Accounting Standards, which was less than the 38.4% drop of the H-share company according to International Financial Reporting Standards. This was mainly due to the significant increase in non-controlling interests, which affected the accounting under International Financial Reporting Standards.

中芯上季纯利跌近40%

中芯国际（981）去年第4季纯利1.08亿美元，按年下跌38.4%；全年纯利录得4.93亿元，按年减少45.4%，主要由于投资收益

std.stheadline.com

 

[tonyget]

首次突破80亿美元！中芯国际Q4营收增长31.0%，扩产致产能利用率下降至85.5% | 财报见闻

中芯国际2024全年收入首次突破80亿美元。净利润同比下降，主要是由于资金收益下降所致。由于新增产能并且相应产能验证需要时间，公司当季产能利用率以及出货量均受到影响。

wallstreetcn.com

Exceeding US$8 billion for the first time，SMIC's Q4 revenue increased by 31.0%

 

[KevinK]

Exceeding US$8 billion for the first time，SMIC's Q4 revenue increased by 31.0%

Increased revenues in 2024, but greatly reduced profits.

Chipmaker SMIC posts 45% profit slump in 2024 amid US-China trade tensions​

China’s top semiconductor manufacturer saw its annual profit last year hit US$492.7 million, down from US$902.5 million in 2023

Chipmaker SMIC posts 45% profit slump in 2024 amid US-China trade tensions

China’s top semiconductor manufacturer saw its annual profit last year hit US$492.7 million, down from US$902.5 million in 2023.

www.scmp.com

 

[Barnsley]

Increased revenues in 2024, but greatly reduced profits.

Chipmaker SMIC posts 45% profit slump in 2024 amid US-China trade tensions​

China’s top semiconductor manufacturer saw its annual profit last year hit US$492.7 million, down from US$902.5 million in 2023​

​

Chipmaker SMIC posts 45% profit slump in 2024 amid US-China trade tensions

China’s top semiconductor manufacturer saw its annual profit last year hit US$492.7 million, down from US$902.5 million in 2023.

www.scmp.com

When you slash your prices to gain revenue isnt this going to happen?

 

[KevinK]

When you slash your prices to gain revenue isnt this going to happen?

Or underprice leading edge chips, that have high fab depreciation costs, high allocated engineering costs, and poor yields.

 

[Fred Chen]

This seems to be mainly from mature-node (28 nm and higher) pricing for competition? Isn't their advanced process development officially stopped at 7nm (N+2)? They shouldn't be burning money there anymore(?)

 

[KevinK]

This seems to be mainly from mature-node (28 nm and higher) pricing for competition? Isn't their advanced process development officially stopped at 7nm (N+2)? They shouldn't be burning money there anymore(?)

I think it’s 3 things:
* Substitution of super-cost-sensitive domestic customers in place of international customers as China focuses silicon-buyers on home-grown supply.

Which has caused:
* Ugly competition at mature nodes
* And painful expenditures as they expand leading edge compactly in an inefficient way.

Their gross margins are anemic for a foundry. And I’m betting they have very high allocated engineering costs from their 7nm lines, even if they aren’t pushing new process development forward right now. Pretty sir they are still investigating beyond 7nm plus having to do far more sustaining engineering on 7nm than a TSMC due to yields and equipment issues - they have to fix on their own.