SMIC is heading towards a record revenue year, with the chip giant expecting annual revenue to exceed $9 billion for the first time, as its production lines are operating at full capacity to meet strong demand.

On November 14, during the latest earnings call, SMIC co-CEO Zhao Haijun stated that although customer inventory buildup slowed down in the fourth quarter, which is typically an industry off-season, the effect of industrial chain iteration continued, making the off-season not so quiet. The company's production lines remain in a state of supply shortage.

According to estimates, SMIC's annual sales revenue is expected to exceed $9 billion.

Zhao Haijun said that the current memory market is in short supply and prices have risen significantly. From the perspective of the foundry and memory industries, the speed of industry capacity expansion will only increase next year, not decrease.

SMIC's latest quarterly report shows that revenue in the third quarter was 17.162 billion yuan, up 9.9% year-on-year, and a gross profit margin of 25.5% saw a significant increase of 4.8 percentage points compared to the previous quarter. The capacity utilization rate climbed to 95.8%, approaching full production.

Key financial data are as follows:

Q3 Revenue: 17.162 billion yuan, up 6.9% quarter-on-quarter and 9.9% year-on-year; Revenue for the first three quarters: 49.51 billion yuan, up 18.2% year-on-year;

Q3 Gross Profit Margin: 25.5%, up 4.8 percentage points from the previous quarter; Gross profit margin for the first three quarters: 23.2%, up 5.6 percentage points year-on-year;

Q3 Net Profit Attributable to Shareholders: 1.517 billion yuan, up 43.1% year-on-year; Net profit attributable to shareholders for the first three quarters: 3.818 billion yuan, up 41.1% year-on-year;

Capacity Utilization Rate increased to 95.8%, up 3.3 percentage points quarter-on-quarter.

However, SMIC's management guidance for the fourth quarter shows that revenue will be flat to grow by 2% quarter-on-quarter, with a gross profit margin of 18%-20%. This means that with the capacity utilization rate already as high as 95.8%, the company expects a significant slowdown in revenue growth for the fourth quarter, and the midpoint of the gross profit margin of 19% will drop by about 6 percentage points from the 25.5% in the third quarter.

Zhao Haijun mentioned that the decline in SMIC's fourth-quarter performance guidance is mainly due to the traditional off-season and fluctuations in the mobile phone market. Due to the shortage of memory supply and rising prices, industries such as mobile phones and network communication equipment have been cautious in purchasing, leading to relatively conservative shipment forecasts for the next two quarters. He also revealed that to meet urgent orders related to memory and analog products, the company postponed some shipments of mobile phone products in the third quarter.

Original article: https://www.toutiao.com/article/7572411496399979046/

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