BEIJING (Reuters) – Semi-Mikanductor Manufacturing International Corporation (0981.HK), China’s largest contract chip manufacturer, reported a 38.4% year-on-year decline in profits for the four quarter.
According to LSEG data, profits attributable to SMIC owners reached $107.6 million in the October-December quarter, compared to analysts’ $1345 million estimates .
Revenues rose 31.5% to $2.2 billion, compared to market expectations of $2.18 billion, according to LSEG.
Smic’s business is overwhelmingly focused on mature node chips in home appliances and appliance products, with advanced manufacturing projects like Huawei’s smartphone chips representing only a small portion of revenue.
As US export controls limit access to advanced chipmaking technologies, Chinese foundries, including SMIC, have strengthened their focus on this segment.
This shift paid off, with Chinese manufacturers gradually gaining market share with mature node chips and challenging established players like Taiwan’s PowerChip.
Over the past few years, Smic has increased its capital investment, expanded its production capacity and strengthened China’s domestic semiconductor capacity.
Reflecting its aggressive expansion strategy, its capital expenditures skyrocketed from $4.5 billion in 2023 to $7.3 billion. The company invested an additional $7.333 billion in 2024, according to its latest revenue release.
Large quantities of spending narrowed profitability, and in 2023, the gross profit margin for 2023 fell to about 20%, when it exceeded 30% between 2023 and 2022.
Smic reported a total margin of 22.6% in the fourth quarter of 2024, compared to 16.4% the previous year.
(Reporting by Liam Mo and Brenda Goh, Editing by Louise Heavens)
