SMIC shows first quarterly revenue fall in 3 years as chip glut bites
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The global chip industry is struggling to work through an inventory glut.
PHOTO: REUTERS
SHANGHAI – Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) on Thursday reported its first quarterly drop in revenue in more than three years, as the global chip sector struggles to work through an inventory glut.
Revenue in the January-March quarter was US$1.46 billion (S$1.95 billion), down 20.6 per cent year-on-year and in line with analyst estimates. Net profit fell 48.3 per cent from a year earlier to US$231.1 million.
SMIC executives attributed the drop to weak demand, following a years-long chip shortage that led customers to build up excess inventories.
On an earnings call, SMIC co-chief executive Zhao Haijun said there was still a lack of clarity about prospects for recovery in the second half of the year.
Other chip companies have faced similar difficulties in recent months. A chip shortage that began in late 2020 caused a surge of demand for manufacturers like SMIC, but as sales of electronics slow, brands are now stuck with excess chip inventories.
Taiwan Semiconductor Manufacturing Co (TSMC) reported Q1 revenue down 5 per cent from the year prior, while the chip division of Samsung Electronics reported a record loss of US$3.4 billion in the same period.
In early October 2022, the United States Department of Commerce released a sweeping set of export controls aimed at containing advancement among China’s chip manufacturers.
The restrictions are further set to hamper SMIC’s ambitions for making advanced chips, analysts say.
Nonetheless, it is rapidly expanding capacity across China, announcing plans to build four new chip manufacturing plants since 2020. One plant in Shenzhen has entered mass production, while another is set to go into mass production later in 2023. REUTERS
