Connect with us

Hi, what are you looking for?

Alive Business PlanAlive Business Plan

Investing

SMIC sees prolonged chip glut, signals cautious expansion outlook

BEIJING (Reuters) -Semiconductor Manufacturing International Corp, China’s largest chipmaker, warned on Friday that overcapacity in mature node chips will persist through 2025 and that it was turning cautious on building new capacity.

The global semiconductor industry has struggled to recover since late 2022, when pandemic-driven shortages turned into oversupply, with many end users, including automakers, still working through excess inventory.

Still, SMIC, which mainly produces mature node chips for less sophisticated electronics devices, and other Chinese chipmakers have ramped up production over the past years amid ongoing trade tensions with the United States and its allies.

“Industry utilisation rates are hovering around 70%, well below the optimal level of 85%, indicating significant overcapacity. This situation is unlikely to improve significantly, if not worsen further,” co-CEO Zhao Haijun said in the company’s third-quarter earnings call.

For the September quarter, SMIC’s revenue rose 34% to $2.17 billion, in line with market expectations of $2.2 billion, according to LSEG data.

SMIC attributed part of its sales growth to China’s localization push, which has prompted customers, especially international clients, to move chip production to domestic manufacturers.

However, Zhao said this substitution trend would slow in 2025 as domestic suppliers have already captured a substantial portion of the market.

The company’s annual capital expenditure surged to $7.3 billion in 2023, up from $4.5 billion in 2021.

Zhao indicated that current oversupply conditions would lead SMIC to take a more cautious approach toward capacity expansion.

“We have not announced any new projects, and we are not currently discussing any new ones,” Zhao said, marking a potential shift in strategy for China’s largest contract chipmaker.

SMIC’s net income rose by 58% to $148.8 million for July-September but fell short of analysts’ estimates of $199.71 million, according to LSEG data.

For the fourth quarter, the company expect its revenue to be flat, growing by 2% quarter-over-quarter.

SMIC shares rose by 3.7% in early trading in Hong Kong on Friday.

This post appeared first on investing.com
Become a VIP member by signing up for our newsletter. Enjoy exclusive content, early access to sales, and special offers just for you! As a VIP, you'll receive personalized updates, loyalty rewards, and invitations to private events. Elevate your experience and join our exclusive community today!

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    You May Also Like

    Latest News

    The Gateway Pundit, a far-right website, published a note from its editor on Saturday acknowledging that two election workers in Georgia did not engage...

    Latest News

    New majorities in Congress, particularly when the incoming party has a new leader, offer the rare chance for the institution to take a breath...

    Investing

    JAKARTA (Reuters) -Indonesia has asked Alphabet (NASDAQ:GOOGL)’s Google and Apple (NASDAQ:AAPL) to block Chinese fast fashion e-commerce firm Temu in their application stores in...

    Latest News

    Sister Stephanie Schmidt had a hunch about what her fellow nuns would discuss over dinner at their Erie, Pennsylvania, monastery on Wednesday night. The...



    Disclaimer: alivebusinessplan.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 alivebusinessplan.com