[News] Sales Decline Leads to Sharp Profit Drop for SMIC in 2023

2024-03-29 Semiconductors editor

SMIC, the leading semiconductor foundry in China, announced its financial results on March 28th. The company’s revenue for 2023 was USD 6.32 billion, a decrease of 13.1% compared to the previous year. However, the net profit for the full year plummeted by a staggering 50.4%, dropping to USD 903 million.

According to SMIC’s financial report cited by Sina Finance, SMIC’s gross profit margin for 2023 was 19.3%, with an average annual utilization rate of 75%, essentially meeting the initial guidance for the year. As of the end of 2023, SMIC’s total assets amounted to USD 47.8 billion. The asset structure remained robust, with an equivalent monthly capacity of 806,000 wafers for 8-inch production lines

Last year, SMIC’s revenue share from the China region increased from 74.2% to 80.1%, while revenue from the US region decreased from 20.8% to 16.4%, and revenue from the Europe and Asia region fell to 3.5%.

In terms of application categories, revenue from smartphone chip manufacturing dropped from 27% to 26.7%, while revenue from computer and tablet segments increased from 17.5% to 26.7%, and revenue from IoT and wearable devices decreased from 18% to 12.1%.

SMIC produced 6.074 million wafers last year, a 19.1% decrease year-on-year, with inventory increasing by 40.1% to 724,000 wafers. 8-inch wafers accounted for 26.3% of revenue, while 12-inch wafers accounted for 73.7%.

SMIC also announced its guidance for 2024, aiming for sales revenue growth not lower than the industry average, with a single-digit increase expected mid-year.

Additionally, the company plans to continue advancing its announced 12-inch plant and capacity construction projects in 2024, with capital expenditure expected to remain roughly the same as the previous year.

SMIC pointed out that the decline in revenue in 2023 was primarily due to a decrease in wafer sales volume. Additionally, the decrease in gross profit was attributed to lower capacity utilization, reduced wafer sales, and changes in product mix. Moreover, the group is in a high investment phase, resulting in higher depreciation compared to 2022.

Regarding the development of China’s foundry industry, TrendForce previously reported that from 2023 to 2027, propelled by policies and incentives promoting local production and IC development, China’s mature process capacity is anticipated to grow from 29% this year to 33% by 2027. Leading the charge are giants like SMIC, HuaHong Group, and Nexchip. Globally, the ratio of mature (>28nm) to advanced (<16nm) processes is projected to hover around 7:3.

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(Photo credit: SMIC)

Please note that this article cites information from Sina Finance.