On March 28, SMIC released its 2023 annual earnings report. SMIC's total revenue in 2023 will be 45.25 billion yuan, down 8.6% from last year. Most of them rely on integrated circuit wafer manufacturing and foundry business, reaching 40.875 billion yuan. net profit attributable to shareholders of listed companies was 4.823 billion yuan, a decrease of 60.3%. Judging from this sales data, we can analyze about three points of information.
First, the foundry of Huawei's Kirin chips may not be SMIC. Because according to Huawei's 2023 financial report released on March 29, Huawei's revenue in 2023 will reach 704.2 billion yuan, and its net profit will reach 87 billion yuan. In addition to Huawei's ICT infrastructure business, which accounted for more than half of its sales, Huawei's terminal business sales reached CNY 251.5 billion, an increase of 17.3% over the previous year.
The growth of terminal business sales is naturally inseparable from the contribution of Huawei Mate60. Since the launch of Huawei Mate60, sales have been very impressive. Then if the Kirin chip carried by Huawei Mate60 has a foundry, it will naturally be able to drive a significant increase in the performance of the foundry.
However, judging from the data released by SMIC, it has decreased by 8.6% from the previous year, which is obviously not in line with the law. Therefore, it is possible that SMIC is not the foundry of Huawei's Kirin chips.
However, according to some reports from foreign media, Huawei's Kirin chips are indeed manufactured in China. When there is no possible foundry for Kirin chips, then this answer may point to Huawei itself - its own research and development and manufacturing.
The second point of information is that even if SMIC is not the foundry of Huawei's Kirin chips, and its revenue will decline in 2023, SMIC still intends to continue to expand production under pressure in the next planning. Because there are actually many reasons for the decline in revenue in 2023, such as the weak global economy and sluggish market demand.
SMIC's wafer production in 2023 will reach 6.074 million pieces, but it will only sell 5.8667 million pieces. In the semiconductor industry, the main goal of many companies in 2023 is to destock.
But even so, SMIC still said in its 2024 business plan that the previously planned 12-inch factory and capacity construction plan will continue to advance. Of course, in the process of continuous high investment, the gross profit margin will be under great pressure. SMIC will continue to aim for sustained profitability and try to reduce costs and increase efficiency.
In terms of breakthroughs in chip technology, SMIC has completed the R&D task of 7nm before, and the upcoming R&D of 5nm will be launched. If SMIC can achieve a breakthrough in the research and development of 5nm chips, it will be exciting news for China.
The last point is that among the chips produced by SMIC, automotive chips occupy a large proportion. In 2023, SMIC's automotive chips will account for about 9.5% of total sales. In the 2023 annual report, SMIC disclosed 7 projects under development, of which the 0.11 micron high-voltage display driver platform project is mainly used in large and medium-sized screen display driver chips and automotive screen display driver chips.
Now that China has become the world's major automobile exporter, the development momentum of our automobile industry is becoming more and more fierce, but the autonomy rate of on-board chips is not high. You must know that the demand for chips in automobiles is huge, traditional fuel vehicles need 600~700 chips per car, and electric vehicles need more chips, reaching about 1600 chips per vehicle.
If it is a car with a higher level of intelligence, the demand for new chips can even reach 3,000 pieces per car. In 2020, the mainland's self-sufficiency rate of automotive chips was only about 6%, and although this proportion will increase significantly by 2023, it will only be about 11%.
That is to say, if all the chips in our domestic automobile industry are replaced by domestic ones, then there is still a very broad market potential. Of course, this is also a big challenge for SMIC, but if this challenge is completed, it can get more share of the domestic automotive chip market, which will play a great role in promoting SMIC's development.
It can also be seen here that the connection between the industries made in China is also very close. The development of an industry can also drive the related industrial chain, in addition to the chip industry, there are other components, such as electronic equipment, tires, batteries, raw material suppliers and so on.
Whether it is Huawei, SMIC, or other Chinese brands, they all hope that they can continue to make efforts in the next industry competition, develop better and better, promote each other, and drive the comprehensive upgrading of the domestic industry, which can benefit every one of our people.
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