Over the years, SMIC, as the most technologically advanced wafer company in mainland China, has also occupied a certain position in the global wafer foundry market, but it has always ranked first in the world, behind TSMC, Samsung, UMC and GF.
There is a big gap with TSMC and Samsung, which are the first and second in the world, and not much worse than UMC and GF, which are the third and fourth in the world, but they have not been able to surpass. However, SMIC recently officially announced that it has achieved a major historical transcendence.
Recently, SMIC announced its financial results for the first quarter of 2024, with revenue increasing by 23.4% year-on-year to 12.59 billion yuan. In the same period, Taiwan's UMC achieved revenue of $1.71 billion, and the U.S. company GF achieved revenue of $1.57 billion.
SMIC's revenue is $1.74 billion in U.S. dollars, which has surpassed UMC and GF.
In the global wafer foundry market, Samsung is not a pure wafer foundry enterprise because of its many businesses, and if Samsung is counted, SMIC ranked third in the world in the first quarter, and a pure wafer foundry is the second in the world.
A few years ago, the global market was in a period of core shortage, and at that time, the major wafer foundries were making a lot of money, because there was no shortage of orders at all, and the production capacity was all fully loaded, and many orders were scheduled, and some even had to wait for more than half a year.
But suddenly, the situation has changed, starting from 2022, directly from the lack of cores to surplus, the global chip market as a whole has entered a downward cycle, and TSMC, which ranks first in wafer foundry, is no exception, and its performance continued to decline last year.
It was not until the first quarter of this year that TSMC's performance achieved a slight year-on-year increase, which was the first to achieve a recovery.
After all, TSMC's strength is there, one alone occupies about 60% of the global market share, and is the world's leading foundry technology.
And Samsung is not good, although it ranks second in the world, but the gap with the first is not ordinarily large, the market share can reach 18% in previous years, when TSMC's market share was about 54%, equivalent to one-third of TSMC.
By the fourth quarter of 2023, Samsung's share fell to 11.3%, and TSMC rose to 61.2%, and the gap is getting wider.
In addition to TSMC and Samsung, the market share of other foundries is below 10%, UMC, which ranks third, and GF, which ranks fourth, often have a market share of around 6%6, and SMIC is slightly lower, often around 5.5%.
TSMC and Samsung are the first echelon, and UMC, GF, and SMIC are the second echelon. The reason why UMC and GF are so far behind TSMC and Samsung is that these two companies have announced that they have abandoned the research and development of advanced processes.
There may have been no mistake in the choice at the time, but now the impact is being felt as more customers are moving to advanced processes.
Our SMIC is not like UMC and GF, but the situation is not very optimistic, although it wants to impact the advanced process, after all, as the most technologically advanced wafer enterprise in the mainland, it shoulders the hope of the Chinese people to achieve high-end chips.
However, the West has been implementing restrictions on technology and equipment, especially the United States directly restricting the shipment of ASML's advanced lithography machines.
Although this has brought many difficulties to SMIC's development, fortunately, the domestic market is large enough, and SMIC has focused on increasing its mature process production capacity and expanding four wafer fabs successively, while on the other hand, it has not given up on advanced technology research and development.
Now the effect is beginning to appear, and after TSMC, SMIC has also achieved revenue growth, which is the first to pick up. According to SMIC, revenue growth in the first quarter was mainly due to urgent orders received in areas such as smartphones.
However, despite SMIC's revenue growth, net profit is under serious pressure, and the year-on-year decline is not small.
In fact, it is not SMIC's net profit that has declined, but the wafer foundry companies in the first quarter are basically the same, only TSMC's net profit has achieved a year-on-year increase of 9%, UMC's net profit has fallen by 35% year-on-year, and GF's has fallen by 47% year-on-year.
However, according to the performance sources, this shows that SMIC's path is getting more and more right, because in the current severe external environment, SMIC's main task is not to make huge profits, but to ensure the supply of chips in the domestic market.
In fact, SMIC has also done it, and the domestic market has accounted for more than 80% of its revenue. As the U.S. chip restrictions continue to increase, SMIC will provide more production capacity to China, and domestic companies will choose to make more domestic production.
Next, we are looking forward to the accelerated breakthrough of domestic advanced semiconductor equipment, so that SMIC can achieve advanced manufacturing processes.