Yangtze River Business Daily reporter Jiang Chuya
After a period of slump, SMIC (688981. SH) in the first quarter, the three core indicators of sales revenue, gross profit margin and capacity utilization rate all exceeded expectations.
Recently, SMIC released its financial results for the first quarter of 2024. During the reporting period, SMIC's revenue reached US$1.75 billion, up 19.7% year-on-year and 4.3% quarter-on-quarter, and the gross margin remained at 13.7%.
It is worth noting that SMIC's quarterly revenue surpassed UMC and GF for the first time, according to the financial reports released by these two companies, its first-quarter revenue of $1.71 billion and $1.549 billion respectively, both lower than SMIC. This also means that for the first time in SMIC's history, it has become the world's second largest pure-play foundry.
In recent years, SMIC has continued to expand production capacity and increase production capacity. In the first quarter of 2024, SMIC sold 1,794,900 8-inch equivalent wafers, with a capacity utilization rate of 80.8%, an increase year-on-year and quarter-on-quarter.
For the first time, quarterly revenue surpassed UMC and GF
In the first quarter of 2024, SMIC's revenue increased both quarter-on-quarter and year-on-year.
Specifically, SMIC's revenue in the first quarter of 2024 was $1.750 billion, in the fourth quarter of 2023 it was $1.678 billion, and in the first quarter of 2023 it was $1.462 billion. That is, in the first quarter of 2024, the company's revenue increased by 4.3% quarter-on-quarter and 19.7% year-on-year.
This is the first time that SMIC's quarterly revenue has surpassed that of UMC and GF, two major chip manufacturers, according to the financial reports released by these two companies, their first-quarter revenues of $1.71 billion and $1.549 billion, respectively, are lower than SMIC.
This also means that for the first time in SMIC's history, it has become the world's second largest pure-play foundry.
From a regional perspective, SMIC is more focused on serving the Chinese market. From the fourth quarter of 2022 to the first quarter of 2024, SMIC's market share in China increased from 60.9% to 81.6%, while its market share in the United States and Europe shrank, from 20% to 15%, and from 6% to 3.5% in Europe.
Thanks to the increase in shipments of domestic Android customers, the proportion of mobile phone business and consumer electronics business continues to grow. In the first quarter of 2024, SMIC's smartphone, computer and tablet, consumer electronics, connected and wearable, industrial and automotive businesses accounted for 31.2%, 17.5%, 30.9%, 13.2% and 7.2%, respectively.
SMIC said in the announcement that in the first quarter of 2024, global customers' willingness to stock up has increased, and the company's sales revenue will be $1.75 billion, an increase of 4.3% from the previous quarter. Gross margin was 13.7%, both better than guidance. In the second quarter, the demand for advance delivery from some customers continued, and the company's revenue guidance was a quarter-on-quarter increase of 5%-7%; With the expansion of production capacity, depreciation has increased quarter-on-quarter, and the gross margin guidance is 9%-11%. For the full year, SMIC said that the company's goal is to increase sales revenue faster than the average of comparable peers in the absence of significant changes in the external environment.
However, in terms of net profit, SMIC fell 68.9% year-on-year in the first quarter, only US$71.8 million (about 518 million yuan), lower than the market estimate of US$76.8 million. As for the decline in net profit, the company said that it was mainly due to changes in product mix, increased depreciation and decreased investment income.
Capacity utilization increased to 80.8%
SMIC is currently building up its production capacity on a large scale. In the first quarter of 2024, SMIC shipped 1,794,900 8-inch equivalent wafers, compared to 1,675,000 in the fourth quarter of 2023 and 1,251,700 in the first quarter of 2023, an increase of 7.2% quarter-on-quarter and 43.4% year-on-year.
At the same time, SMIC's monthly production capacity has also increased, from 805,500 8-inch wafer equivalent in the fourth quarter of 2023 to 814,500 in the first quarter of 2024.
At present, SMIC's new production capacity is mainly 12-inch, and in the first quarter of 2.25, SMIC's 8-inch wafer increased by about 532,300 pieces of 8-inch wafers in the first quarter, equivalent to about 241,000 pieces of 12-inch production capacity.
In the downward cycle of the industry with sluggish demand and inventory backlog, the capacity utilization rate is one of the most important indicators for the healthy development of semiconductor companies.
At SMIC's first-quarter earnings call, co-CEO Zhao Haijun revealed that the company's capacity utilization rate increased to 80.8%, and sales revenue reached US$1.75 billion, an increase of 4.3%, achieving growth for the fourth consecutive quarter. Capacity utilization was 76.9% in the fourth quarter of 2023, compared to 68.1% in the first quarter of 2023.
Compared with the same period last year, SMIC's capacity utilization rate in the first quarter of 2024 increased by 12.7 percentage points on the basis of adding 241,000 pieces of 12-inch production capacity.
With the increase in production capacity and capacity utilization, the willingness of the company's global customers to stock has increased. According to SMIC Co-CEO Zhao Haijun revealed at the earnings call, in the first quarter of this year, some urgent orders from customers such as smartphones and computers have been received, and the production capacity of the company's 12nm production line is close to full capacity.
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