Free Shipping on orders over US$49.99

SMIC Revenue Soars as Chinese Market Sours


//php echo do_shortcode(‘[responsivevoice_button voice=”US English Male” buttontext=”Listen to Post”]’) ?>

Semiconductor Manufacturing International Corp. (SMIC) saw sales grow by more than 66% during the first three months of this year as the company warned of weakening demand in China, its home market.

While the Chinese government locked down cities such as Shanghai, SMIC’s headquarters, as part of a zero–Covid strategy, the company was still able to keep its fabs running at 100% utilization. China’s largest chipmaker shifted production to meet strong demand for semiconductors used in electric vehicles and advanced displays while consumer electronics tanked.

Smartphones and other consumer electronics previously accounted for as much as 50% of revenue for chip foundries like SMIC. During the first quarter of this year, that figure fell to less than 30% for the company.

“Smartphones, consumer products, PCs, and internet…they’ve dropped like a rock,” SMIC co–CEO Haijun Zhao told analysts on a conference call last week. “Some customers hold five months of inventory in the supply chain. Oversupply is very serious.”

The company has switched production to address shortages of power management ICs and AMOLED drivers as well as MCUs and parts for WiFi 6, where demand remains strong.

SMIC previously benefited from strong demand in China, which has been the world’s largest and fastest–growing market for chips. China’s domestic electronics companies turned to local suppliers such as SMIC amid a tech war between the U.S. and China. More recently, an inventory glut has emerged in China while demand in the U.S. and Europe remains strong, according to the company.

“We really see very quick recovery of the American markets, European markets, the overseas markets,” Zhao said. “We are seeing a static and over–inventory stage in the Chinese market.”

SMIC’s reliance on the Chinese market during the first quarter this year swelled to 68% of its total demand compared to 56% in the same period a year ago. The company’s sales to North America, its second–largest market, dropped to 19% of overall demand from 28% during the same period.

SMIC Q1 2022 sales YoY. (Source: SMIC) (Click image to enlarge)

The company’s most advanced process technology, 28–nm FinFET, accounted for 18.6% of SMIC’s sales in the fourth quarter of 2021. The company didn’t provide a breakdown of revenue by process technologies during the first quarter of this year.

SMIC reiterated its expectation to spend $5 billion in 2022 to expand existing facilities and roll out three new fab projects.

By comparison, the company’s largest rival, Taiwan Semiconductor Manufacturing Co., plans to boost capital expenditures this year to as much as $44 billion to meet demand the company believes could grow by up to 20% during the next few years. SMIC said it expects company sales to outpace overall growth in the foundry industry this year but didn’t provide specific details.

SMIC lost about six days of production during the first quarter as the Chinese government shut down cities including Shanghai as part of its “Zero–Covid” strategy. Further shutdowns are likely during the rest of the year as the spread of the pandemic continues, according to SMIC.





Source link

We will be happy to hear your thoughts

Leave a reply

AmElectronics
Logo
Enable registration in settings - general
Compare items
  • Total (0)
Compare
0
Shopping cart