China's Largest Chipmaker SMIC Reports 80% Drop in Q3 Profit Amid Stagnant Demand, Raises Capital Expenditure Forecast to $7.5B
US sanctions and global demand weaknesses contribute to SMIC's profit plunge, despite managing product inventory issues in China and anticipating a modest Q4 revenue increase.
- China's largest chipmaker, Semiconductor Manufacturing International Co. (SMIC), reported an 80% drop in third-quarter profit, considerably larger than the 64% drop seen in the second quarter of 2019 due to weak global demand.
- SMIC's third-quarter revenue was $1.62 billion, a 15% decrease year-on-year, with net income standing at $93.9 million, significantly lower than the anticipated $165.1 million.
- The Beijing-based company has been grappling with U.S. sanctions limiting China's chipmaking technology and exports, adding to its troubles.
- SMIC reported that product inventory issues in China have been somewhat resolved, but inventory levels for American and European customers remain at historically high levels due to a continuous downturn in demand for specific chips used in consumer products.
- Despite these challenges, SMIC anticipates a modest revenue increase of 1% to 3% for the fourth quarter and has raised its annual capital expenditure forecast to $7.5 billion for 2023, an 18% rise from its prior spending, as it accelerates equipment purchasing to deal with the effects of U.S. sanctions.
Benzinga 
South China Morning Post 
CNBC 
CNA 
Reuters 
