Semiconductor Manufacturing International Corp (SMIC), China’s top contract chip maker, said its profits declined by more than one-fourth in the fourth quarter, as falling consumer demand in smartphones and laptop computers weighs on the industry. During the three months ended December 31, profits fell over 26% year-on-year to USD425.5 million, the Hong Kong and Shanghai-listed foundry reported. Quarterly revenue reached USD1.6 billion, down 15% from the previous quarter, but up 2.6% from a year earlier. Total revenue for 2022 increased nearly 34% to USD7.27 billion, compared with USD5.44 billion in 2021. SMIC said in November that it expected weaker demand for consumer electronics to weigh on its business outlook through the first half of 2023.
Global smartphone shipments last year fell 11% to fewer than 1.2 billion units, the lowest in a decade, according to research firm Canalys. Personal computer shipments declined 15%, according to Counterpoint Research. Around the world, the semiconductor industry has been facing strong headwinds, with global semiconductor sales dropping nearly 15% year-on-year to USD130.2 billion in the fourth quarter, according to the Semiconductor Industry Association (SIA). Intel posted a 20% slump in revenue in 2022, while Samsung Electronics saw quarterly profit shrink by more than two-thirds to an eight-year low in the last quarter of 2022. SMIC said the semiconductor industry is likely to remain at the bottom of the cycle in the first half of 2023, which could push the company’s first-quarter revenue down by as much as 12% compared with the December quarter.
As China’s front-running foundry, SMIC had begun using the 7-nanometer process to produce semiconductors since at least last year, according to Canada-based research firm TechInsights, putting the Chinese company a step closer to the levels of Intel, Samsung and Taiwan Semiconductor Manufacturing Co (TSMC). SMIC never publicly announced it is using the 7-nanometer process without using the highly advanced extreme ultraviolet machines made by Dutch chip equipment supplier ASML, which stopped exporting such equipment to China in 2019 under U.S. pressure. SMIC, which was added to the U.S. Commerce Department’s Entity List in late 2020, is currently building four mature 28-nm foundries across China, including one each in Shanghai and Tianjin, which are set to go online in the next five to seven years.
As of the end of 2022, the new fab in Shenzhen had entered production, while trial production had begun in another fab in Beijing, where mass production is expected to be delayed by one to two quarters owing to a delay in the procurement of certain equipment. SMIC said its monthly capacity increased to 714,000 8-inch equivalent wafers last year, while total capital spending amounted to USD6.35 billion. It said the increased budget was to prepay for equipment procurement for its four new wafer foundries, which would provide additional capacity equivalent to 340,000 12-inch wafers per month, the South China Morning Post reports.
