China’s Semiconductor Manufacturing International’s Q2 revenue jumps, profit beats estimates despite decline

Semiconductor Manufacturing International (OTCQX:SIUIF) saw a 59.1% decline in net profit in the second quarter of 2024 but the numbers from the Chinese chip foundry beat estimates.

For the period ended June 30, profit attributable to the owners of the company fell 59.1% year-over-year to $164.57M, which beat estimates of $103.8M by analysts polled by LSEG, as per a report by Reuters.

Revenue jumped 21.8% year-over-year to $1.90B, which also beat estimates.

The company’s gross margin was 13.9% in the second quarter of 2024, compared to 20.3% in the second quarter of 2023.

“The Company’s revenue and gross margin both beat guidance in the second quarter. Revenue increased by 9% sequentially to $1.9 billion, of which, 8-inch equivalent wafer shipments increased by 18% sequentially to more than 2.11 million, and blended ASP declined by 8% sequentially due to the changes in product mix,” said the company’s management in the earnings release.

In April, Chinese tech giant Huawei Technologies launched its Pura 70 series, which features the Kirin 9010 chip. This was a follow-up to the Kirin 9000s, reportedly, made by Semiconductor Manufacturing International for Huawei’s Mate 60 Pro. Huawei surprised many people in August last year by quietly launching the new flagship phone, Mate 60 Pro. The company did not provide data on the power of the chip inside, but people speculated that it could be using a 5G capable chip. The chip, reportedly, made by China’s Semiconductor Manufacturing International had ignited concerns in the U.S. and raised questions about how it was possible, without the company being able to access critical technologies.

Semiconductor Manufacturing International does not yet produce the advanced 3nm process technology that its larger peer Taiwan Semiconductor Manufacturing (TSM) does.

Last month, TSM second quarter results beat estimates and third quarter revenue outlook was seen above estimates, amid a surge in demand for chips used for AI products. For the third quarter, TSM expects its business to be helped by strong smartphone and AI-related demand for its leading-edge process technologies.

SIUIF expects third quarter revenue to grow 13% to 15% sequentially, while it anticipates gross margin to be in the range of 18% to 20%.

In the second quarter, SIUIF noted that China accounted for 80.3% of total revenue, compared to 79.6% in the prior year period. America region’s share was 16% of total revenue down from 17.6% a year earlier.

Wafers amounted to 92.9% of total revenue, while the remaining 7.1% was from Others.

By size, 8-inch wafers accounted for 26.4% of wafer revenue in the second quarter of 2024, versus 25.3% in same period a year ago.

The 12-inch wafers amounted to 73.6% share of wafer revenue, compared to 74.7% in the second quarter of 2023.

By Application, Smartphone accounted for 32% of wafer revenue in the second quarter of 2024, rising from 26.8% of wafer revenue in the year ago period.

Consumer Electronics’ share was 35.6%, versus 26.5% of wafer revenue in the second quarter of 2023.