SMIC shrugs off US curbs with record revenue outlook on tight chip supply

Semiconductor Manufacturing International Corporation (SMIC), China’s largest chip foundry, said on Friday that full-year revenue is on track to hit an all-time high of more than US$9 billion, as tight foundry capacity and supply-chain localisation keep its fabs running at full tilt.

“The iterative effects across the supply chain are continuing, which leads to a stronger-than-usual off-season. Our production remains in a state of supply falling short of demand,” co-CEO Zhao Haijun said on an earnings call. “Our revenue is set to reach a new level.”

He said the persistent supply squeeze, together with a rush by Chinese chip designers to localise production, had effectively erased the usual seasonal lull and kept SMIC’s factories running close to full capacity.

The outlook followed strong third-quarter results, released on Thursday after the market close, with revenue rising to US$2.38 billion and a gross margin of 22 per cent, as downstream clients accelerated the shift to home-grown supply chains amid geopolitical tension.

Quarterly revenue rose 7.8 per cent quarter on quarter, surpassing management’s earlier forecast of 5 to 7 per cent. Gross margin also exceeded guidance.

SMIC’s monthly capacity expanded to 1,022,750 standard 8-inch-equivalent wafers in the third quarter, up from 991,250 in the previous quarter. Its capacity utilisation rose to 95.8 per cent, up 3.3 percentage points from the previous quarter.