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Semiconductor Manufacturing International Corp. (SMIC), China's largest contract chipmaker, this week announced its financial results for the first quarter of 2023. Despite crushing US sanctions, SMIC is now the world's second-largest pure-play foundry after TSMC. The company managed to outsell GlobalFoundries and UMC, two of the other pure-play foundries, which it used to trail for years. However, it still lags behind IDMs like Intel and Samsung. 

With $1.75 billion revenue for the first quarter, SMIC is ahead of the two other leading pure-play foundries, UMC (which earned $1.71 billion, up 0.8% YoY) and GlobalFoundries (which earned $1.549 billion, down 16% YoY). As a result, SMIC is the No. 2 pure-play foundry in the world for now. 

SMIC's revenue for the first quarter of 2024 was $1.75 billion, up 19.7% year-over-year from $1.462 billion in the same quarter a year ago. This increase is due to increasing orders and production of high-performance processors using the company's 2nd Generation 7nm-class fabrication process.

However, SMIC's profitability declined sharply from $231.1 million in Q1 2023 to $71.792 million in Q1 2024 despite increased utilization (80.8% vs 68.1%) and shipments (1.795 million 200-mm equivalent wafers vs 1.252 million 200-mm equivalent wafers). 

The primary reason for lower profitability is SMIC's massive capital expenditure hike from $2.235 billion in Q1 2024 to $1.259 billion in Q1 2023. Another possible reason is that the company is ramping up production of chips on its 2nd-generation 7nm-class fabrication process, which increases its costs but will naturally drive substantial long-term revenue increases. 

Semiconductor Manufacturing International Corporation (SMIC，00981.HK/688981.SH) is one of the leading foundries in the world and is the front runner in manufacturing capability, manufacturing scale, and comprehensive service in the Chinese Mainland. SMIC Group provides semiconductor foundry and technology services to global customers on 8-inch and 12-inch wafers. Headquartered in Shanghai, China, SMIC Group has an international manufacturing and service base, with 8-inch and 12-inch wafer fabrication facilities in Shanghai, Beijing, Tianjin and Shenzhen. SMIC Group also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan, China.

Editor：Vicky

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