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SMIC gains quarterly profits following strong demand for Huawei phones
SMIC – one of the leading chipmakers, has recently shared insights on the company’s financial performance in 2023 with surprising quarterly profits, due to strong demand for Huawei phones in the market. Yet, we have more to explore in this subject.
Semiconductor Manufacturing International Corporation (SMIC) is a well-known chip producer. Currently, the company has joined hands with Huawei to boost the Kirin and AI chipsets production and power up China’s self-sufficiency aspects.
SMIC: Profits
According to the information, SMIC has gained amazing results in the quarterly net income. Eventually, the chipmaker scored around $1.7 billion in the fourth quarter of 2023, which is an increment of 3.6% quarter-on-quarter.
The overall net income within three months reached $174.7 million which is quite ahead of the analyst estimations – $139.1 million. Ahead, the total revenue is $1.68 billion which again beats the projection of analysts for $1.66 billion.
Credit: Huawei Phones
A part of the credit for SMIC’s profitable results goes to the booming demand for Huawei phones in the China market. The company has introduced the Mate 60 series with a 7nm Kirin chip (made by SMIC), which led to an increase in the production of these chipsets.
It is a win-win situation for both companies as Huawei reached the top four ranks in China by Q4 2023, and made its way to the top spot in the first two weeks of 2024.
SMIC: Loss
Despite good quarterly profits and Huawei phone support, SMIC faced a significant decline of 50.4% in the 2023 net profit due to weak global market sales and intense chip industry competition. The information reveals that the revenue contribution from the U.S. dropped to 15.7% from 25.3 in Q4 2023.
On the other hand, the quarterly profit earnings went down from $385.53 million (2022) to $174.68 million. Thus, the company has seen a loss more than profitability for the complete 2023 year.
SMIC further shares its concerns over recovery expectations. The chip producer says that there could be a decline in the second half of the year as all the orders for the second half of the year would have been shipped in the first half.
At present, SMIC plans to integrate with Huawei to develop 5nm chips amid U.S. restrictions. The company has laid the production lines in Shanghai and may soon begin the work on this matter (Read the full story HERE).
Thus, we might see more unexpected outcomes in the time ahead. It would be worth seeing how SMIC will lead to better outcomes this year despite U.S. strict trading rules and guidelines.
(Source)
