“Science and Technology Innovation Board Daily”, November 7 (Editor Song Ziqiao) On November 7, SMIC announced after the market that revenue for the first three quarters was 41.879 billion yuan, up 26.5% year on year; net profit was 2.706 billion yuan, down 26.4% year on year; after deducting non-net profit of 2.199 billion yuan, down 10.4% year on year.

In the third quarter, SMIC achieved revenue of 15.609 billion yuan, up 32.5% year on year, up 14% month on month; net profit of 1.06 billion yuan, up 56.4% year on year; after deducting non-net profit of 0.911 billion yuan, up 32.1% year on year.

SMIC management said that according to IFRS, in the third quarter, its revenue rose 14% month-on-month to 2.17 billion US dollars, reaching a record high of 2 billion US dollars in a single quarter for the first time.

Behind the year-on-month increase in revenue is an increase in production capacity for 12-inch products. According to reports, it added a 12-inch monthly production capacity of 0.021 million sheets in the third quarter, promoting further optimization of the product structure and increasing the average sales unit price. The overall capacity utilization rate continued to rise to 90.4% (in Q1 this year, its capacity utilization rate reached 80.8%, Q2 capacity utilization rate further increased to 85.2%, compared to 77.1% in the same period last year), and gross margin increased to 20.5% (18.3% in the same period last year).

Overall, SMIC's monthly production capacity in the third quarter increased 5.6% month-on-month to 0.88425 million wafers (8-inch equivalent wafers).

Looking ahead to the fourth quarter, SMIC's guidance is: revenue remained flat to 2% month-on-month in a single quarter, and gross margin was between 18% and 20%.

Furthermore, from the beginning of the year to the end of the third quarter, SMIC's net cash flow from operating activities was 12.264 billion yuan, down 25% year on year; total R&D investment was 3.895 billion yuan, up 7% year on year; R&D investment accounted for 9.3% of revenue, down 1.7 percentage points from the same period last year.

In terms of a single quarter in the third quarter, its capital expenditure was 8.376 billion yuan, down 45% year on year (15.31 billion yuan in the same period last year); net cash flow from operating activities was 9.018 billion yuan, up 67.2% year on year; total R&D investment was 1.274 billion yuan, up 2.8% year on year; R&D investment accounted for 8.2% of revenue, down 2.3 percentage points from the same period last year.

Take a closer look at the revenue composition

Focusing on SMIC's third-quarter revenue, the revenue share by application was: smartphones 24.9%, computers and tablets 16.4%, consumer electronics 42.6%, connectivity and wearables 8.2%, and industrial and automotive 7.9%, respectively.

Looking at the revenue contributions of each region, China accounted for 86.4% of revenue; the US region accounted for 10.6%, and Eurasia accounted for 3%.

By wafer size, 12-inch wafers accounted for 78.5% of revenue in the third quarter, while 8-inch wafers accounted for 21.5% of revenue.

Dongguan Securities previously released a research report saying that looking ahead to the second half of the year, SMIC is expected to benefit from the continued recovery of consumer electronics and smartphone platforms and the increase in product added value brought about by the continuous expansion of 12-inch production capacity. Business performance is expected to gradually recover, and long-term development momentum is abundant.

China Post Securities said that SMIC is continuing to build a 12-inch production capacity and is expected to maintain a capital expenditure of 7.5 billion US dollars for the full year of 2024. In the medium to long term, the global semiconductor industry is both cyclical and growing, and the short-term imbalance between supply and demand will not affect the medium- to long-term improvement of the industry. As demand for intelligent terminal equipment rises, the market size continues to rise, and all links in the industrial chain pick up step by step. Wafer processing is a key industry at the front end of the industrial chain, and capacity utilization is expected to gradually recover, achieving continuous and steady medium- to long-term growth.