SMIC expects an uptick in third quarter

Staff reporter

Semiconductor Manufacturing International (0981) expects its revenue to grow faster by up to 15 percent in the third quarter, after its income and gross margin during the previous three-month period beat estimates.

In the second quarter, the Chinese chipmaking giant saw its revenue rise 8.6 percent from three months ago to US$1.9 billion (HK$14.82 billion) and net profit surged 129 percent to about US$165 million, both above market expectations. The gross profit margin edged up by 0.2 percentage points to 13.9 percent.

SMIC cited the increased shipments of 8-inch equivalent wafers during the April-June period, which are mainly used to make low- and medium-end chips in smartphones and consumer electronics.

For the ongoing quarter, SMIC forecasts its revenue to rise by 13 to 15 percent from the three months ending in June and the margin to improve to a range of 18 to 20 percent.

However, the second-quarter net profit and gross margin are still 59 percent lower than a year ago and the gross margin is over 6 percentage points narrower from 20.3 percent.

SMIC said it will "embrace headwinds and opportunities" while continuing to dedicate in wafer manufacturing.

In contrast, smaller chipmaker Hua Hong Semiconductor's (1347) second-quarter net profit plunged 91.5 percent from a year ago and 79 percent from three months earlier to US$6.7 million, mainly due to the lower selling prices.

Hua Hong's revenue shrank by 24 percent year-on-year to US$478 million in the second quarter, despite a 4 percent rise from three months ago.

Its operating expenses shot up by 17.8 percent from a year earlier, largely due to the new fab Hua Hong Manufacturing and engineering wafer costs, the company said.

The company expects its third-quarter revenue to grow as much as 8.8 percent to US$520 million within three months.