SMIC Reports Decline in Fourth-Quarter Profit

Semiconductor Manufacturing International Corp. (SMIC) has announced a 55% decrease in its fourth-quarter profit. The decline is attributed to higher costs of materials and parts, which have impacted the company’s revenue growth.

Profit and Revenue Figures

In the fourth quarter, SMIC’s net profit dropped from $385.5 million to $174.7 million in comparison to the same period the previous year. Despite this decline, it exceeded expectations for profit, which were estimated at $146.0 million by analysts.

However, there was some positive news for SMIC, as revenue for the quarter increased by 3.5% to $1.68 billion, surpassing the FactSet estimate of $1.66 billion. The company’s gross margin remained steady at 16.4%, staying within its guidance range of 16% to 18%. Nevertheless, the cost of sales rose by 27% compared to the previous year.

Full-Year Performance

For the entire year, SMIC experienced a 50% decrease in net profit, amounting to $902.5 million. The company attributed this decline to weak global demand and high inventories in the semiconductor industry, which is currently at a low point in the business cycle. SMIC also acknowledged intense competition and a period of high investment.

In terms of revenue, SMIC reported a 13% drop for the full year, reaching $6.32 billion.

Future Plans and Forecasts

Looking ahead, SMIC disclosed that its capital expenditure for 2023 amounted to $7.47 billion. The company expects spending to remain relatively unchanged in the coming year. Additionally, SMIC forecasted mid-single-digit percentage revenue growth for 2024.

For the first quarter of 2024, SMIC anticipates a sequential revenue increase of up to 2% and a gross margin between 9% and 11%.