A Semiconductor Manufacturing International Corp (SMIC) da China announced on Friday (9) which will avoid a price war in the industry and predicted sequential revenue growth in the current quarter of up to 15%. Co-CEO Zhao Haijun, who had warned of a price war in May, stated: “In fact, we have encountered a situation where some of our competitors with excess capacity are using low prices to attract customers. SMIC will not take the initiative to cut prices”, Zhao added during an earnings call on Friday.
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Zhao mentioned that the industry was experiencing some favorable trends that will continue in the second half of the year, including geopolitical tensions that are leading companies to switch to local semiconductor suppliers for the Chinese market.
SMIC predicted a 13% to 15% increase in revenue quarter-over-quarter for the current quarter. The company reported results on Thursday that exceeded expectations. In the three months ended June 30, SMIC reported an unaudited profit of $164,6 million attributable to owners, beating the $103,8 million average expected by analysts surveyed by LSEG.
Revenue increased 21,8% year over year to $1,9 billion, also beating forecasts and exceeding guidance provided on a quarter-over-quarter basis in May. However, net profit fell 59,1% year over year. Capital expenditures were $2,25 billion in the quarter.
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SMIC shares rose 7% in Hong Kong on Friday morning amid a broad market rally that lifted the benchmark index (HSI) by 2%.
The results reflected signs of recovery in the global semiconductor industry after a prolonged recession that began in late 2022. Global semiconductor sales rose 18,3% to $149,9 billion in the second quarter, with the Chinese market growing 21,6% , according to the Semiconductor Industry Association.
Although SMIC mainly produces entry-level chips for less sophisticated electronics, the company gained attention after the teardown of a smartphone from Huawei reveal a chip manufactured by SMIC among the most advanced produced in China. However, production of advanced chips remains limited, restricting SMIC's ability to fully capitalize on the artificial intelligence boom driving the growth of some competitors.
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The industry leader TSMC reported a 30% increase in second-quarter revenue, largely attributed to strong demand for advanced chips in AI and high-performance computing.
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