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Chipmaker SMIC Warns of Weak 2023 on Slipping Tech Demand

SMIC said it predicts revenue for the year ahead to “decline by low-teens percentage year-over-year” marking a break from previous continual growth

SMIC is rapidly expanding its capacity across China
SMIC expects capital expenditure to be roughly flat this year. Photo: AFP


Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) has warned of a weak 2023 as slowing demand for electronics takes a toll.

The forecast comes despite record high sales last year, as demand for low-end chips rocketed in the wake of the Covid-19 pandemic and a global chip shortage.

Backed by funding from Beijing, SMIC is China’s best hope for becoming a global leader in chip manufacturing that can rival Taiwan Semiconductor Manufacturing Corporation (TSMC), the industry’s largest foundry.


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On Thursday, it said total revenue for 2022 reached $7.23 billion, up 33.6% from 2021. That was below an average estimate of $7.35 billion, according to a survey of analysts on Refinitiv, and on the low side the company’s late November forecast of “around $7.3 billion”.

The company’s growth may be peaking, however, with demand for consumer electronics waning as the pandemic subsided.

In its financial filing, SMIC said it expects revenue for 2023 to “decline by low-teens percentage year-over-year”, which would mark a break from continual growth.

Net income last year hit $1.82 billion, a 6% year-on-year increase, while sales in the final quarter of 2022 hit $1.62 billion, about 2% year-on-year and marginally below analyst expectations.

Gross profit over the same period fell slightly, hitting $518.7 million down from $552.8 million the year prior.


SMIC in Washington Crosshairs

The company remains generations behind rivals in leading-edge technology and has been in Washington’s crosshairs in recent years amid an ongoing spat with Beijing over chip technology.

“In 2022, the market demand for smartphones, computers, and home appliances turned from strong to weak, and customers’ willingness to place orders was significantly weakened,” said SMIC co-CEO Zhao Haijun on an earnings call.

In early October, the US Department of Commerce released a sweeping set of export controls aimed at containing advancement among China’s chip manufacturers.

The restrictions are further set to hamper SMIC’s ambitions for making advanced chips, experts say.

Nonetheless, it is rapidly expanding capacity across China, announcing plans to build four new chip manufacturing plants since 2020.

On its earnings call, co-CEO Zhao Haijun said that by the end of 2022, its newest fab in Shenzhen had entered production, another fab entered “pilot production”, and two others remained under construction.


  • Reuters with additional editing by Sean O’Meara


Read more:

China’s SMIC to Splash $7.5bn on Fourth Chip Fab in Tianjin

China’s SMIC Sees Big Profit Jump But Wary of Chips Outlook



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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