With a month-on-month increase of 15.3%, SMIC's quarterly revenue exceeded US$1 billion for the first time!

November 11,SMIC released its third-quarter 2020 financial report, with quarterly revenue exceeding US$1 billion for the first time.

As of September 30, SMIC's third-quarter sales were US$1.0825 billion, a record high, up 15.3% from US$938.5 million in the second quarter of this year and up 32.6% from US$816.5 million in the same period last year.

SMIC's gross profit in the third quarter of this year was US$262 million, up 5.4% from US$248.6 million in the second quarter of this year and up 54.3% from US$169.8 million in the same period last year. The gross profit margin in the third quarter was 24.2%, compared with 26.5% in the previous quarter.

Financial report details

The financial report shows that SMIC's production capacity in the third quarter of this year was still close to full, reaching 97.8%, and the revenue share of China further increased to 69.7%. It is worth mentioning that SMIC's 28nm and below process revenue accounted for 14.6% in the third quarter, a slight increase from 9.1% in the second quarter of this year.

In the third quarter, the revenue share by application was: smartphone 46.1%, smart home 20.5%, consumer electronics 17.0%, and others 16.7%. In terms of service type, wafer foundry still accounted for an extremely high proportion of 85.4%, while the proportion of mask manufacturing, wafer testing and others increased from 9.1% in the second quarter of this year to 14.6%.

Looking at the revenue contribution of each region, revenue from China still accounts for more than half, reaching 69.7%; Eurasia accounts for 11.7%, while the United States accounts for 18.6% from 21.6% in the second quarter of this year.

By process classification, the revenue contribution of 28nm and 14nm processes increased to 14.6%, and the revenue contributions of other processes were 150/180nm (31.2%), 55/65nm (25.8%), 40/45nm (17.2%), 110/130nm (4.4%), 250/350nm (3.4%), and 90nm (3.4%).

Regarding the production capacity of SMIC's major wafer fabs in the third quarter of this year, the production capacity of the Beijing 12-inch fab and the controlled Beijing 12-inch fab has increased significantly. SMIC's total monthly production capacity of 8-inch equivalent wafers has increased from 480,150 pieces to 510,150 pieces, and the overall capacity utilization rate has slightly declined from 98.6% in the second quarter of this year to 97.8%.

Second-generation FinFET process small batch trial production

Dr. Gao Yonggang, CFO of SMIC, commented that the company's revenue in the third quarter continued to hit a record high, reaching US$1.083 billion, a month-on-month increase of 15.3% and a year-on-year increase of 32.6%; gross profit was US$262 million, profit attributable to the company was US$256 million, and EBITDA was US$653 million, all record highs. The full-year revenue growth forecast was revised upward to 24% to 26%, and the full-year gross profit margin target was higher than last year.

Dr. Haijun Zhao and Dr. Mengsong Liang, co-CEOs of SMIC, commented that the demand for mature application platforms remains strong as always, with significant growth in revenue from power management, RF signal processing, fingerprint recognition, and image signal processing. Advanced technology applications are diverse, with the first generation of advanced technology yield reaching the industry's mass production level, and the second generation entering small-scale trial production. The company's production capacity is steadily expanding, and capacity utilization remains high.

The external situation in 2020 is complex and changeable. As a foundry company, SMIC serves diversified customers at home and abroad. Since its establishment, it has strictly abided by the laws of the place of operation and operated legally and in compliance with regulations. We maintain active communication with suppliers, customers and relevant institutions, and comprehensively evaluate the impact of US export controls on the company's production and operations. At present, the company is operating normally. In the short term, export controls will have a certain impact on the company, but the impact is controllable. The company will continue to follow up on this matter and continue to evaluate the impact. Thank you for the trust of our customers, the support of our suppliers and the joint efforts of all colleagues in the company.

In the era of the Internet of Everything, semiconductors will continue to promote innovation and development in various industries. We will continue to uphold the attitude of cooperation, openness, development and win-win, fully integrate into the global ecological chain, expand technology platforms, enrich product applications, and provide complete solutions for domestic and foreign customers.

Revenue has grown for five consecutive quarters. As Liang Mengsong said at the second quarter earnings conference, SMIC has entered a period of rapid growth.

Looking ahead

Amid the COVID-19 pandemic and the complex international situation, SMIC still achieved rapid development in 2020, thanks to the formation of a new normal such as online office and online teaching, as well as the further growth in demand brought about by new applications such as 5G and AI. At the same time, SMIC's progress is also inseparable from the low-key running-in and adjustment, optimization and reform in the past two years, which has made full preparations for the ever-changing industry environment.

Regarding the outlook for the fourth quarter of this year, SMIC expects that the revenue in the fourth quarter will decrease by 10% to 12% quarter-on-quarter due to the traditional off-season. The gross profit margin will be between 16% and 18%. Non-IFRS operating expenses will be between US$220 million and US$235 million.