2020 Annual Revenue of US$3.907 Billion! SMIC's Multiple Financial Indicators Set New Records

On February 4, SMIC released its fourth-quarter 2020 financial report, with many financial indicators reaching new highs throughout the year.

As of December 31, 2020, SMIC's sales in the fourth quarter were US$981.1 million, a year-on-year increase of 10.3%.

SMIC's gross profit in the fourth quarter of 2020 was US$176.8 million, an increase of 11.0% compared with the same period last year. The gross profit margin in the fourth quarter was 18%, compared with 24.2% in the previous quarter.

Financial report details

The financial report shows that SMIC's capacity utilization rate reached 95.5% in the fourth quarter of 2020. Sales in China decreased from the previous quarter to 56.1%, while sales in North America, Europe and Asia increased to varying degrees from the previous quarter. It is worth noting that SMIC's 14/28nm process revenue share in the fourth quarter fell to 5%, compared with 14.6% in the previous quarter. The 55/65nm process accounted for 34% of revenue in the fourth quarter, a slight increase from 25.8% in the previous quarter.

In the fourth quarter of 2020, the revenue share by application was: 36.7% for smartphones, 15.8% for smart homes, 20.2% for consumer electronics, and 27.3% for others. In terms of service type, wafer foundry still accounts for an extremely high proportion of 89%, while the proportion of mask manufacturing, wafer testing and others has dropped from 14.6% in the third quarter to 11%.

Looking at the revenue contribution of each region, revenue from China still accounts for more than half, reaching 56.1%; the Eurasian region accounts for 16.2%, while the United States accounts for 27.7%, up from 18.6% in the third quarter of 2020.

By process classification, the revenue contribution of 28nm and 14nm processes has dropped to 5%, and the revenue contributions of other processes are 150/180nm (32.5%), 55/65nm (34%), 40/45nm (14.8%), 110/130nm (6.2%), 250/350nm (4%), and 90nm (3.5%).

The financial report shows that SMIC's monthly wafer production capacity in the fourth quarter of 2020 increased from 510,150 8-inch equivalent wafers in the third quarter of 2020 to 520,750 8-inch equivalent wafers in the fourth quarter of 2020, mainly due to the capacity expansion of the Beijing 300mm wafer factory controlled by SMIC in the fourth quarter of 2020.

Dr. Gao Yonggang, Chief Financial Officer of SMIC, commented: "The company's revenue in the fourth quarter of 2020 was US$981.1 million, with a gross profit margin of 18.0%. Many of the company's financial indicators (unaudited) set new historical highs throughout the year. Annual revenue was US$3.907 billion, an increase of 25.4%; gross profit was US$921 million, an increase of 43.3%; profit attributable to the company was US$716 million, an increase of 204.9%; EBITDA was US$2.123 billion, an increase of 54.6%."

Dr. Haijun Zhao and Dr. Mengsong Liang, Co-CEOs of SMIC, commented, "Currently, the foundry industry is facing capacity constraints, especially as demand for mature processes remains strong. We expect the company's mature capacity to remain fully loaded. In order to meet customer demand, the company expects capital expenditures of US$4.3 billion this year, most of which will be used for expansion of mature processes, a small portion for advanced processes, civil engineering for the new joint venture project in Beijing, and others. In terms of capacity construction, we plan to expand the production of mature 12-inch production lines by 10,000 pieces and mature 8-inch production lines by no less than 45,000 pieces this year. Under the influence of the Entity List, we will consider strengthening the development and deployment of first-generation and second-generation FinFET multi-platforms, and expanding the reliability and competitiveness of the platforms."

Regarding the outlook for the first quarter of 2021, SMIC expects that revenue in the first quarter of 2021 will increase by 7% to 9% quarter-on-quarter, and gross profit margin will be between 17% and 19%.

Looking ahead to the full year of 2021, SMIC stated that due to being included in the Entity List by the US government, the company is restricted in purchasing US-related products or technologies, which brings uncertain risks to the company's full-year performance expectations. The full-year expectations we give are based on the assumption that operational continuity is not affected. Export license applications must follow the process, which takes time and has certain uncertainties. Based on this, our full-year revenue target is mid-to-high single-digit growth, with a first-half revenue target of approximately US$2.1 billion; the full-year gross profit margin target is in the mid-teens to 20s.