China’s largest integrated circuit foundry company, SMIC International, and another wafer fabrication giant, Hua Hong Semiconductor, recently disclosed their first-quarter reports, both showing a significant decline in net profits for the first quarter of this year.
SMIC International’s first-quarter financial report revealed that its revenue for the first quarter of 2024 was $1.75 billion, a year-on-year increase of 19.7%, with a net profit of $71.8 million, a decrease of 68.9% compared to the same period last year.
On the other hand, Shanghai Hua Hong (Group) Limited (referred to as “Hua Hong Company”) reported sales revenue of $460 million in the first quarter, a 27.08% decrease year-on-year, with a net profit attributable to the parent company of $31.8 million, a 79.1% decline.
According to a report by “First Financial”, research firm Counterpoint pointed out that SMIC International expects an increase in demand for components related to smartphones in the short term. However, due to the uncertainty of demand sustainability, SMIC International remains cautious about its full-year outlook, echoing the sluggish sentiment in the mature node foundry market of 28nm and above, mainly targeting the broad consumer electronics and industrial control chip market.
On March 28, SMIC International disclosed its 2023 financial report, showing that the company’s operating income for 2023 was 45.25 billion yuan, an 8.6% decrease compared to the previous year. The net profit attributable to shareholders of the listed company was 4.82 billion yuan, down by 60.3%, and the non-GAAP net profit attributable to shareholders of the listed company was 3.27 billion yuan, a 67.7% decrease year-on-year.
On the same day, Hua Hong Company released its annual performance report stating that its operating income in 2023 was approximately 16.232 billion yuan, a 3.3% decrease year-on-year, with a net profit attributable to shareholders of the listed company of about 1.936 billion yuan, a 35.64% decrease compared to the previous year.
Since September 2020, during the U.S.-China trade war, the United States has imposed sanctions on Chinese semiconductor companies. Subsequently, the U.S. has gradually escalated sanctions against Chinese companies such as SMIC International and Hua Hong Company.