Semiconductor Manufacturing International Corp (SMIC), the mainland's largest contract chipmaker, may be entering a new stage of growth after the company raised its earnings guidance for the first quarter this year.
Shanghai-based SMIC's share price rose 3.85 per cent to finish at 41 Hong Kong cents yesterday, its highest close in nearly a month, following the announcement.
'I think the Asian semiconductor sector, which includes SMIC, has gone past the cyclical trough and is now on the way to a clear rebound in the second quarter this year,' said Bernstein Research senior analyst Mark Li. He continues to rate the stock 'underperform'.
In a filing with the Hong Kong stock exchange, SMIC's first-quarter revenue guidance was revised to reflect an increase of 14 to 15 per cent over the previous quarter. Its original guidance was between a 7 and 9 per cent improvement.
'We have seen solid order momentum and an improved outlook from our customers across the board, exceeding our earlier expectations,' said SMIC chief financial officer Gary Tseng. 'We are also raising our first-quarter gross margin guidance to between 10 and 12 per cent, from the original guidance of between 4 and 7 per cent, as a result of the increased loading in our fabs (wafer fabrication facilities).'
Li estimated the chipmaker's higher guidance has put its revenue for the past three months in the range of US$330 million to US$333 million. The firm posted a revenue of US$289.6 million in the fourth quarter last year, down 29 per cent from the same period in 2010.