Chip maker SMIC posts steady first-quarter earnings growth amid market headwinds

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Shanghai-based SMIC posted a 13.7 per cent increase in net profit to US$69.8 million for the three months ended March 31. Photo: Handout

Published: 9:15pm, 10 May 2017Updated: 4:15am, 3 Feb 2021

Semiconductor Manufacturing International Corp (SMIC), mainland China’s largest contract chip maker, reported on Wednesday steady earnings growth in the first quarter, but forecast a modest decline in second-quarter revenue due to a market downturn.

Shanghai-based SMIC posted a 13.7 per cent increase in net profit to US$69.8 million for the three months ended March 31, up from US$61.4 million in the same period last year, as demand for its 28-nanometre semiconductor device fabrication ramped up.

Revenue grew 25 per cent to US$793.1 million from US$643 million a year earlier.

“Our team delivered a good quarter,” newly appointed SMIC chief executive Zhao Haijun said in a statement on Wednesday.

Zhao pointed out that earnings before interest, taxes, depreciation and amortisation – a measure of a company’s operating profitability – grew 42.8 per cent year on year to a record high US$312.4 million.

“We are pursuing growth in areas in which we are seeing meaningful demand, such as NOR flash [memory], RF [radio frequency chip] and connectivity, power integrated circuits and others,” he said.

SMIC, however, warned of headwinds in the first half of this year, which it has estimated will lead to a 3 per cent to 6 per cent quarter-on-quarter drop in revenue in the three months to June.