Chip maker SMIC lowers 2017 revenue growth target
Mainland China’s largest contract chip manufacturer is hit by weak China smartphone demand and customer transition to new production technology process
Semiconductor Manufacturing International Corp (SMIC), mainland China’s largest contract chip maker, is now targeting “mid to high single digit” annual revenue growth amid muted demand in the domestic smartphone market this year.
That forecast marks a sharp decline from the Shanghai-based company’s earlier guidance of a 20 per cent year-on-year increase in revenue growth, as analysts expect market conditions to remain challenging in the second half of this year.
SMIC chief executive Zhao Haijun predicted the company’s revenue to be flat or up by 3 per cent quarter-on-quarter in the three months to October 31.
“The challenges we are facing this year include node transition, pricing environment, customer inventory, market uncertainty and new technology execution,” Zhao said in a conference call with analysts on Wednesday.
Node transition refers to the move by certain SMIC clients to the so-called 28-nanometre semiconductor manufacturing process from the older processes, such as the 40nm and 0.18um [micrometre] technology nodes.
“We see continued weakness in 40nm due to the transition to 28nm and muted demand in China’s smartphone market, and in 0.18um due to a major fingerprint sensor customer [of SMIC] losing market share,” said Jefferies equity analyst Rex Wu.