China's Top Chipmaker SMIC Sees Profit Margin Plummet To 15-Year Low Amid US Export Controls
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 10 2024
0mins
Source: Benzinga
- SMIC's Financial Performance: China's Semiconductor Manufacturing International Corp (SMIC) reported a significant drop in profit margin, hitting its lowest level since 2009, despite a revenue increase of 19.7% to $1.75 billion for the first quarter of 2024.
- Future Outlook: SMIC anticipates further decline in gross margin to approximately 9% to 11% for the current quarter due to increased depreciation of equipment as it expands production capacity.
- Strategic Focus: SMIC is prioritizing aiding China in semiconductor supply amid U.S. export controls rather than focusing on substantial profits.
- Partnership with Huawei: SMIC partnered with Huawei to produce 5G mobile chipsets, with revenue from Chinese clients accounting for 81.6% of quarterly earnings.
- Industry Challenges: SMIC's struggles reflect broader challenges faced by the Chinese chip industry amidst U.S. sanctions, despite advancements in producing sophisticated chips.
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Analyst Views on INTC
Wall Street analysts forecast INTC stock price to fall
29 Analyst Rating
5 Buy
19 Hold
5 Sell
Hold
Current: 116.960
Low
20.00
Averages
39.30
High
52.00
Current: 116.960
Low
20.00
Averages
39.30
High
52.00
About INTC
Intel Corporation is a global designer and manufacturer of semiconductor products. The Company's segments include Intel Products, Intel Foundry, and All Other. Its Intel Products comprise Client Computing Group (CCG) and Data Center and AI (DCAI). CCG delivers platforms and processors that power PCs and edge devices, enabling enhanced performance, connectivity and user experience for consumer and commercial markets with capabilities that also support retail, industrial robotics and AI ecosystems at the edge. DCAI delivers workload-optimized solutions based upon its x86 architecture for data centers, including CPUs, AI accelerators, NICs, IPUs and custom ASICs, enabling performance and scalability for cloud, enterprise, telecommunication and HPC environments. The Intel Foundry segment comprises technology development, manufacturing and foundry services, developing new semiconductor process technologies and advanced packaging technologies. All Other segments include Mobileye and Other.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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