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
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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.
Analyst Views on INTC
Wall Street analysts forecast INTC stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for INTC is 39.30 USD with a low forecast of 20.00 USD and a high forecast of 52.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
29 Analyst Rating
5 Buy
19 Hold
5 Sell
Hold
Current: 54.320
Low
20.00
Averages
39.30
High
52.00
Current: 54.320
Low
20.00
Averages
39.30
High
52.00
About INTC
Intel Corporation is a global designer and manufacturer of semiconductor products. The Company operates through three segments: Intel Products, Intel Foundry, and All Other. Its Intel Products segment includes Client Computing Group (CCG), Data Center and AI (DCAI), Network and Edge (NEX). The CCG is bringing together the operating system, system architecture, hardware, and software application integration to enable PC experiences. DCAI delivers workload-optimized solutions to cloud service providers and enterprises, along with silicon devices for communications service providers, network and edge, and HPC customers. NEX helps networks and edge compute systems from fixed-function hardware to general-purpose compute, acceleration, and networking devices running cloud native software on programmable hardware. The Intel Foundry segment comprises technology development, manufacturing and foundry services. All Other segments include Altera, Mobileye, 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.
