SMIC Q4 margin forecast falls short of Q3 level despite revenue growth outlook
SMIC forecast fourth-quarter gross margin would fall to 26%-28% from 29.9% in the third quarter, despite expected revenue growth of 4%-6%.
The Chinese contract chipmaker reported third-quarter revenue of $3.19 billion, up 6.1% from the previous quarter and 33.9% from a year earlier, driven by higher wafer shipments. Shipments rose 5.7% quarter on quarter and 21.4% year on year.
Gross profit rose to $953.2 million from $760.6 million in the second quarter and $522.8 million a year earlier.
Gross margin increased to 29.9% from 25.3% and 22%, respectively, as plant utilisation improved to 97.3% from 93.7% in the previous quarter and product mix changed.
Profit from operations rose 32.9% quarter on quarter and 102.3% year on year to $710.1 million.
Other operating income, driven by recognised government funding, increased to $155 million from $112.6 million in the second quarter.
Research and development spending rose to $258.4 million from $208.5 million, reflecting increased R&D activity.
Net profit fell 11.2% from the previous quarter to $650.9 million but more than doubled from a year earlier.
Profit attributable to owners declined 10.6% quarter on quarter to $428.4 million, while rising 123.4% year on year. Earnings per share were $0.05, compared with $0.06 in the second quarter and $0.02 a year earlier.
Other income swung to a net loss of $32.1 million from a gain of $275.9 million in the second quarter, as the share of results from associates and a joint venture turned to a loss of $23 million from a gain of $193.8 million, reflecting smaller investment gains.
Net cash generated from operations fell to $1.18 billion from $2.52 billion in the second quarter, while capital spending declined to $1.09 billion from $1.84 billion.
Net debt rose to $1.50 billion at the end of September from $162.3 million at the end of June.
Receivables increased to $2.29 billion from $1.51 billion over the same period, while inventories rose to $4.83 billion from $4.36 billion.
Smartphones accounted for 14.3% of wafer revenue, down from 16.9% in the second quarter, while industrial and automotive rose to 19.3% from 16.5%.
China accounted for 90.8% of revenue, compared with 90.2% in the previous quarter and 86.2% a year earlier. Monthly production capacity increased to 1,116,750 8-inch-equivalent wafers from 1,096,500 in the second quarter.