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[Introduction] SMIC's second-quarter revenue exceeded expectations.

China Fund News reporter Lu Yu

As chip exports have achieved year-on-year growth for nine consecutive months, good news has also come from the two leading wafer manufacturing companies. SMIC's second-quarter revenue exceeded the company's previous expectations, and Huahong Semiconductor's capacity utilization rate further increased compared with the previous quarter and is close to full production.

Industry insiders predict that the chip development situation may be better next year.

SMIC's second quarter revenue exceeded expectations

On the evening of August 8, SMIC announced that the company's sales revenue in the second quarter of 2024 was US$1.901 billion, a month-on-month increase of 8.6% and a year-on-year increase of 21.8%.

Previously, SMIC's second-quarter guidance expected a 5% to 7% quarter-on-quarter revenue growth in the second quarter, which means that the second-quarter revenue is expected to be US$1.838 billion to US$1.873 billion. The US$1.901 billion figure released this time is significantly higher than the company's previous expectations.

In terms of gross profit margin, SMIC's gross profit margin in the second quarter of 2024 was 13.9%, compared with 13.7% in the previous quarter, an increase compared with the first quarter.

In terms of the capacity utilization rate of 8-inch wafers, SMIC's capacity utilization rate increased from 80.8% in the first quarter of 2024 to 85.2% in the second quarter of 2024.

In this regard, SMIC management commented: "The company's second-quarter sales revenue and gross profit margin were better than guidance. Among them, shipments exceeded 2.11 million 8-inch wafer equivalents, an increase of 18% month-on-month, and the average sales price decreased by 8% month-on-month due to changes in product mix."

For the third quarter, SMIC's revenue guidance is a month-on-month increase of 13%-15%, with a gross profit margin of 18%-20%.

Huahong is close to full production

On the same day, Huahong Semiconductor, a leading wafer manufacturing company, also announced that the company's sales revenue (unaudited) in the second quarter of 2024 was US$479 million, a month-on-month increase of 4.13%; the gross profit margin was 10.5%, a significant increase from 6.4% in the previous quarter.

In this regard, Tang Junjun, President and Executive Director of Hua Hong Semiconductor, said that the semiconductor market is experiencing a slow recovery from the bottom. After several quarters of continued weakness, the market has shown signs of stabilization and recovery, driven by some consumer electronics and other fields. In the second quarter of 2024, Hua Hong Semiconductor's sales revenue reached US$479 million, in line with guidance, and its gross profit margin was 10.5%, better than guidance, both of which achieved month-on-month growth. Capacity utilization has also increased further than the previous quarter, and is close to full production in all aspects, consolidating the company's leading position in the specialty process foundry industry.

Tang Junjun also said that the construction of the company's second 12-inch production line is progressing at full speed and trial production is expected to begin before the end of the year.

Hua Hong Technology expects its third-quarter sales revenue to be between US$500 million and US$520 million, with a gross profit margin of approximately 10% to 12%.

According to statistics from the General Administration of Customs, in July 2024, my country's integrated circuit exports amounted to 98.56 billion yuan, a year-on-year increase of 26.77%. The export value has achieved positive year-on-year growth for nine consecutive months.

In the first seven months of 2024, my country's integrated circuit exports amounted to 640.91 billion yuan, a year-on-year increase of 25.8%; among the key exported commodities, the growth rate was second only to ships.

In this regard, Gu Wenjun, chief analyst of Strategy Analytics, told reporters that the current good situation of the chip industry is mainly due to three factors: first, the inventory has been almost digested, second, the strong pull of downstream consumer electronics and automotive electronics demand, and third, the industry's resilience. In Gu Wenjun's view, the chip development situation may be better next year.

Editor: Xiaomo

Reviewer: Chen Siyang

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