SMIC to retain Capex at $6.35 billion for 2023

Semiconductor Manufacturing International (SMIC) said its capital expenditure (Capex) in 2023 will be similar to previous year’s $6.35 billion.
SMIC said monthly capacity increased to 714 thousand 8-inch equivalent wafers. SMIC has achieved the annual capacity utilization rate of 92 percent. SMIC Shenzhen entered into production, SMIC Jingcheng entered into pilot production, SMIC Lingang completed construction of main fab shell, and SMIC Xiqing started the construction. SMIC will postpone the mass production of SMIC Jingcheng by 1-2 quarters due to the delay of bottleneck equipment.

SMIC said revenue rose 33.6 percent to $7.273 billion in 2022 from $5.443 billion in 2021. Profit of SMIC increased 6.8 percent to $1.817 billion in 2022 from $1.701 billion in 2021.

SMIC has generated 21.6 percent of the total revenue from consumer electronics, 28.6 percent from smartphone, 10.8 percent from smart home business, while 39 percent from others.

China contributed 69 percent of its revenue, while America contributed 25.3 percent and Euroasia 5.6 percent last year.
SMIC reported revenue of $1.621 billion in 4Q22, compared to $1.907 billion in 3Q22, and $1.580 billion in 4Q21. Gross profit of SMIC was $518.7 million in 4Q22, compared to $742.2 million in 3Q22, and $552.8 million in 4Q21. Gross margin of SMIC was 32 percent in 4Q22, compared to 38.9 percent in 3Q22 and 35 percent in 4Q21.

SMIC warned of a weak 2023 despite record high sales last year, as slowing demand for electronics placed pressure on its business.

SMIC has seen sales surge over the past two years, as global demand for low-end chips rocketed in the wake of the COVID-19 pandemic and a global chip shortage.

The company’s growth may be peaking, however, with demand for consumer electronics waning as the pandemic subsided.

SMIC said it expects revenue for 2023 to decline by low-teens percentage year-over-year, which would mark a break from continual growth.

SMIC remains generations behind rivals in leading-edge technology and has been in Washington’s crosshairs in recent years amid an ongoing spat with Beijing over chip technology.

In early October, the U.S. department of commerce released a sweeping set of export controls aimed at containing advancement among China’s chip manufacturers.

The restrictions are further set to hamper SMIC’s ambitions for making advanced chips, experts say.

SMIC is rapidly expanding capacity across China, announcing plans to build four new chip manufacturing plants since 2020, Reuters news report said.