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BEIJING (Reuters) -Semiconductor Manufacturing Worldwide Corp, China’s largest chipmaker, warned on Friday that overcapacity in mature node chips will persist by way of 2025 and that it was turning cautious on constructing new capability.
The worldwide semiconductor business has struggled to get better since late 2022, when pandemic-driven shortages changed into oversupply, with many finish customers, together with automakers, nonetheless working by way of extra stock.
Nonetheless, SMIC, which primarily produces mature node chips for much less refined electronics gadgets, and different Chinese language chipmakers have ramped up manufacturing over the previous years amid ongoing commerce tensions with america and its allies.
“Trade utilisation charges are hovering round 70%, effectively beneath the optimum degree of 85%, indicating important overcapacity. This case is unlikely to enhance considerably, if not worsen additional,” co-CEO Zhao Haijun mentioned within the firm’s third-quarter earnings name.
For the September quarter, SMIC’s income rose 34% to $2.17 billion, consistent with market expectations of $2.2 billion, in line with LSEG information.
SMIC attributed a part of its gross sales progress to China’s localization push, which has prompted clients, particularly worldwide shoppers, to maneuver chip manufacturing to home producers.
Nevertheless, Zhao mentioned this substitution development would gradual in 2025 as home suppliers have already captured a considerable portion of the market.
The corporate’s annual capital expenditure surged to $7.3 billion in 2023, up from $4.5 billion in 2021.
Zhao indicated that present oversupply circumstances would lead SMIC to take a extra cautious method towards capability enlargement.
“We’ve not introduced any new tasks, and we aren’t at present discussing any new ones,” Zhao mentioned, marking a possible shift in technique for China’s largest contract chipmaker.
SMIC’s web revenue rose by 58% to $148.8 million for July-September however fell wanting analysts’ estimates of $199.71 million, in line with LSEG information.
For the fourth quarter, the corporate anticipate its income to be flat, rising by 2% quarter-over-quarter.
SMIC shares rose by 3.7% in early buying and selling in Hong Kong on Friday.
(Reporting by Liam Mo and Brenda Goh; Enhancing by Susan Fenton, Rashmi Aich and Christian Schmollinger)
