SMIC shares fall after reporting reduced Q3 profits and revenue

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SMIC shares fall after reporting reduced Q3 profits and revenue
Credit: © Reuters.

Semiconductor Manufacturing International Corporation (SMIC), one of the key players in the global chip-making industry, faced a decline in its share price today following the release of its third-quarter financial results. The company reported a notable decrease in net profit and revenue, alongside a contracted gross margin.

On Thursday, SMIC's Co-CEO Zhao Haijun acknowledged the absence of a rebound in chip demand, which has continued to affect the company's performance. Despite this, SMIC announced an increase in capital expenditure aimed at expanding its production capacity and fabrication facilities. This strategic move is made with an eye on future growth prospects as easing geopolitical tensions are anticipated to enhance supply chain operations and facilitate equipment flow by the end of the year.

The expansion plans, however, are expected to put additional pressure on SMIC's gross margins due to the costs associated with ramping up new capacity. In light of these developments, SMIC has forecasted a modest rise in revenue for the fourth quarter and anticipates market conditions to stabilize in 2024. This outlook is supported by analyst Liu Xiang's research note, which suggests that the market may see an equilibrium in the coming year.

Investors reacted to SMIC's financial update and future projections with caution, leading to a downturn in its stock value on Friday. The company's forward-looking statements indicate a strategic approach to navigate through current market challenges while preparing for anticipated improvements in the semiconductor landscape.

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