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SMIC, Hua Hong's earnings pick up in second quarter; Chip market to improve this Year, analyst says 2024-08-11
Chinese wafer foundries Semiconductor Manufacturing International and Hua Hong Semiconductor both logged an uptick in net profit and revenue in the second quarter from the previous quarter. Chip sales should continue to get better in the second half, an analyst said.
The chip making industry will stage a weak recovery this year, and things should get better in the second half, an analyst who works at a brokerage told Yicai.
After several sluggish quarters, the semiconductor market is slowly rebounding, driven by industries such as consumer electronics, Tang Junjun, president and executive director of Hua Hong, said at the earnings call last Thusday. SMIC had previously said that global customers are becoming more willing to stock up.
SMIC’s net profit in the second quarter more than doubled from the previous quarter, but plunged 59 percent year on year to USD165 million, according to the Shanghai-based company’s latest financial report. Revenue surged 8.6 percent quarter on quarter and 21.8 percent year on year to USD1.9 billion.
Hua Hong’s net profit plummeted 91.5 percent in the three months from the year before ended June 30 to USD6.6 million, but the decline contracted 79 percent from the previous quarter, the Shanghai-headquartered firm said in its most recent earnings report. Revenue slumped 24.2 percent year on year to USD478.5 million, a gain of 4 percent from the previous quarter.
The gross profit margin and capacity utilization rate of the two companies are also slowly improving. SMIC’s gross profit margin in the second quarter was 13.9 percent, a gain of 0.2 percentage point from the previous quarter, while Hua Hong’s was 10.5 percent, up 4.1 percentage points. SMIC’s and Hua Hong’s capacity utilization rates increased by 4.4 percentage points and 6.2 percentage points from a quarter ago, respectively.
SMIC said it is expecting revenue to jump between 13 percent and 15 percent in the third quarter from the previous three months, with a gross margin of between 18 percent and 20 percent. But its estimations for the second half remain cautious.
The market should pick up in the second half, and the company is eager for orders, Hua Hong said. The firm expects revenue in the three months ending Sept. 30 to be between USD500 million and USD520 million with a gross margin of between 10 percent and 12 percent.
Source: Yicai Global
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