[News] SMIC Q2 Net Profit Plummets Over 59%, while Hua Hong Also Sees Over 90% Decline

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China’s two major semiconductor foundries, Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor, released their Q2 2024 financial results on August 8.

Both companies reported sharp declines in net profit. SMIC, the leading foundry, saw its Q2 revenue increase by 21.8% year-over-year to USD 1.901 billion, but its net profit fell by 59.1% to USD 165 million.

Moreover, SMIC’s financial report indicates that the company expects its revenue to increase by 13% to 15% quarter-over-quarter in the third quarter, with a gross margin between 18% and 20%.

SMIC stated that its second-quarter revenue and gross margin both exceeded expectations, driven by an increase in wafer sales. Its revenue grew by 9% quarter-over-quarter to USD 1.9 billion, and the gross margin rose by 0.2 percentage points to 13.9%.

The company shipped over 2.11 million 8-inch equivalent wafers, marking an 18% increase from the previous quarter. However, the average selling price per wafer declined by 8% due to changes in the product mix.

On the other hand, Hua Hong Semiconductor’s Q2 revenue decreased by 24.2% year-over-year to USD 478.524 million, primarily due to a decline in average selling prices, though this was in line with expectations. Net profit dropped by 91.5% to USD 6.673 million. The gross margin stood at 10.5%.

Hua Hong Semiconductor’s financial report projects that third-quarter revenue will be between USD 500 million and 520 million, with a gross margin of approximately 10% to 12%.

Hua Hong Semiconductor’s President, Junjun Tang, further noted that the global semiconductor market is experiencing a gradual recovery from its bottom. After several quarters of sustained weakness, there are signs of stabilization and recovery in certain areas, driven by sectors like consumer electronics. The company’s second-quarter capacity utilization improved further from the first quarter, nearing full production.

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(Photo credit: SMIC)