[News] SMIC 2024 Sales Hit Record, But Profit Drops Reportedly Due to High Huawei Chip Costs

Despite escalating U.S. chip sanctions, China’s foundry giant SMIC reported Q4 2024 revenue of $2.207 billion, up 31.5% year-over-year, according to its its press release. However, its net profit fell 38.4% to $108 million, as noted by Commercial Times.

Commercial Times, citing Chinese media, reports that SMIC’s 2024 revenue rose 27% to $8.03 billion. According to ijiwei, this is the first time SMIC’s annual revenue surpassed the $8 billion milestone.

However, SMIC’s annual net profit fell 45.4% to $493 million in 2024, mainly due to reduced investment and financial gains. According to a previous report by Chosun Daily cited by Commercial Times, strong revenue growth without profit increase could suggest that SMIC incurred high costs to mass-produce 7nm chips for Huawei, which is seen as a “money-burning black hole” in line with China’s tech policies.

According to ijiwei, in the fourth quarter of 2024, China contributed 89.1% of SMIC’s total revenue, the U.S. 8.9%, and Europe/Asia 2%.

On the other hand, market analysts cited by Commercial Times note that despite the U.S. imposing new AI chip export restrictions on 120 countries in January, the sanctions have made SMIC’s products the only option in China, which may turn restrictions into an advantage.

Notably, as SMIC’s major customer in China, Huawei’s 2024 revenue surpassed 860 billion yuan ($118.3 billion), marking its second-highest record despite U.S. sanctions.

For Q1 2025, SMIC expects revenue to grow 6-8% quarter-over-quarter, with a gross margin of 19-21%. The company aims for above-industry-average revenue growth in 2025 while maintaining capital expenditures at around the $7.33 billion in 2024, as noted in its press release.

According to TrendForce, SMIC ranked third in the foundry market by revenue in Q3 2024, with a 6% market share, following TSMC (64.9%) and Samsung (9.3%).

Read more

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(Photo credit: SMIC)