The automotive and industrial markets are driving growth, with SMIC’s Q2 revenue up 8.8% year-on-year.

On August 8, SMIC (New York Stock Exchange: SMI; Hong Kong Stock Exchange: 981) announced its consolidated financial results for the three months ended June 30, 2017. According to the financial report, sales in the second quarter of 2017 totaled US$751.2 million, representing an 8.8% increase year-on-year but a 5.3% decrease quarter-on-quarter. Gross profit amounted to US$194.1 million, down from US$220.8 million in the first quarter of 2017 and from US$217.8 million in the second quarter of 2016. The gross margin for the second quarter of 2017 was 25.8%, compared to 2... in the first quarter of 2017.

On August 8, SMIC (New York Stock Exchange: SMI; Hong Kong Stock Exchange: 981) announced its consolidated financial results for the three months ended June 30, 2017. According to the financial report, sales for the second quarter of 2017 totaled US$751.2 million, representing an 8.8% increase year-on-year but a 5.3% decrease quarter-on-quarter. Gross profit amounted to US$194.1 million, down from US$220.8 million in the first quarter of 2017 and from US$217.8 million in the second quarter of 2016.

In the second quarter of 2017, the gross profit margin was 25.8%, compared to 27.8% in the first quarter of 2017 and 31.6% in the second quarter of 2016. SMIC expects its revenue for the third quarter of 2017 to remain flat or increase by up to 3%, with a gross profit margin ranging from 22% to 24%. Non-GAAP operating expenses, after excluding the impact of employee bonus provisions, government subsidies, and gains from the sale of residential campus assets, are expected to be between US$179 million and US$185 million. Non-controlling interests are projected to range from zero to positive US$3 million (reflecting losses attributable to non-controlling interests).

Dr. Zhao Haijun, CEO of SMIC, pointed out that revenue for the second quarter increased by 8.8% year-on-year but declined by 5.3% quarter-on-quarter. Compared to last year, our growth, from an application perspective, was primarily driven by the automotive and industrial sectors; from a product perspective, it was mainly fueled by CMOS image sensors, non-volatile flash memory, application processors, and power management chips.

He further stated that this year, our team continues to expand 28-nanometer production, which is also one of our key growth drivers for the year. Revenue from 28-nanometer products grew by a factor of 12 year-on-year and by 24.8% quarter-on-quarter, bringing us closer to our target of achieving a high-single-digit percentage share of revenue in the fourth quarter of this year. In addition, we’re pleased to see the fingerprint recognition chip business beginning to stage a strong rebound, and we’re also witnessing continued growth in the flash memory business. We’re working closely with our customers to seize opportunities in new mobile devices, the Internet of Things, automotive applications, and industrial sectors.

In terms of its sustained profitability strategy, SMIC will fully leverage its existing assets, differentiated technologies, and the development of advanced technologies to meet customers’ needs for product migration. First, we must expand our cooperation with existing customers. Second, we aim to achieve excellence through mature technologies. Third, in markets where we already have a certain market share—such as cameras, specialized microcontrollers, flash memory, and other segments—we are committed to further enhancing our specialized process platforms.

“Although the short-term outlook differs from previous seasonal expectations, we remain committed to maintaining our position as China’s most popular contract manufacturer. By engaging in deep-level collaboration with our customers and continuously enhancing and refining our product quality, services, and product lineup, SMIC will undoubtedly benefit from the broad-based growth momentum in the integrated circuit market,” added Zhao Haijun.

Key words: