By Kate Yuan

(JW Insights) Aug 11 -- China’s top chipmaker SMIC reported $1.56 billion revenue in the second quarter of 2023, a 6.7% increase compared to the previous quarter, with a gross margin of 20.3%, according to its financial report released on August 10.

SMIC’s revenue from smartphones, IoT and consumer electronics took up 26.8%, 11.9%, and 26.5% respectively. In terms of region, revenue from China took the largest proportion, reaching 79.6%, while the US and Eurasia accounted for 17.6% and 2.8% respectively.

In Q2 of 2023, SMIC's wafer shipments increased by 12% compared to the previous quarter, while the average selling price decreased by 7% due to price adjustments and changes in product mix. Revenue from 12-inch and 8-inch wafers took up 74.7% and 25.3% respectively. The monthly production capacity of 8-inch wafers increased from 732,250 pieces in Q1 2023 to 754,250 in Q2 2023.

SMIC stated that its capital expenditure was $1.7315 billion in Q2 2023, and that reached nearly $3 billion in the first half of the year. Its R&D expenses increased to $177.6 million in Q2 from $167.7 million in Q1 due to more R&D projects.

Looking ahead to the third quarter, the company expects a 3% to 5% increase in revenue compared to Q2 and a gross profit margin ranging from 18% to 20%. The shipment may continue to rise in Q3.

Zhao Haijun, co-CEO of SMIC, said, “Q3 is expected to follow the trend of increased shipments and declined prices seen in Q2. But we will strive to expand market share in a contracting market. Sales will be better in the second half of the year than in the first half.”

The company stated that it will continue to focus on R&D, and platform development, and expedite the validation of new products. It will also allocate supporting capacity at the fastest pace to prepare for the next growth cycle.