SMIC'S Net Profit Increased 4 Times In The Second Quarter, And The Production Capacity Was Tight Until The First Half Of 2022

Semiconductor business cycle, SMIC international second quarter performance is bright.

On the evening of August 5, SMIC released its second quarter financial report in 2021. During the period, SMIC's sales revenue was $1.344 billion, an increase of 43.2% year-on-year; The net profit attributable to the parent company was 688 million US dollars, with a year-on-year increase of 398.5%; The gross profit margin was 30.1%, up from 26.5% in the same period last year.

At the performance communication meeting on August 6, Zhao Haijun, CO CEO of SMIC international, introduced: "in the second quarter, the gross profit rate grew. On the one hand, the output increased, and the products with higher gross profit rate were selected. There were fewer low-cost products, and the proportion of high-end prices increased. At the same time, the price of each product also increased, and the impact of (price factor) accounted for about 9%

It can be seen that the double growth of capacity and price has become an important engine of SMIC's performance growth, and the capacity utilization rate in the second quarter also increased to 100.4%. In addition, Zhao Haijun also said that the delivery of goods for customers also led to the performance, but he pointed out that "the part of delivery for customers is not sustainable, but also reduces the next shipment. Therefore, the sales revenue in the third quarter can not continue to grow significantly, and is expected to grow by 2% - 4% month on month. As the market changes and the company's precision tackling difficulties, we have revised the annual sales revenue growth target and annual gross profit rate target to about 30%, but the uncertainties caused by uncontrollable factors such as entity list, epidemic situation and global industrial chain shortage still exist. "

At present, the trend of tight wafer production capacity will continue. Zhao Haijun said that the increase of production capacity will take time. At present, it is impossible to alleviate the shortage of supply by the end of this year or the first half of next year. In addition, the uncertainty of epidemic situation still exists, so the price may continue to rise.

Speed up plant expansion and release new capacity in the second half of the year

In the case of global wafer capacity shortage, the major wafer plants are expanding production capacity. According to the global foundry output value forecast released by Jibang consulting in 2021, some manufacturers will gradually expand their production capacity in 2021. It is expected that the output value of the overall foundry industry will reach a record high of US $94.5 billion this year, with an increase of 11%.

SMIC is also speeding up the pace of expanding production. At present, SMIC is building or expanding factories in Shenzhen, Beijing and Tianjin. According to Zhao Haijun, "the production capacity of our 12 inch mature process in Beijing is fully loaded, and the area inside the factory has been used up, so we expand it. The newly-built factories in Shenzhen and Beijing will have a division of labor. The output of the existing factories in Beijing will be doubled by more than 100000 pieces a month, which is the production capacity of the new factories in Beijing and Shenzhen in the future. The new 8-inch factory will be expanded in Tianjin. "

The new capacity is mainly concentrated in the mature process. According to the plan, SMIC's 12 inch mature production line will expand the production capacity by 10000 tablets / month, and the 8-inch mature production line will expand by no less than 45000 pieces / month. The new capacity is mainly formed in the second half of the year.

Talking about the product demand of mature process, Zhao Haijun said that in the first half of this year, the demand of various market segments grew very fast, including RF chips, mainly at 40 nm, MCU at 40 nm, and high-voltage drive at 55 nm and 40 nm.

Despite the impact of SMIC on the physical inventory, it is worth noting that SMIC continues to invest in advanced manufacturing processes, and the proportion of FinFET / 28nm has increased significantly to 14.5%.

When asked about the customer orders of advanced manufacturing process, Zhao Haijun said: "before, we have made great customer adjustments, the original big customers no longer produce, we have imported a lot of new customers and different product platforms, but this will take about half a year to achieve. Now we have reached the production capacity of 15000 pieces a month, customers are more diversified, production capacity is in a tight state, supply exceeds demand. A lot of customers and new products are still coming in, because our production capacity is very small, so we are not very worried. "

But he also admitted that there were delays in the supply of 14nm and 28nm devices. At present, SMIC is in close communication with the US government, suppliers and customers to find ways to promote it, Zhao said“ We do see that there is a delay in the approval of 28nm and 14nm equipment. Our suppliers are still trying to do this, and we are also trying to communicate with each other. We think we can still think of a way. We also have a second supplier's solution, and we are trying to verify it. "

Production capacity falls short of demand and prices continue to rise

From the industry point of view, the situation of insufficient capacity supply and core shortage continues. Many entrepreneurs told 21st century business reporter that the whole market is in a chaotic stage, and the cycle of chip shipment this year will be too long. In addition to competing for the production capacity of wafer manufacturers, we also need to grab the capacity of packaging test. The production capacity has been arranged to 2022 and 2023.

Zhao Haijun said that the current market demand mainly comes from three parts. First of all, the original stock demand is still stable; Secondly, the upgrading of various products has brought about increment, such as the migration of 4G to 5g products, the popularization of fast charging, the quantity of electric vehicles and charging piles, the short-distance interconnection communication of smart home, and the implementation of inverters in carbon neutral industry, etc., which increase the silicon area of single terminal products and greatly increase the total usage. At the same time, the form of semiconductor industry has changed, the manufacturing demand of local production and local production has increased greatly, and the superposition of demand in three aspects causes the shortage of capacity supply.

But the construction of new production capacity still needs time. "From now on, because the speed of equipment capacity expansion is very slow, and the delivery is very slow, so the supply of new capacity is not so fast. To alleviate the current situation of short supply, we can see that it is impossible to reach the end of the year or the first half of next year. The epidemic situation is still there, and the international uncertainty is still there, so we need to establish inventory and ensure supply. This matter will continue, "Zhao Haijun said." we think that in the third quarter and the fourth quarter, we have already announced the price in various announcements or markets, and it is possible to continue to go up. "

At the same time, he also pointed out: "we believe that in the future, the price can continue to stabilize or grow, mainly from the competitiveness of market segments. In some nodes of the market segment, capacity will always be tight. At the same time, people will increasingly demand high-quality products, such as electric vehicles, high-end mobile phones or products in industrial applications, such as radio frequency, MCU, high-voltage drive, special memory chips and other products. The demand is applied to the industry chain with high value, and its price will be stable or continue to grow. "

When it comes to the strategy of price increase, Zhao Haijun said that SMIC will first respect the contract and negotiate with customers, and will follow the market trend. "When we go slowly in the market, we will only start to do it after other peers have spoken out. The range is not too high. We will do it in accordance with the strategy of prudence, contract and long-term stability. We will not do this because of the temporary price increase, which will lead to the customer running away. "

?