Chipmaker SMIC Misses Third Quarter Estimate, Warns That Weak Demand Alongside Other Factors Would Affect Its Fourth Quarter Results

Chipmaker Semiconductor Manufacturing International Corp (SMIC) reported its third-quarter earnings results on Thursday and missed estimates. The company also warned investors about the effect that the impact of export controls from the US has on its business. 

The company reported revenue of $1.91 billion for the third quarter. It was up 34.7 percent from the $1.42 billion the chipmaker reported in the same period a year ago and, however, below analysts’ estimate of $1.94 billion.

SMIC reported a net profit of $574.4 million,  a growth of 54.1 percent, while gross profit soared 58.6 percent to $742.2 million. 

The company highlighted in its filing that weak demand in the consumer market plus the new export controls from the US would affect its results for the fourth quarter. SMIC noted that these new rules will have an adverse impact on its production and operations. It is working to spell out certain definitions in the rules, the company said. 

The US issued a new set of export controls aimed at containing advancement among China’s chip manufacturers in early October. According to experts, these restrictions could hinder SMIC’s ambitions of making advanced chips.

Irrespective of the aforementioned issues, the company went ahead to increase its capital expansion plan for the year from $5 billion to $6.6 billion.

SMIC is one of Asia’s biggest chipmakers and has been described as China’s best hope for becoming a global leader in chip manufacturing. It has also been referred to as the Chinese rival to giant chipmaker Taiwan Semiconductor Manufacturing Corporation (TSMC). In terms of leading-edge technology, SMIC still has a lot of gaps to catch up with before it can be seen as an appropriate rival to TSMC.