In a recent report, CICC highlighted the resilience of Semiconductor Manufacturing International Corporation (SMIC) as the company reported first-quarter revenue of $2.505 billion, reflecting an 11% increase year-over-year and a slight quarter-over-quarter rise of 0.7%. This performance aligns closely with earlier guidance, which suggested flat revenue for the quarter.
The report detailed that SMIC's gross margin improved to 20.1%, up 0.9 percentage points compared to the previous quarter, comfortably within the guided range of 18-20%. Looking ahead, SMIC has set an ambitious guidance for the second quarter, predicting revenue growth of 14-16% quarter-over-quarter along with a gross margin target between 20% and 22%.
A noteworthy aspect of SMIC's operational capacity was its ability to reach 1.08 million wafers per month by the end of Q1, with a stable utilization rate of 93.1%. However, this figure represents a slight decline from the previous quarter, attributed mainly to seasonal fluctuations and a downturn in the consumer electronics sector. The company’s capital expenditures during the first quarter totaled $1.56 billion, while depreciation and amortization expenses rose by 25.7% year-over-year to $1.088 billion. Despite these expenditures, the gross margin remained stable, indicating strong industry fundamentals and high capacity utilization.
The positive revenue guidance for the second quarter is driven by increased capacity utilization alongside rising average selling prices (ASP). SMIC’s revenue mix showed a decline in smartphone-related consumer electronics to 18.9% and in other consumer electronics to 46.2%, whereas segments related to computing and tablets and industrial and automotive saw increases to 13.6% and 14%, respectively.
CICC noted that SMIC is well-positioned to take advantage of the evolving semiconductor market, particularly due to localized production demands arising from AI supply constraints. This shift is changing the dynamics in the mature-node semiconductor market, as SMIC's clientele increasingly moves away from traditional consumer electronics towards sectors where AI-related components are integral.
Looking ahead, CICC anticipates that 2026 will be a key year for SMIC as revenue is expected to accelerate, despite facing depreciation pressures. With the demand for AI-related components reshaping the semiconductor industry, SMIC seems poised to handle the challenges while capitalizing on new opportunities.
