SHANGHAI (Reuters) – Chinese chip maker Semiconductor Manufacturing International Corp (SMIC) on Thursday reported its first quarterly drop in revenue in more than three years, as the global chip sector struggles to work through an inventory glut.
Revenue in the January-March quarter was $1.46 billion, down 20.6% year-on-year and in line with analyst estimates. Net profit fell 48.3% from a year earlier to $231.1 million.
SMIC executives attributed the drop to weak demand, following a years-long chip shortage that led customers to build up excess inventories.
On an earnings call, SMIC co-CEO Zhao Haijun said there was still a lack of clarity about prospects for recovery in the second half of the year.
Other chip companies have faced similar difficulties in recent months. A chip shortage that began in late 2020 caused a surge of demand for manufacturers like SMIC, but as sales of electronics slow, brands are now stuck with excess chip inventories.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) reported Q1 revenue down 5% from the year prior, while the chip division of Samsung Electronics Co Ltd reported a record loss of $3.4 billion in the same period.
In early October, the U.S. Department of Commerce released a sweeping set of export controls aimed at containing advancement among China’s chip manufacturers.
The restrictions are further set to hamper SMIC’s ambitions for making advanced chips, analysts say.
Nonetheless, it is rapidly expanding capacity across China, announcing plans to build four new chip manufacturing plants since 2020. One plant in Shenzhen has entered mass production, while another is set to go into mass production later this year.
(Reporting by Josh Horwitz; Editing by Mark Potter and Edmund Klamann)
