Bloomberg News reported on the 10th that a global oversupply phenomenon is occurring as China begins producing its own semiconductors due to the United States’ sanctions on semiconductors.
SMIC, China’s largest foundry (consignment manufacturing) manufacturer, warned that geopolitical tensions between the U.S. and China are encouraging an oversupply of global semiconductors.
SMIC announced its earnings the previous day. As a result of the performance announcement, it was revealed that net profit and sales plummeted by 80% and 15%, respectively. As a result, the stock price is plummeting by nearly 8%.
SMIC is China’s largest foundry semiconductor company, supplying semiconductors to Huawei and others.
China is intensively growing this company in response to U.S. sanctions on semiconductor exports to China. The goal is to surpass Korea’s Samsung Electronics and Taiwan’s TSMC.
SMIC is the company that produced the 7-nano process semiconductor used in Huawei’s recently released smartphone.
SMIC announced in its earnings announcement on the 9th that its net profit for the last quarter was $93.9 million. This is not only significantly lower than the market’s expectation of $165.1 million, but also a plunge of 80% compared to the previous year.
Sales were $1.621 billion, falling short of market expectations of $1.625 billion. This is also a 15% decrease compared to the previous year.
This can be interpreted as the fact that semiconductor inventory has not yet been completely exhausted as the recession in the semiconductor industry continues.
According to data from the U.S. Semiconductor Industry Association, global semiconductor sales in September rose 1.9% from the previous month, showing signs of recovery, but still fell 4.5% compared to the previous year, failing to completely escape the recession.
In particular, SMIC warned that demand for semiconductors in the smartphone sector is low. SMIC said that demand from smartphone manufacturers such as Xiaomi is slowing significantly.
Haijun Zhao, the company’s CEO, said in a conference call after the earnings announcement, “From a global perspective due to geopolitical tensions, the current global semiconductor production capacity is excessive,” and “It is taking more time than expected until inventory is exhausted.” “It will take,” he predicted.
Samsung Electronics Delight Room in Seocho-dong, Seoul. 2020.9.15/News 1 This contradicts the optimism of Samsung Electronics and TSMC that demand for smartphone semiconductors will soon bottom out.
When SMIC announced performance that fell short of market expectations, the company’s stock listed on the Hong Kong Stock Exchange plummeted by about 8%. On the Hong Kong stock market on the 10th, SMIC’s stock price fell 7.48% from the previous trading day to 21.65 Hong Kong dollars.
Source: Donga