China’s SMIC sees a lower Q4 gross margin and lifts its annual capex forecast. On Thursday, Semiconductor Manufacturing International Corp. (0981. HK) announced that its projection for yearly capital expenditures has been increased to about $7.5 billion, and the company also stated that it anticipates weaker fourth-quarter gross margins.
The Chinese chip foundry also announced a decline in its third-quarter profit of almost 80%, related to $470.8 million. The chip foundry joins competitors such as Taiwan’s TSMC (2330. TW) and Germany’s Siltronic (WAFGn.DE) in experiencing profitability pressure due to a downturn in the semiconductor sector.
Due to rising interest rates and ongoing inflation, businesses have been obliged to reduce their spending on technology. In addition, limitations imposed by the United States on Chinese semiconductor firms are adding more pressure on the industry.
Compared to the gross margin of 19.8% achieved in the previous quarter, SMIC anticipates a fourth-quarter gross margin of between 16% and 18%.
The business anticipates a sequential gain of 1% and 3% in the fourth quarter, even though revenue for the third quarter decreased to $1.62 billion from $1.91 billion in the same period a year before.
SMIC had stated in the past that it anticipates its capital expenditures in 2023 to be broadly equivalent to what they were in 2022, which totaled around $6.35 billion.