On November 11, SMIC issued a warning that the overcapacity issue in mature process chips will continue until 2025, stating that it will be more cautious in establishing new capacity.
Reports indicate that since the end of 2022, the global semiconductor industry's recovery has been quite challenging. The pandemic initially caused a large-scale chip shortage, which eventually transformed into an oversupply situation. Many end users, including automotive manufacturers, are still coping with excess inventory.
Zhao Haijun, co-CEO of SMIC, acknowledged during the announcement of the third-quarter financial report that the company's capacity utilization rate hovers around 70%, far below the optimal level of 85%. This indicates "serious overcapacity," and even if the situation does not worsen, a significant improvement is unlikely.
According to LSEG data, SMIC's revenue for the third quarter reached $2.17 billion, a 34% year-over-year increase, roughly in line with the market expectation of $2.2 billion. Net profit grew by 58% from July to September, reaching $148.8 million, which is below the analyst expectation of $199.71 million. Looking ahead to Q4, SMIC expects revenue to remain roughly flat, with a 2% quarter-over-quarter increase.
Zhao Haijun stated that the global macroeconomic environment, especially in Europe, remains in a downturn. Consequently, global wafer capacity utilization still faces oversupply. For the industry to recover, the overall capacity utilization needs to be above 85%. However, the average capacity utilization rate for the industry this year is only 70%. This situation is unlikely to improve significantly in the short term.
From 2021 to 2023, major foundries announced numerous new capacity expansion plans. However, since the beginning of this year, the number of publicly disclosed new construction projects has significantly decreased. Zhao Haijun believes that the reduction in new projects reflects an industry trend; beyond the publicly disclosed projects, there will be no new capacity expansion plans in the short term. The current capacity under construction primarily corresponds to existing customer demand, with little additional planning.
He noted that many of the orders currently being processed by SMIC are from last year. After fulfilling these orders this year, there will be few left for next year. Therefore, in terms of revenue, this year will be a peak for incremental growth, while 2025 will still see some growth, but it will not be as strong as this year.
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Source: GuoXin Network
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