Shulou(Shulou.com)11/24 Report--

SMIC today (12) held a performance presentation meeting, SMIC Co-CEO Dr. Zhao Haijun, Board Secretary Guo Guangli answered hot topics of concern to shareholders at the meeting. Zhao Haijun said at the meeting that there was panic in the market and the adjustment would last until the first half of next year.

A small increase in the average sales unit price will announce the company's financial report for the second quarter of 2022 and its revenue outlook for the third quarter. Guo Guangli, secretary to the board of directors, said that the average sales unit price increased slightly and the full-year results are expected to remain unchanged. SMIC had revenue of $1.903 billion in the second quarter, with a gross profit margin of 39.4% and a net profit of $514 million. In the second quarter, 188.65 million wafers (about 8 inches) were shipped, and capacity utilization fell to 97.1%. The unit price of the product increased by 3% from the previous month to $2136 per piece (12 inches). Capital expenditure was $1.672 billion in the second quarter, and the new plant project is moving forward as planned, with full-year capital expenditure expected to remain unchanged at $5 billion, up 11% from $4.5 billion in 21 years.

On the question of how the company has shown resilience in dealing with the current downward cycle, Zhao said SMIC has a better ability to cope with customers, platforms and production capacity than ever before. He also said that more than 70% of SMIC's turnover comes from the domestic market and is easily affected by the instability of the surrounding epidemic, but SMIC has a large number of production lines, product platforms and customers. to be able to flexibly switch different node production capacity and product platforms, while taking into account both Chinese and foreign customers, actively deal with the occasional market "quick freeze" problem.

There is a structural differentiation in the application field for downstream demand, Zhao said. Consumer electronics is in the stage of destocking, but demand such as smart home / industry is better. According to him, the oversupply in the wafer foundry industry is not obvious. Due to the slow growth of the entire supply chain, the production capacity of many process nodes and areas has not increased, so the monthly shipments of the whole industry have not increased significantly. At present, there is a trend of structural differentiation in different application fields, smartphones are still digesting inventory, consumer electronics demand is weak, while demand in automotive electronics, green energy, industrial control and other areas still maintain steady growth. Zhao Haijun revealed that the prices of large-size LCD Driver and smartphone IC will decline with the decline in demand, and chip manufacturers need to sell them to terminal phone manufacturers at reduced prices to maintain market share. However, the prices of products in other areas will remain stable, and the prices of products with long-term contracts will not change.

When introducing the market operation and the situation of various process platforms, Zhao Haijun said that in the second quarter, the camp received in smart home, consumer electronics high-end MCU, industrial growth is better. Driven by the demand for local network connections such as wireless networks and routers, smart homes increased by 24% month-on-month, consumer electronics demand on high-end analog MCU platforms increased by 8%, and industrial demand increased by 18%. Demand for consumer electronics such as smartphones and large-size LCD Driver is slowing.

There is panic in the market. In terms of market trends, Zhao said, there is panic in the market, and there is even an extreme reaction to a quick freeze. He said that in the first half of 2022, the integrated circuit industry chain entered the stage of being superimposed by the "double cycle", bringing some panic and uncertainty to the market, and some links of the industrial chain even had an extreme reaction of quick freezing and sudden stop. Zhao Haijun pointed out that the first priority in the "dual cycle" is the cycle of slowing global economic growth. Under the influence of many factors, such as the impact of the epidemic, high inflation and international local conflicts, global economic growth is under great pressure and consumption power is insufficient. The second is that the semiconductor market itself has entered a downward cycle. After accelerating consumption and expanding production capacity in the past few quarters, the industry as a whole has entered the balance of supply and demand, and some links have entered the destocking stage.

Zhao Haijun believes that this is already the worst-case scenario of the adjustment, and it seems that this round of cyclical adjustment will last at least until the first half of next year. When it ends, we should refer to the next macroeconomic trend, the pace of recovery of consumer demand and the situation of industry destocking. Zhao Haijun said that at the end of this year, all companies will make plans for next year, and the end of this year and the Spring Festival (February) are the turning points, and we can see whether the overall market demand will improve. He believes that the growth trend of demand in the integrated circuit industry remains unchanged, although there is a short-term adjustment, but the long-term logic of local wafer manufacturing remains unchanged.

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