China’s SMIC Had Reported Record High Revenue For 2Q 2020

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The China-headquartered semiconductor company, SMIC, might be next on the list of US bans. The company said that it has maintained long-term strategic partnerships with multiple U.S.-based semiconductor equipment suppliers

On the brink of being banned by the US authorities, SMIC for 2Q 2020, had reported record revenue figures of $938.5 million. These announcements were made before the news of US possible banning SMIC were published.

“Although the macro environment remains uncertain, IC demand continues to be strong. Our second quarter revenue reached another record high of $938 million, an increase of four per cent quarter-over-quarter and a 19 per cent year-over-year increase; profit for the period attributable to SMIC also reached another historical high of $138 million,” Dr. Zhao Haijun and Dr. Liang Mong Song, SMIC’s Co-Chief Executive Officers had commented.

Supplies to Huawei and Qualcomm among others

SMIC supplies chips to Huawei as well as Qualcomm among other clients. If the proposal of Pentagon is finalised and summoned, SMIC would not be able to upgrade software of any of its US-sourced machines.

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SMIC, in a response, released a statement that read, “SMIC solemnly declares that the Company, a public company listed on the Hong Kong Stock Exchange and the Sci-Tech Innovation Board (STAR Market), is an international semiconductor foundry strictly complying with the laws and regulations of all jurisdictions where it performs its businesses. Since its inception, the Company has been fully compliant with all rules and laws. SMIC has maintained long-term strategic partnerships with multiple U.S.-based semiconductor equipment suppliers.”

The company also noted that it had been granted Validated End-User (VEU) authorization by the BIS and the company hosted several visits from U.S. Government officials. It also stated that any assumptions of the it’s ties with the Chinese military are untrue statements and false accusations.

SMIC’s Gross profit was $248.6 million in 2Q20. This represents an increase of 6.4 per cent QoQ from $233.6 million in 1Q20 and 64.5 per cent YoY from $151.2 million in 2Q19. It’s gross margin was 26.5 per cent in 2Q20, compared to 25.8 per cent in 1Q20 and 19.1 per cent in 2Q19.

The company is expecting its revenue to increase by one to three per cent QoQ during 3Q 2020. It also expects gross margin to range from 19 to 21 per cent during the ongoing quarter.

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