In the past three quarters, the production capacity is close to full capacity, and SMIC revised its Q3 performance target

On October 15, SMIC announced an increase in revenue and gross profit margin guidance for the third quarter of 2020. The quarter-on-quarter revenue growth guidance for the three months ended September 30, 2020 was raised to 14% to 16% from the original 1% to 3%, and the gross margin guidance was raised to 23% to 25% from the original 19% to 21% .

In the second quarter of this year, SMIC’s revenue reached US$938 million, an increase of 3.7% month-on-month and an increase of 18.7% year-on-year; gross profit was about US$249 million, an increase of 6.4% month-on-month and 64.5% year-on-year. To achieve performance growth in the second quarter, the price increase of 8-inch wafers can be regarded as an important driving force.

8-inch wafer heat continues

Benefiting from the rapid growth of application demand for image sensor CIS, power management chip PMIC, fingerprint identification chip, Bluetooth chip, special memory chip and other applications, orders for 8-inch factories continued to be hot, and SMIC’s production capacity was fully loaded. It is expected that under the catalysis of 5G applications, the rising market of 8-inch wafers will continue.

SMIC’s capacity utilization rate has been increasing since 2019Q1. In the past three quarters, the company’s overall capacity has been close to full capacity, and the capacity utilization rate has reached more than 98%.

Large-scale expansion has begun

It will alleviate the production capacity problem, and SMIC has embarked on a large-scale expansion of production.

Zhao Haijun, co-CEO of SMIC, once said in the second-quarter earnings conference call, “In order to alleviate the shortage of production capacity, the company’s 8-inch monthly production capacity will increase by 30,000 pieces and 12-inch monthly production capacity will increase by 20,000 pieces by the end of this year. “

In terms of 8-inch wafers, it is expected to increase the production capacity of 30,000 wafers per month in three production bases in Tianjin, Shanghai and Shenzhen. At the same time, the SMIC North FABB3, SMIC South FABSN1 and the proposed SMIC South FABSN2 under construction will also contribute new capacity increments to the company.