Semiconductor Manufacturing International Corp (SMIC) reported a bigger-than-expected quarterly profit thanks to strong demand for Huawei Technologies smartphones powered by components made by the Shanghai-based chipmaker.
The net profit came in at 174.7 million USD for the quarter to the end of December, compared with an average analyst estimate of 139.1 million USD. The revenue for the period came in at 1.86 billion USD, which also came in above estimates of 1.66 billion USD.
SMIC, which is China’s largest chip sub-supplier, is capable of producing advanced 7-nanometer chips that can power smartphones and laptops, although its technology is still years behind that of industry leader Taiwan Semiconductor Manufacturing Co.
The Chinese semiconductor maker contributed to Huawei’s surprise comeback last year as it produced 7-nanometer processors for the Mate 60 Pro smartphones. With the help of SMIC, Huawei was able to return to the 5G phone market after years of US sanctions that limited the company’s access to advanced chips and put huge pressure on its smartphone business.
Huawei’s smartphone sales jumped 36% in the quarter to the end of December. The Shenzhen-based company became China’s fourth-largest smartphone maker and the only major brand to increase its market share in the latest quarter, according to IDC data. Huawei was the leading smartphone maker in China for the first two weeks of 2024, Counterpoint Research announced earlier this week.
However, SMIC shares are down 25% in Hong Kong since the start of the year amid continued headwinds in the financial center and in mainland China.
Most of SMIC’s business is related to the production of more basic semiconductors used in a wide range of devices, including household appliances and electric cars. Weak demand for these components is putting pressure on margins, according to Bloomberg Intelligence analyst Charles Shum.
