Newshot Article title: SMIC 赵海军: Smartphone and consumer electronics demand remains relatively weak; localization switching drives growth in three areas
Body:
SMIC 赵海军: Smartphone and consumer electronics demand remains relatively weak; localization switching drives growth in three areas
IT Home, November 13 news: SMIC Co-CEO 赵海军 said at the third-quarter earnings call that, from the application perspective of wafer revenue, demand for smartphones and consumer electronics remains relatively weak, with the two declining 8% and 1% quarter-on-quarter, respectively.
赵海军 pointed out that overall demand in the computers and tablets, industrial and automotive, and connectivity and wearable markets has not changed significantly. However, benefiting from localization switching across the industry chain and forward-looking platform deployment, the company achieved quarter-on-quarter revenue growth of 26%, 26%, and 18% in these three areas, respectively.
He also mentioned that the company's performance was not weak in the off-season. Although orders for mobile phones and some consumer categories weakened somewhat, the company fully leveraged its coordination and allocation capabilities across multiple process platforms to shift the released capacity toward high-demand, high-value-added products such as specialty memory and BCD. In the fourth quarter, the company expects shipments to remain steady. Changes in product mix and pricing that follows market conditions will drive up average selling prices, and revenue is expected to grow 4% to 6% quarter-on-quarter. At the same time, cost pressures from depreciation and raw materials continue to increase, and the company's increased engineering and R&D wafer starts in the fourth quarter will cause capacity utilization to decline slightly on the basis of continued release of expanded capacity. Therefore, the gross margin guidance given is flat with the previous quarter's guidance, at 26% to 28%.
赵海军 said that the company's full-year sales revenue is expected to exceed US$12 billion (approximately RMB 80.221 billion at current exchange rates), an increase of nearly 30% year-on-year. With total depreciation increasing by about 30% year-on-year, gross margin is expected to be around 26%, up about 5 percentage points year-on-year.
At the same time, the global equipment supply chain is overall tight, delivery cycles have lengthened, and there is still uncertainty regarding the delivery time of some equipment. Although this will not affect the implementation of this year's capacity expansion plans, it may disrupt the execution of full-year capital expenditure.
Looking ahead, he believes that industry certainty is mainly reflected in two aspects: first, AI demand is expected to lengthen the semiconductor upcycle, with the growth structure and cycle shape changing accordingly; second, the large-scale localization development of the entire industry chain is still continuing.
Against this backdrop, the company, relying on strategic binding with customers and matching the innovation speed of Chinese customers, will strengthen its advantages in specialty and customized processes. On this basis, the company will advance capacity expansion oriented by customer demand, build leading advantages with a high-value-added, high-quality product mix, strive to stabilize EBITDA—that is, operating cash flow capability—improve cost control and operational efficiency, enhance operational resilience through cycles, and achieve quality, sustainable growth.
The main data from SMIC's third-quarter financial report are as follows:
First three quarters of 2026
- Total operating revenue: RMB 60.618 billion, up 22.4% year-on-year
- Net profit attributable to shareholders of the parent company: RMB 7.314 billion, up 91.6% year-on-year
- Operating cash flow: RMB 28.625 billion
- Basic earnings per share: RMB 0.91
- Diluted earnings per share: RMB 0.91
Third quarter of 2026
- Total operating revenue: RMB 21.983 billion, up 28.1% year-on-year
- Net profit attributable to shareholders of the parent company: RMB 2.847 billion, up 87.6% year-on-year
- Operating cash flow: RMB 7.866 billion
- Basic earnings per share: RMB 0.33
- Diluted earnings per share: RMB 0.33
In the industrial and automotive fields, SMIC has a comprehensive layout of BCD low-, medium-, and high-voltage products, providing diversified specialty devices and processes, supporting up to grade 0 automotive standards.
IT Home note: grade 0 is the highest tier among automotive electronic component temperature grades, requiring an operating temperature range covering -40°C to 150°C.
The products cover BMS analog front-end and system basis chips, digital isolation, isolated drive and sampling front-end, and smart power switches, to meet the incremental demand of relevant customers, especially demand for high-value-added products.
- "SMIC 赵海军: Average wafer unit price in the third quarter increased 1.8% quarter-on-quarter"
- "SMIC Co-CEO 赵海军: Revenue expected to exceed US$12 billion in 2026, global equipment delivery cycles lengthen"
- "SMIC's net profit attributable to shareholders of the parent company in the first three quarters of 2026 was RMB 7.314 billion, up 91.6% year-on-year"
Related articles
- SMIC 赵海军: Average wafer unit price in the third quarter increased 1.8% quarter-on-quarter
- SMIC Co-CEO 赵海军: Revenue expected to exceed US$12 billion in 2026, global equipment delivery cycles lengthen
- SMIC's net profit attributable to shareholders of the parent company in the first three quarters of 2026 was RMB 7.314 billion, up 91.6% year-on-year
- Another domestic breakthrough: AMEC's first plasma wafer cutting equipment successfully delivered to an important domestic integrated circuit packaging customer
- Rapidus President Atsuyoshi Koike: Plans to build 3 more fabs and 1 R&D base near the existing fab
- Report says the three major memory manufacturers are in discussions with SEMI on robot charging standardization to improve fab automation levels