SMIC Photo: CFP

Semiconductor Manufacturing International Corp (SMIC) is unlikely to see a repeat of massive sales growth in the third quarter, Zhao Haijun, co-chief executive of SMIC said Friday after the chipmaker posted stellar results for the second quarter.

An uptick in the company's gross margin during the second quarter was attributed to increased capacity, modifications to its product structure and higher prices, Zhao told a quarterly earnings conference on Friday.

Price swings contributed to about 9 percent of the jump in gross margin, Zhao disclosed, adding that semiconductor makers are generally making slow headway in expanding capacity and delivery shipments.

Supply would continue to fall short of demand until at least the first half of 2022, he estimated, noting that the COVID-19 epidemic and international uncertainty remained a factor.

Prices are likely to continue upward in the third and fourth quarters, according to Zhao, who noted however the chipmaker's sales would only report a rise of 2-4 percent in the third quarter over the previous quarter when its gross margin would range from 32 percent to 34 percent.

The unsustainability of a spike in wafer shipments to clients is seen to render it impossible to continue SMIC's sales momentum in the third quarter.

The Chinese chipmaking giant generated $1.34 billion in revenue in the second quarter, up 21.8 percent from the prior quarter and an increase of 43.2 percent on a yearly basis, according to its latest quarterly financial report on Thursday.

The firm's gross profit hit $405 million in the second quarter, a surge of 61.9 percent from the quarter before and 62.9 percent from the year before.

The chipmaker's gross margin also rose to 30.1 percent in the second quarter from 22.7 percent in the first quarter.

In a sign of an upturn, SMIC raised its annual revenue growth target and gross margin target to around 30 percent respectively.

In a statement announcing the quarterly disclosure, SMIC co-CEOs Zhao and Liang Mong Song said that "since being placed on the Entity List last year, SMIC has been proceeding forward through difficult circumstances … In terms of capacity expansion, its progress is rolling out as planned. However, uncontrollable factors such as license approvals, supply chain tightness, and logistics impacted by the epidemic have also inevitably affected the equipment arrival times.

"We understand that people have high expectations for SMIC, but there is no shortcut or leaping forward in the semiconductor manufacturing industry. We will take one step at a time, grasp our own advantages in specific market segments, improve our core competitiveness and enhance customer satisfaction."

Global Times