By Sherry Qin
Semiconductor Manufacturing International Corp.’s shares fell in morning trade after the chip maker posted declining profits and margins amid sluggish demand.
The Chinese company’s Hong Kong-listed shares fell as much as 6.6% early Friday and were last down 4.1% at 22.45 Hong Kong dollars (US$2.87). Its Shanghai-listed shares were down 3.1% to 55.23 yuan (US$7.58).
The declines come after the Shanghai-based foundry said in an exchange filing late Thursday that its third-quarter net profit fell 80% on the year to $94.0 million. That compared with the $184.0 million expected in a FactSet poll of analysts.
Revenue declined to $1.62 billion from $1.91 billion in the year-earlier period. The result missed consensus views and company guidance of about $1.96 billion-$2.00 billion, according to FactSet.
SMIC’s third-quarter gross margin fell to 19.8% from 38.9% last year.
In an earnings call after the results, SMIC’s co-chief executive said the rebound in chip demand that had been expected at the beginning of the year hadn’t materialized.
“We haven’t seen drivers and momentum for significant growth for the market,” Zhao Haijun said on the call Thursday.
Like other chip makers, SMIC has been grappling with weak demand amid a slowing global economy and supply-chain issues. But it expects the market to stabilize in 2024 and has new plans to boost capacity.
SMIC on Thursday raised its capex forecast for the year to around $7.5 billion despite previously saying it expected spending to be roughly flat compared with the $6.35 billion allotted in 2022. Zhao said most of the funds will be spent on capacity expansion and new infrastructure for semiconductor fabrication plants.
Zhao also attributed the capex increase to supply-chain improvements. He said the impact of geopolitical issues on the company’s supply chain has eased, meaning that the flow of equipment to fabs will likely increase substantially by the end of the year.
Kaiyuan Securities analyst Liu Xiang said in a research note that SMIC’s continuous production capacity reflects its confidence in the industry and its future growth.
SMIC expects fourth-quarter revenue to grow 1% to 3% on quarter, but that its gross margin will be pressured by the new capacity additions.
Write to Sherry Qin at sherry.qin@wsj.com
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