Chinese chipmaker becomes second largest smelter in the world

SMIC, despite being blacklisted, surpassed GlobalFoundries and others in revenue.

China’s largest contract chipmaker this week announced its financial results for the first quarter of 2023. Despite crushing US sanctions, SMIC is now the world’s second largest pure-play foundry after TSMC. The company managed to outsell GlobalFoundries and UMC, two of the other pure-play foundries, that it had tracked for years. However, it still lags behind IDMs like Intel and Samsung.

With revenue of $1.75 billion in the first quarter, SMIC is ahead of the other two major pure-play foundries, UMC (which made $1.71 billion, up 0.8% year-over-year) and GlobalFoundries (which profited $1.549 billion, down 16% from the previous year). As a result, SMIC is the second pure-play foundry in the world at the moment.

Two other contract chipmakers – Intel Foundry and Samsung Foundry – are part of the multinational conglomerates Intel and Samsung Electronics and serve the needs of their owners as well as third-party customers. In the case of Intel Foundry, well over 90% of its profits come from Intel itself.

Intel said revenue from its foundry unit was $4.4 billion in the first quarter of 2024, making it the world’s second-largest contract chipmaker by revenue, if you can call it that, given that the vast majority of its business is made up of products it manufactures. Intel itself.

As for Samsung Foundry, we estimate it made about $3.38 billion: We assume SF revenue represents about 82% of Samsung’s Device Solutions division revenue, excluding memory, which was about $4.127 billion for System LSI and Foundry units in Q1 2024. As a result, Samsung Foundry is now the world’s third-largest contract chipmaker by revenue, although its main customer is likely Samsung Electronics itself.

SMIC’s revenue for the first quarter of 2024 was US$1.75 billion, a 19.7% year-over-year increase from US$1.462 billion in the same quarter last year. This increase is due to increased orders and production of high-performance processors using the company’s 2nd generation 7nm class manufacturing process.

However, SMIC’s profitability declined sharply from US$231.1 million in Q1 2023 to US$71.792 million in Q1 2024, despite increased utilization (80.8% vs 68.1%) and shipments (1.795 million 200 mm equivalent wafers versus 1.252 million 200 mm equivalent wafers).

The main reason for the lower profitability is the huge increase in SMIC’s capital expenditure from US$2.235 billion in Q1 2024 to US$1.259 billion in Q1 2023. Another possible reason is that the company is increasing production of chips in its 2nd generation class 7nm manufacturing process, which increases its costs but will naturally generate substantial revenue increases in the long term.

Text by Anton Shilov is a freelance news writer at Tom’s Hardware US. Over the past few decades, he has covered everything from CPUs and GPUs to supercomputers, and from modern process technologies and the latest fabulous tools to high-tech industry trends.