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Investing.com -- Semiconductor Manufacturing International Corp (SMIC), China’s largest contract chipmaker, has reported a significant decrease in profit for the fourth quarter, while its revenue saw an increase.
The profit attributable to SMIC’s owners was $107.6 million in the October-December quarter, a 38.4% fall compared to the same period in the previous year. This figure was lower than the analysts’ estimate of $193.45 million, based on London Stock Exchange Group (LON:LSEG) data.
On the other hand, SMIC’s revenue for the fourth quarter increased by 31.5% year-on-year to reach $2.2 billion, slightly exceeding the market expectations of $2.18 billion, according to LSEG.
The company’s capital expenditure jumped to $7.3 billion in 2023 from $4.5 billion in 2021, demonstrating its aggressive expansion strategy. It invested an additional $7.33 billion in 2024, as per its latest earnings release.
However, this heavy spending has impacted SMIC’s profitability. The company’s gross margin fell to around 20% in 2023 from over 30% in 2021-2022.
For the fourth quarter of 2024, SMIC reported a gross margin of 22.6%, an improvement compared to 16.4% in the same quarter a year earlier.
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