"Kechuangban Daily" on August 9 news (reporter Guo Hui)"From the perspective of demand in the second quarter of this year, as low-end and middle-end consumer electronics gradually recover, from design companies to terminal manufacturers, various links in the industry chain are more willing to seize opportunities and occupy more market share, and the willingness to stockpile and store goods is higher than in the first three months of this year." At the earnings conference of Semiconductor Manufacturing International Corporation held today, Zhao Haijun, co-CEO of Semiconductor Manufacturing International Corporation, said so.

Due to the supply chain segmentation and changes brought about by geopolitical factors, some customers have obtained opportunities to enter the industry chain, bringing new demand for the company. In order to cope with the ever-changing market, customers often convey their needs to the company in the form of urgent orders and early deliveries.

In terms of overseas customer revenue in the second quarter, the proportion of revenue from the US and Eurasian markets has increased compared with the previous period. Zhao Haijun said that this is because some overseas customers have established inventory to stabilize market share and hedge market risks in response to geopolitical considerations and market demand in China, and have conducted a certain degree of early delivery, and have shipped some products in the second half of the year in the first half of the year.

At the same time, Zhao Haijun also mentioned that the overall pattern for this year has been basically determined. The goal is to achieve a sales revenue growth rate higher than the industry average on a year-on-year basis. Sales revenue in the second half of the year is expected to be higher than the first half. The expansion of high value-added capacity and the growth of demand will become the main trend of Semiconductor Manufacturing International Corporation's basic face in the second half of the year.

"High-end Autos Quarterly" reported that the foundry price of Semiconductor Manufacturing International Corporation has bottomed out in the second quarter, and the expansion of 12-inch production will drive the average unit price in the third quarter to increase sequentially.

In the second quarter, the capacity utilization rate of Semiconductor Manufacturing International Corporation has been significantly improved, and the monthly capacity has also increased. Based on 8-inch wafers, the comprehensive capacity utilization rate of Semiconductor Manufacturing International Corporation has improved from 80.8% in Q1 2024 to 85.2% in Q2.

Zhao Haijun said that 12-inch production capacity has been close to full capacity utilization for the past few quarters. Effective production capacity has been added in the first half of this year; at the same time, the utilization rate of 8-inch wafers has also rebounded.

According to the financial report, classified by size, the demand for 8-inch wafers rebounded in Q2, and the revenue accounted for 26.4%, an increase of 2 percentage points from the previous period.

Due to the sales growth of 8-inch wafers, there appeared a situation of 'quantity rises, price falls' in the second quarter of Semiconductor Manufacturing International Corporation. Specifically, the sales revenue in Q2 was 1.9 billion US dollars, with shipments of over 2.11 million pieces of 8-inch wafers, an increase of 18% compared with the previous period. However, the average consolidated selling price fell 8% QoQ due to changes in product mix.

"Kechuangban Daily" reporters learned from the earnings conference that Semiconductor Manufacturing International Corporation's production expansion this year will mainly be for 12-inch wafers. Since 8-inch wafers have been shipped in the second quarter, the proportion of 12-inch products will increase in the third quarter. Therefore, it is expected that the average selling price in the third quarter will rise.

In terms of production capacity, Zhao Haijun said that the total increase in production capacity at the end of this year compared to the end of last year is about 0.06 million pieces of monthly 12-inch wafers.

"Currently, 12-inch wafer chips are in short supply, and prices are on the rise. At the same time, the added production capacity will also be fully utilized, promoting the optimization and adjustment of the product mix. Therefore, it is expected that the average unit price will increase sequentially in the third quarter, and drive the gross margin to increase sequentially, bringing price increases and revenue growth."

The performance guidance given by Semiconductor Manufacturing International Corporation for the third quarter shows that the quarterly revenue growth rate will increase by 13% to 15% compared with the previous quarter, and the gross margin will be in the range of 18% to 20%. Zhao Haijun said that the trend of increasing gross margin and average sales price is expected to continue into the fourth quarter.

In terms of pricing strategy, Semiconductor Manufacturing International Corporation once again emphasized at the earnings conference that it will not take the initiative to reduce prices and clearly stated that the foundry prices in the second quarter of this year have completely "stabilized, only rising and not falling".

Zhao Haijun said that neither 12-inch nor 8-inch wafers of Semiconductor Manufacturing International Corporation use low prices to increase capacity utilization. "But we will also face market competition and support customers to retain customer market share and product competitiveness."

"Industrial and Autos Daily" predicts that there is still uncertainty in new orders in Q4, and the industrial and automobile sectors have not shown signs of demand recovery.

In general, Q4 is the off-season for the wafer foundry industry. Wafer foundries usually place orders six months before the official launch of terminal products. The products that customers plan to sell this year will be basically in place for stocking in July and August. The demand for orders in the fourth quarter depends on whether manufacturers will stock up for the coming year.

Zhao Haijun expressed that the judgement for the newly added orders in Q4 of this year is cautiously optimistic, and there are still uncertainties. Semiconductor Manufacturing International Corporation has already received feedback from some customers.

Among them, orders corresponding to chips for televisions, speakers, and smart phones have all received requests from customers to reduce shipments in Q4.

Due to customers' advance replenishment and stocking, the overall business environment including smart phones, wearables and interconnectivity, consumer electronics, computers and peripherals has not declined, and will not fall further. However, it is also seen that the demand for automotive and industrial applications has not rebounded yet, and whether it will further decline will depend on the situation at the end of the year.

Currently, in the consumer electronics market classified under Semiconductor Manufacturing International Corporation - including applications such as games, toys, remote control, and smart home - demand is gradually recovering and is the "largest in quantity and fastest in growth" among the five major application categories.