SMIC stock: Third-quarter profit jumps 123.4%

Semiconductor Manufacturing International Corporation reported a sharp increase in third-quarter profit on Thursday, November 12, after stronger revenue and improved factory utilization. Reuters reported that profit rose 123.4 percent year over year and exceeded analyst estimates.

Revenue reached USD 3.19 billion for the three months ended September 30, according to FilingReader. That represented growth of 6.1 percent from the second quarter and 33.9 percent from the year-earlier period. Wafer shipments reached 3,033,683 units.

Gross profit rose to USD 953.2 million, lifting the gross margin to 29.9 percent from 25.3 percent in the preceding quarter. FilingReader attributed the improvement to higher utilization and a changed product mix. Capacity utilization reached 97.3 percent, while capital spending totaled USD 1.0943 billion.

Fourth-quarter guidance remains positive

SMIC expects fourth-quarter revenue to increase by 4 percent to 6 percent sequentially. The company projects a gross margin of 26 percent to 28 percent, below the third-quarter level but still above the preceding quarter's margin.

The results give investors two competing signals. Higher utilization and stronger wafer shipments point to continued demand for the Chinese foundry's production capacity. The lower margin outlook, however, suggests that profitability may moderate as the company moves into the final quarter of the year.

Reuters said the quarterly profit result beat analyst estimates, putting attention on whether SMIC can maintain utilization and pricing while expanding capacity. The next focus for investors is the delivery of the fourth-quarter revenue and margin outlook.

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