SMIC announced the increase of Q3 performance guidance: 14nm outbreak?

On October 15th , SMIC announced that it raised its Q3 quarterly performance guidance as of September 30 , and revenue and gross profit margins have increased significantly.

According to SMIC’s announcement, the company would like to inform shareholders and potential investors of the company that the company has raised its initial revenue and gross profit guidance for the three months ended September 30 , 2020 in the announcement.

The quarter-on-quarter revenue growth guidance for the three months ended September 30 , 2020 has been revised up from the original 1% to 3% to 14% to 16% due to changes in product mix and growth in other business revenues.

The gross margin guidance for the three months ended September 30 , 2020 has been raised from the original 19% to 21% to 23% to 25% .

Information from the official point of view, Q3 quarter revenue was up the chain to become rose up to 16%, but more interesting is the gross margin, turned into a 23-25% from the expected 19-21% increase 4 percentage points.

For SMIC, its mature technology has passed the depreciation period. Even if its revenue grows, its gross profit margin will not increase significantly. The main driver of gross profit growth should be advanced technology, especially 28nm or even 14nm processes.

In the Q2 quarter, the 14nm/28nm advanced process revenue accounted for a new high, reaching 9.1% , compared with only 7.8% in the previous quarter.

Prior to co-CEO Liang Mengsong mentioned May their 14nm production ascend to 6000 wafers / month, the end of this year the target is 15,000 wafers / month.

Judging from this information, in the September Q3 quarter, SMIC’s 14nm production capacity should have a good climb. The performance brought by advanced technology not only improved performance, but also promoted gross profit margin growth.