SMIC shows first quarterly revenue fall in 3 years as chip glut bites

A logo of Semiconductor Manufacturing International Corporation is seen at China International Semiconductor Expo following the coronavirus disease outbreak in Shanghai, China October 14, 2020. REUTERS/Aly Songon Thursday reported its first quarterly drop in revenue in more than three years, as the global chip sector struggles to work through an inventory glut.

Revenue in the January-March quarter was $1.46 billion, down 20.6% year-on-year and in line with analyst estimates. Net profit fell 48.3% from a year earlier to $231.1 million. SMIC executives attributed the drop to weak demand, following a years-long chip shortage that led customers to build up excess inventories.

On an earnings call, SMIC co-CEO Zhao Haijun said there was still a lack of clarity about prospects for recovery in the second half of the year. Other chip companies have faced similar difficulties in recent months. A chip shortage that began in late 2020 caused a surge of demand for manufacturers like SMIC, but as sales of electronics slow, brands are now stuck with excess chip inventories.

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