Despite record high sales last year, the Chinese chipmaker Semiconductor Manufacturing International Corp SMIC warned of a weak 2023, as slowing demand for electronics put pressure on its business.
SMIC is China's best hope to become a leader in chip manufacturing that can rival Taiwan Semiconductor Manufacturing Corporation TSMC, the industry's largest foundry, backed by funding from Beijing.
SMIC has seen sales surge over the past two years, as global demand for low-end chips went up in the wake of the COVID-19 epidemic and a global chip shortage.
It said that total revenue for 2022 reached $7.23 billion, up 33.6 per cent from 2021. According to a survey of analysts on Refinitiv, that was less than the average estimate of $7.35 billion, and the low side of the company's late November forecast of around $7.3 billion. Demand for consumer electronics waned as the pandemic subsided, and the growth of the company may be peaking.
In its financial filing, SMIC said it expects revenue to decline by low-teens percentage year-over-year, which would mark a break from continuous growth.
Gross profit fell slightly over the same period, hitting $518.7 million, down from $552.8 million the year prior.
The company is generations behind competitors in leading-edge technology and has been in Washington's crosshairs in recent years due to a dispute with Beijing over chip technology.
In early October, the U.S. department of commerce released a sweeping set of export controls aimed at containing advancement among China's chip manufacturers.
The restrictions are further set to hamper SMIC's ambitions for making advanced chips, experts say.
China is rapidly expanding capacity and plans to build four new chip manufacturing plants since 2020.