smic's q2 2025 net profit dips amid rising costs, sales surge

2025-08-07 general

Shanghai, Thursday, 7 August 2025.
semiconductor manufacturing international corporation (smic), china’s leading chipmaker, witnesses a 19% drop in net profit year-over-year, settling at $132.48 million for q2 2025. despite a robust 16% increase in sales, reaching $2,209.06 million driven by strong domestic demand, escalating costs have squeezed profitability. interestingly, china now accounts for 84% of smic’s sales, a notable rise from 80% in the previous year. the company’s ability to navigate cost pressures while sustaining growth remains a key challenge.

financial performance details

smic’s second-quarter revenue reached $2.209 billion, a 16.2% year-over-year increase but a 1.7% decrease compared to the previous quarter [2][4][6]. despite exceeding prior guidance for a 4% to 6% sequential decline, the results indicate a slight deceleration [2][4]. the gross margin stood at 20.4%, surpassing the management’s guidance of 20% [2]. however, the profit attributable to shareholders experienced a significant decrease, landing at $132 million, a -19.465 19.5% drop year-over-year and a 29.5% decrease quarter-over-quarter [1][6]. this decline in profitability, coupled with a high price-to-book ratio, raises concerns about smic’s valuation [2].

segment analysis and market trends

a closer look at smic’s revenue streams reveals that smart phones contributed 25.2% of the total, while computers and tablets accounted for 15% [2]. consumer electronics led with 41%, followed by internet and wearable devices at 8.2%, and industrial and automotive applications at 10.6% [2]. notably, smart phone revenue decreased by 8.4% year-over-year to $557 million, reflecting a broader market trend where global smart phone shipments saw a 1% decline in q2 2025 [2]. this is the first decline in six quarters, signaling potential headwinds for smic’s future performance [2].

capacity and utilization rates

smic’s capacity utilization rate saw an increase, reaching 92.5% in the second quarter, up from 89.6% in the first quarter and 85.2% year-over-year [4]. the company’s monthly capacity increased from 973,300 to 991,300 8-inch equivalent wafers [4]. wafer sales volume also increased to 2.39 million, up 4.3% sequentially and 13.2% year-over-year [4]. these figures indicate strong operational activity, but the benefits are offset by rising costs [1]. despite these operational improvements, smic’s management forecasts a slowdown in revenue growth for the third quarter, projecting a 5% to 7% sequential increase [2][6].

q3 2025 outlook and analyst perspectives

smic anticipates a 5% to 7% sequential revenue increase for q3 2025; this translates to approximately $2.34 billion, marking the slowest growth in one and a half years [2]. the projected gross margin for q3 is between 18% and 20%, falling short of the 21.1% analysts had predicted [2]. the company has not yet explained the anticipated slowdown in revenue growth, leaving investors to await further details from the upcoming earnings call [2]. despite geopolitical challenges, one techinsights analyst noted that smic’s ability to maintain profitability is still impressive [7].

regional performance and strategic considerations

the chinese market continues to be smic’s primary revenue source, accounting for 84.1% of sales in q2 2025, up from 80.3% last year [1][4]. however, sales in the american region decreased from 16% to 12.9% year-over-year [4]. smic’s co-ceo, zhao haijun, mentioned that the direct impact of tariffs on the industry is minimal [4]. he also noted positive signs of recovery in the industrial and automotive sectors, as well as a strong trend toward domestic supply chain localization [4]. smic plans to further expand its production capacity in shenzhen by q4 2025 [7].

Bronnen

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