For the October to December period, profit attributable to SMIC's owners was $107.6 million, falling short of analysts' expectations of $193.45 million, as per LSEG data.
In contrast, revenue increased by 31.5%, reaching $2.2 billion, which slightly exceeded market forecasts of $2.18 billion, according to LSEG.
The company's operations remain predominantly centered on mature-node chips used in consumer electronics and home appliances, with advanced manufacturing initiatives, such as those for Huawei's smartphone chips, contributing only a small fraction of its overall revenue.
Due to U.S. export restrictions on advanced chipmaking technologies, Chinese foundries, including SMIC, have sharpened their focus on this segment.
This strategic pivot has proven beneficial, as Chinese manufacturers are gradually capturing market share in mature-node chips, posing a challenge to established competitors like Taiwan's Powerchip.
Over recent years, SMIC has significantly increased its capital investments to enhance production capacity and bolster China's semiconductor industry.
Capital expenditure rose to $7.3 billion in 2023, up from $4.5 billion in 2021, highlighting the company's aggressive growth strategy. Additionally, it allocated another $7.33 billion in 2024, according to its most recent earnings report.
However, this substantial investment has impacted profitability, with SMIC's gross margin decreasing to approximately 20% in 2023, down from over 30% in 2021-2022.
In the fourth quarter of 2024, SMIC reported a gross margin of 22.6%, an improvement from 16.4% in the same period the previous year.