BEIJING, CHINA – DECEMBER 04: A logo hangs on the building of the Beijing branch of Semiconductor Manufacturing International Corporation (SMIC) on December 4, 2020 in Beijing, China. (Photo by VCG/VCG via Getty Images)
“Competition in the industry has been increasingly fierce and the pricing for commodity products basically follows the market trends,” SMIC said on Friday during the firm’s earnings call.
“The company fulfills its [long-term view] through constructing quality technology platforms that leap here in mainland China by one to two generations,” said SMIC.
SMIC, China’s biggest contract chip manufacturer, is seen as critical to Beijing’s ambitions of cutting foreign reliance in its domestic semiconductor industry as the U.S. continues to curb China’s tech power. SMIC lags behind Taiwan’s TSMC and South Korea’s Samsung Electronics, according to analysts.
The company’s first-quarter net income plunged 68.9% from a year earlier to $71.79 million, compared with LSEG analysts’ average estimate of $80.49 million.
Gross margin slid to 13.7% in the quarter – the lowest the firm has ever recorded in nearly 12 years – according to LSEG data.
Revenue for the first quarter was $1.75 billion, up 19.7% from a year earlier, as customers stocked up on chips, SMIC said. This handily beat LSEG estimate of $1.69 billion.
“In the first quarter, the IC [integrated circuits] industry was still in the recovery stage and customer inventory gradually improved. Compared to three months ago, we have noticed that our global customers are more willing to build up inventory,” SMIC said on Friday.
Customers are building up inventory to brace for competition and respond to market demand, the firm said, adding that it was unable to fulfil a few rush orders in the first quarter as some production lines were running at near maximum capacity.
SMIC’s chips are found in automobiles, smartphones, computers, IoT technologies and others. More than 80% of its revenue in the first quarter came from customers in China, it said.
Bracing for competition
In a bid to build up competitiveness and increase market share, the firm said it was prioritizing areas such as capacity construction and R&D activities for investments.
“[To] ensure that the company maintain its leading position in fierce market competition and maximize the protection of investor interest … the company plans not to pay dividends for the year 2023,” said SMIC.
“We believe that as long as there’s demand from customers along with our technology and capacity readiness, we can ultimately be bigger, better and stronger despite the fierce competition.”
The company expects second-quarter revenue to rise by 5% to 7% from the first quarter on strong demand, while gross margin could dip further to between 9% and 11%.
“Along with the increase in capacity scale, depreciation is expected to rise quarter by quarter. So the gross margin is expected to decline sequentially,” SMIC said.
Dara Khosrowshahi, CEO of Uber, speaking on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 22, 2025.
Gerry Miller | CNBC
Ride-hailing and food delivery app Uber is opening its “interest list” to users in Austin, Texas, who want to be first in line for Waymo robotaxis there.
The company said in a statement that users will “be able to travel across 37 square miles of Austin — from Hyde Park, to Downtown, to Montopolis” — when the Uber-Waymo service launches soon.
The so-called “interest list” allows users to receive Uber updates and bolsters their odds of being matched with a Waymo autonomous vehicle upon launch.
The vehicles that will be part of the Austin service are Jaguar iPace electric models equipped with Waymo’s driverless systems and labeled with both Waymo and Uber branding.
The Waymo rides in Austin will only be available through the Uber app, unlike in San Francisco and Los Angeles, where riders hail them through the Waymo One app.
In the face of investor pressure to step up its autonomous vehicle strategy after Tesla promised it would soon start producing robotaxis, Uber last year said it had begun testing a ride-hailing app with some of its employees.
While Tesla does not make vehicles that are safe to use without a human driver at the wheel, ready to steer or brake at all times, Elon Musk’s automaker in January said it will “begin launching” a driverless ride-hailing business “later this year” starting in Austin.
According to the Texas Department of Transportation, testing and operating a commercial robotaxi service in the state does not require the same types of special licenses and permits that other states require.
“Texas law allows for AV testing and operations on Texas roadways as long as they meet the same safety and insurance requirements as every other vehicle on the road,” a spokesperson for the department told CNBC by e-mail.
Uber CEO Dara Khosrowshahi is expected to discuss the impact of automated driving systems — or self-driving cars — on the company’s overall business and strategy on a fourth-quarter earnings call on Wednesday.
Apple shares fell on Wednesday after Bloomberg reported that Chinese regulators are considering whether to open a formal probe into the iPhone giant’s App Store fees and policies.
Shares of Apple were down 2.66% at 09:34 a.m. London time in premarket trading.
The State Administration for Market Regulation (SAMR) is looking into policies that include Apple taking a cut of as much as 30% on in-app spending, as well as blocking third-party payment services and app stores, Bloomberg reported Wednesday, citing people familiar with the matter.
China’s market regulator has not decided whether to formally open an investigation into Apple, according to the report.
Apple and China’s Ministry of Commerce was not immediately available for comment when contacted by CNBC.
Apple has maintained that its strict App Store policies are designed to protect users and improve the experience across its products.
China this week also opened a probe into Google over alleged antitrust violations, although the market regulator did not supply details over the focus of the investigation.
The Financial Times reported on Tuesday that the SAMR is also considering a probe into U.S. chipmaker Intel.
Apple’s App Store has come under scrutiny from regulators globally. It was forced to open up its App Store in Europe, under the sweeping Digital Markets Act in the EU. This means that it now allows non-Apple companies to offer app stores in Europe, and app developers can also use third-party payment systems.
If the China probe goes ahead, it would cause further headache for Apple in one of its biggest markets. The Cupertino giant is already facing stiff competition from local players like Huawei that are eating away at its smartphone market share. Apple sales in Greater China declined 11% year-on-year in the December quarter.
FILE PHOTO: The logo of Toyota is pictured in Cuautitlan Izcalli, Mexico, January 30, 2025
Raquel Cunha | Reuters
Japan’s Toyota Motor on Wednesday reported a second consecutive fall in quarterly profit, while announcing that it will set up a new company in China to make electric vehicles as it plays catch up with automakers focused on EVs.
Here are Toyota’s results compared with estimates from analysts, compiled by LSEG.
Revenue: 12.39 trillion yen vs. 12.1 trillion yen
Operating profit: 1.22 trillion yen vs. 1.39 trillion yen
The world’s largest automaker by sales volume saw anearly 28% year-on-year drop in operating profit during the quarter ended December.
The results mark Toyota’s second consecutive year over year decline in operating profit after the company saw profit fall 20% year over year in the previous quarter.
Net income attributable to the company, however, jumped to 2.19 trillion yen from 1.36 trillion yen a year ago.
The automaker’s consolidated vehicle sales for its financial third-quarter dropped to 2.44 million from 2.55 million units a year ago.
Still, Toyota maintained its full-year dividend forecast at 90 yen, compared with a dividend payout of 75 yen a year earlier.
Toyota said it will establish a wholly-owned company for the development and production of Lexus BEVs and batteries in Shanghai, China. The new company is expected to start production in 2027.
Toyota shares rose over 1% in Tokyo on Wednesday.
The companysaw its operating profit drop in the key North America region by 113.7 billion yen in the December quarter, year on year, while it declined by over 46 billion yen in Asia.
Toyota has been slower than competitors at embracing fully battery-powered electric vehicles, and instead has focused on hybrids, according to local reports.