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.
The New Jersey attorney general sued Amazon on Wednesday, alleging the company has violated the rights of thousands of pregnant employees and staffers with disabilities who work in several of its facilities in the state.
The complaint, filed in Essex County Superior Court by the office of Attorney General Matthew Platkin, alleges Amazon violated state anti-discrimination law in how it treats pregnant employees and employees with disabilities when they request a work accommodation.
The state said the lawsuit follows a years-long investigation by its civil rights division into Amazon’s treatment of workers at warehouses across New Jersey.
According to the suit, the state’s investigation found that since October 2015, Amazon allegedly violated pregnant and disabled employees’ rights by placing them on unpaid leave when they request accommodations, denied them reasonable accommodations and “unreasonably” delayed its responses to workers’ requests.
It also alleged that Amazon “unlawfully” retaliates against these workers when they seek an accommodation, including by firing them. After workers are granted an accommodation, Amazon allegedly fired some employees for “failing to meet the company’s rigid productivity requirements.”
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“There is no excuse for Amazon’s shameful treatment of pregnant workers and workers with disabilities,” Platkin said in a statement. “Amazon’s egregious conduct has caused enormous damage to pregnant workers and workers with disabilities in our state, and it must stop now.”
Amazon spokesperson Kelly Nantel said in a statement that accusations it doesn’t follow federal and state laws like New Jersey’s anti-discrimination law are “simply not true.”
“Ensuring the health and well-being of our employees is our top priority, and we’re committed to providing a safe and supportive environment for everyone,” Nantel said.
The company said it approves more than 99% of pregnancy accommodation requests submitted by workers. Amazon also denied placing pregnant workers automatically on leave, as well as claims that it unjustifiably rejects accommodation requests.
The complaint seeks to require that Amazon pay unspecified compensatory damages and civil fines, as well as court orders requiring the company to adjust its policies and to submit to monitoring and reporting requirements for five years, among other remedies.
One incident described in the complaint states that an unnamed pregnant employee received an accommodation that permitted her to take additional breaks and restricted her from lifting items heavier than 15 pounds.
Less than a month after the accommodation was approved, she was allegedly terminated for “not meeting packing numbers,” the lawsuit states, even though her accommodation required her pack fewer items each shift.
In another case, a pregnant employee’s accommodation request was closed due to a lack of medical paperwork when the requested documents weren’t required. While the worker tried to resubmit her request, she allegedly received three warnings for “poor productivity,” and was ultimately fired for “not making rate,” according to the complaint.
Amazon’s internal investigation of her case didn’t confirm that the employee was fired due to her pregnancy, but the company ultimately reinstated her with backpay, the lawsuit says.
“Amazon’s discriminatory practices and systemic failure to accommodate pregnant workers and workers with disabilities have the effect of pushing these employees out of Amazon’s workforce — the precise outcome the [Law Against Discrimination] was intended to prevent,” according to the lawsuit.
Amazon’s treatment of pregnant employees and others in its sprawling front-line workforce has come under scrutiny in the past.
The company, which is the nation’s second-largest private employer, has faced lawsuits from workers at its warehouses, who alleged the company failed to accommodate them once they were pregnant, then fired them for failing to meet performance standards, CNET reported.
The Equal Employment Opportunity Commission last year opened a probe into Amazon’s treatment of pregnant workers in its warehouses after six senators urged it to do so, citing a “concerning pattern of mistreatment.”
New York’s Division of Human Rights in 2022 filed a complaint against Amazon alleging it discriminates against pregnant workers and workers with disabilities at its facilities.
Amazon said it doesn’t comment on ongoing litigation.
Chairman, President and CEO of IBM Arvind Krishna attends the 55th annual World Economic Forum meeting in Davos, Switzerland, on Jan. 22, 2025.
Yves Herman | Reuters
IBM reported third-quarter results that topped Wall Street estimates and lifted its guidance, citing ongoing artificial intelligence tailwinds. Still, the stock dropped 5% in extended trading.
Here’s how the company performed versus LSEG estimates:
Earnings per share: $2.65 adjusted vs. $2.45 expected
Revenue: $16.33 billion vs. $16.09 billion expected.
Revenue increased 9% from about $15 billion in the year-ago period, IBM said. The company reported net income of $1.74 billion, or $1.84 per share, after recording a loss of $330 million, or 36 cents per share, a year earlier. The results from last year included the impact of a $2.7 billion pension settlement charge.
“Clients globally continue to leverage our technology and domain expertise to drive productivity in their operations and deliver real business value with AI,” CEO Arvind Krishna said in release.
IBM upped its revenue guidance and said it now expects “more than” 5% revenue growth, up from “at least” 5%. Free cash flow for the year is expected to hit $14 billion, up from a $13.5 billion estimate last quarter.
Krishna also said the company’s AI book of business has surpassed $9.5 million, up from $7.5 billion during the second quarter.
Amazon on Wednesday unveiled a new robotic system that’s capable of performing multiple tasks at once in the company’s warehouses.
The system, called Blue Jay, is made up of a series of robotic arms that are suspended from a conveyor belt-like track. Those arms are tipped with suction-cup devices that allow them to grab items of varying shapes and sizes.
Blue Jay combines “what used to be three separate robotic stations into one streamlined workplace that can pick, sort, and consolidate in a single place,” Amazon said in a blog.
The robotic system’s goal is to assist employees with otherwise strenuous tasks “while creating greater efficiency in less physical space,” the company said.
Amazon is testing Blue Jay at one of its warehouses in South Carolina. So far, the company has observed that the system is able to pick, pack, stow and consolidate “approximately 75% of items we store at our sites.”
Blue Jay joins a growing fleet of robotic machinery being deployed across Amazon’s legions of warehouses. Over the past several years, Amazon has debuted robots capable of handling different tasks, ranging from removing items from shelves to sorting boxes. In May, it debuted “Vulcan,” a robotic system that has a sense of touch.
Amazon’s warehouse automation efforts were largely jumpstarted by its $775 million acquisition of Kiva Systems in 2012.
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The announcement comes as Amazon’s warehouse automation has come under growing scrutiny, particularly over how the technology is impacting its sprawling frontline workforce.
The New York Times on Tuesday published an investigation showing that Amazon’s automation team expects that it can avoid hiring more than 160,000 people in the U.S. by 2027, amounting to savings of about 30 cents on every item that Amazon packs and delivers. The report was based on interviews and internal strategy documents, the Times said.
In response to the report, an Amazon spokesperson told CNBC that the documents offer an “incomplete and misleading picture of our plans.”
“In this instance, the materials appear to reflect the perspective of just one team and don’t represent our overall hiring strategy across our various operations business lines — now or moving forward,” the spokesperson said in an email.
As the nation’s second-largest private employer, Amazon’s automation playbook could become a bellwether for the broader job market and other corporations. The company had more than 1.54 million employees globally at the end of the second quarter. That figure excludes delivery drivers, which are contracted through third-party firms.
The company on Wednesday said that employees remain “at the center” of its robotics development. Amazon said its goal is to “reduce physically demanding tasks, simplify decisions and open new career opportunities” for workers.
Amazon has sought to highlight how increasing automation in its facilities will lead to employees adopting “more rewarding” roles within the company. It offers an apprenticeship program in mechatronics and robotics, which involves honing skills around maintaining and monitoring robotic machinery.