In the turbulent current situation of the semiconductor industry, SMIC's every move affects the nerves of the market. Recently, SMIC Co-CEO Zhao Haijun released heavy news at the results meeting: the company plans to cooperate with terminal machine factories to increase the sales proportion of automotive products to 10% in the future. This declaration undoubtedly makes SMIC's ambitions on the automotive chip track clear, and also makes the industry full of expectations for the future of this semiconductor giant.
The Rise of the Automotive Chip Market: New Opportunities for SMIC
With the acceleration of the transformation of the global automotive industry to electrification, intelligence, and networking, the demand for automotive chips has exploded like a blowout. From intelligent driver assistance systems to in-vehicle infotainment systems, from power control systems to body electronic control systems, chips are everywhere. According to the forecast of market research institutions, the global automotive chip market is expected to exceed $30 billion in 2025, with a compound annual growth rate of more than 10%. SMIC keenly grasped this market trend and resolutely plunged into the field of automotive chips.
Zhao Haijun said that SMIC is validating some of its existing product platforms for automotive products, and plans to upgrade the platform and gradually increase the volume within three years, when the corresponding production capacity will meet one-third of the demand of the domestic auto market. In the fourth quarter of 2024, SMIC's industrial and automotive application sales revenue accounted for 8.2% of the total, laying a solid foundation for the company's further expansion in the automotive chip market in the future.
Figure: SMIC will enter the field of automotive chips
Technology and capacity layout: SMIC's hard core strength
At the technical level, SMIC has continued to increase R&D investment in recent years and continue to make breakthroughs in advanced process technologies. The company has successfully mastered the process technology of 14nm and below, and is marching towards more advanced process technology. These advanced process technologies will provide strong support for the high-performance and low-power consumption requirements of automotive chips. For example, SMIC's 14nm process technology has achieved mass production, and its performance and power consumption have been recognized by the market, and it is expected to shine in the field of automotive chips in the future.
In terms of production capacity, SMIC has invested heavily. In 2024, the company's capital expenditure will reach 7.33 billion US dollars, and the monthly production capacity of 8-inch standard logic will be 948,000 pieces at the end of the year, with a total shipment of more than 8 million pieces, and an average annual capacity utilization rate of 85.6%. This large-scale production capacity layout can not only meet the needs of existing customers, but also provide sufficient "ammunition" for the rapid development of the automotive chip business. Zhao Haijun revealed that the company plans to complete the upgrade of the platform and gradually expand the production scale within three years, when SMIC's production capacity will be able to meet one-third of the demand of the domestic auto market.
Collaboration and Market Strategy: SMIC's Smart Move
SMIC is well aware that in the automotive chip market, it is difficult to go it alone. Therefore, the company actively carries out in-depth cooperation with terminal machine factories to develop and grow together. This partnership will not only help SMIC better understand the needs of automakers, but also accelerate the process of product validation and mass production. Zhao Haijun pointed out that the process of transferring and switching from the automobile and other industries to the domestic chain has entered the volume reception from the verification stage, and some products have been officially mass-produced.
In addition, SMIC actively cooperates with upstream and downstream enterprises in the industry chain to build a complete ecosystem covering design, manufacturing, packaging and testing. The construction of this ecosystem will provide a strong guarantee for the long-term development of the company's automotive chip business.
Financial Performance and Challenges: SMIC's Resilience and Resilience
Judging from the financial data in 2024, SMIC's performance is remarkable. The company achieved operating income of 57,795.6 million yuan, a year-on-year increase of 27.7%; The net profit attributable to shareholders of listed companies was 3,698.7 million yuan, a year-on-year decrease of 23.3%, but mainly due to the decline in capital income. In terms of automotive chip business, the total sales revenue of industrial and automotive applications in the fourth quarter of 2024 will reach 8.2%, indicating that the company's layout in this field has achieved initial results.
However, SMIC also faces some challenges. Zhao Haijun said frankly that the rapid growth of the company's revenue scale has brought higher depreciation pressure to the gross profit margin, and it is expected that the depreciation will increase by about two percent in 2025. In addition, the uncertainty of the external environment and the intensification of competition in the industry have also brought certain risks to the company's development.
In the face of these challenges, SMIC has not flinched. The company said it will combat depreciation by improving capacity utilization and diversify its product portfolio to combat cycles. At the same time, the company will continue to optimize the cost structure, strengthen cooperation with customers, and increase the added value of products to maintain sustainable profitability.
Future Prospects: SMIC's Sea of Stars
SMIC's ambitions in the automotive chip market are by no means a whim. The company has occupied a strong position in this field with its strong technical strength, sufficient production capacity layout, smart cooperation strategy and solid financial performance. In the next three years, with the gradual increase in the automotive chip business, SMIC is expected to set off a "China storm" in the automotive chip market.
Zhao Haijun's 10% target is not only a confident demonstration of the company's own strength, but also a strong promotion of the entire Chinese automotive chip industry. We have reason to believe that with the efforts of local companies such as SMIC, China's automotive chip industry will usher in a better tomorrow.
For SMIC, the automotive chip market is just the beginning. With the company's continuous cultivation in this field, its technical strength and market influence will be further enhanced, which will lay a more solid foundation for the company to expand into other emerging markets. The future of SMIC is worth looking forward to for each and every one of us.
