TREE NEWS update: SMIC’s third-quarter gross margin reached 29.9%, up 4.6 percentage points quarter-on-quarter, co-CEO Zhao Haijun said at the company’s Q3 earnings call. He attributed the improvement to urgent customer pull-in requests that led SMIC to slow engineering and R&D wafer starts to support customer shipments, lifting capacity utilization to 97.3%, up 3.6 points, on 20,000 additional 8-inch-equivalent monthly wafers. Higher output diluted per-wafer costs, offsetting a 2.3% quarter-on-quarter rise in depreciation and pushing gross margin above the top end of guidance.
SMIC Q3 gross margin rises to 29.9% on urgent customer pull-in, co-CEO says
AI take
The margin beat rests on a tactical trade-off rather than a structural shift: SMIC diverted engineering and R&D wafer starts toward urgent customer pull-in, so utilization and cost dilution did the work while depreciation still climbed. That distinction matters for anyone tracking foundry economics, because pull-in demand is by nature a timing effect, not a durable demand signal. The open question is whether engineering and R&D activity resumes without giving back the utilization gains, and whether depreciation keeps rising faster than output once the urgent orders clear.
Generated by AI for reference only.
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