SMIC(00981)2022-05-13 00:30Financial Data and Key Metrics Changes - In Q1 2022, the company reported revenue of 536 million, a sequential increase of 27.6% and a year-over-year increase of 330% [4][5] - The company expects Q2 2022 revenue to grow sequentially by 1% to 3% and gross margin to be between 37% and 39% [5][13] Business Line Data and Key Metrics Changes - Revenue by application for Q1 2022: smartphones (29%), smart homes (14%), consumer electronics (23%), and other electronics (34%), with growth of 10% to 30% across categories [12][13] - The share of smartphones and consumer electronics decreased, while smart homes and other categories increased, aligning with market demand and capacity allocation [12][13] Market Data and Key Metrics Changes - The company noted a structural shortage in semiconductor manufacturing capacity, despite a softening demand in consumer electronics [2][9] - Revenue distribution by region in Q1 2022: Mainland China and Hong Kong (68%), North America (19%), and Eurasia (13%), with growth in all regions [12][13] Company Strategy and Development Direction - The company aims to optimize product mix and pricing strategies to enhance average selling prices, which increased by 13% sequentially in Q1 2022 [11][12] - The company plans to continue its strategy of seeking progress in a stable manner, focusing on fulfilling customer commitments [15] Management Comments on Operating Environment and Future Outlook - Management highlighted that the impact of COVID-19 and geopolitical tensions has been mitigated, but the long logistics supply chain remains a challenge [15] - The company expects strong customer demand to persist, with capacity remaining tight throughout the year [15] Other Important Information - The company plans capital expenditures of approximately $32 billion for 2022, with a focus on expanding production capacity [7][8] - The company has implemented various measures to ensure production continuity amid pandemic challenges, including closed-loop operations and logistics management [11][27] Q&A Session Summary Question: What impact has COVID-19 had on sales and maintenance? - Management indicated that the postponement of annual maintenance (APM) could disrupt manufacturing for 5 to 6 days, affecting productivity [16][17] Question: How is the company managing production amid ongoing pandemic challenges? - The company is working to expedite manufacturing to recover lost capacity and has not canceled any customer orders, only delayed some deliveries [18][27] Question: What is the outlook for wafer pricing in the foundry industry? - The company anticipates that rising costs for materials and equipment will impact gross margins, but it is negotiating with customers to adjust pricing accordingly [29][30] Question: How is inventory management affecting customer orders? - Management noted that while some customers are reducing orders due to high inventory levels, demand for critical components remains strong [32][33]