(Yicai Global) Nov. 11 -- Leading Chinese chipmaker Semiconductor Manufacturing International Corporation said it expects operating revenue to fall this quarter because of new US export curbs on China's chip sector and sluggish demand for consumer electronics.

Operating revenue, or income from SMIC’s main business, could drop from 13 percent to 15 percent in the three months ending Dec. 31, the Shanghai-based firm said in a filing to the Hong Kong Stock Exchange yesterday.

The company cited weak demand in the smartphone and consumer electronics sectors, coupled with the need for some clients to take time to interpret new US export controls, for the projected decline. The gross profit margin will probably stay between 30 percent and 32 percent, it said.

The US Department of Commerce released broad changes to the Export Administration Regulations on Oct. 7, requiring licenses to be issued before exports can be made to facilities for advanced chip production in China.

“The new rules have an adverse impact on our production and operation,” SMIC said. “We have maintained close communications with suppliers, while the clarification of some definitions in the new rules and the assessment of impact on the company are still in progress.”

Shares of SMIC [HKG: 0981] rose 0.4 percent today to end at HKD16.74 (USD2.14), after opening 3.1 percent higher.

Third-quarter gross profit soared 59 percent to USD467.9 million from a year earlier, SMIC’s earnings report showed. The gross profit margin was nearly 39 percent, up 5.9 percentage points from a year ago but down 0.5 point on the second quarter.

Shipments fell in the three months ended Sept. 30, while product prices climbed. Operating revenue rose 0.2 percent from the previous quarter and 34.7 percent from a year earlier. Income from China accounted for 70 percent of the total.

For the full year, SMIC expects revenue to jump 34 percent to USD7.3 billion, with a gross profit margin of about 38 percent, based on its performance in the first nine months and fourth-quarter guidance. The firm raised its capital expenditure budget to USD6.6 billion from USD5 billion.

Editor: Futura Costaglione