SMIC's Q1 Results and Q2 Outlook Align with Projections, Strongly Benefiting from Localized Production Demand

Stock News05-19 17:07

CICC's research report indicates that Semiconductor Manufacturing International Corporation's (SMIC) first-quarter performance and second-quarter guidance met expectations. Revenue reached USD 2.505 billion, marking an 11% year-on-year increase and a 0.7% sequential growth, which aligned with the guidance for flat sequential performance. The gross margin was 20.1%, up 0.9 percentage points quarter-over-quarter, within the guided range of 18-20%. For the second quarter, the company projects revenue growth of 14% to 16% sequentially, with a gross margin expected between 20% and 22%. CICC maintains an "Outperform" rating and a target price of HKD 100.

The report notes that SMIC's production capacity reached 1.08 million wafers per month (in 8-inch equivalents) by the end of the first quarter. Capacity utilization stood at 93.1%, showing a slight sequential decline primarily due to seasonal factors and impacts from the consumer electronics sector. Capital expenditures for the first quarter amounted to USD 1.56 billion. Depreciation and amortization expenses rose to USD 1.088 billion, a 25.7% increase year-on-year. However, the gross margin did not experience a significant drop, reflecting the counterbalancing effect of robust industry conditions and the company's high capacity utilization.

CICC anticipates that 2026 will be a pivotal year for SMIC, characterized by accelerated revenue realization alongside ongoing depreciation pressures. The projected 14% to 16% sequential revenue growth for the second quarter is attributed to the combined effect of rising capacity utilization and average selling prices (ASP).

In the first quarter, the revenue contribution from consumer electronics and smartphones declined to 18.9% and 46.2%, respectively. Conversely, the share from computers & tablets and industrial & automotive segments increased to 13.6% and 14%. CICC believes the company is significantly benefiting from the "localized production demand" driven by AI supply constraints and the reshaping of supply-demand dynamics in mature process technologies by AI-related components. SMIC's customer base is also transitioning away from reliance on traditional consumer electronics.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment