SMIC shares rise on strong Q2 earnings as chip sector gains

Shares of Semiconductor Manufacturing International Corp (SMIC) advanced on Thursday after the Chinese chipmaker reported stronger-than-expected second-quarter earnings, propelling gains across the broader semiconductor sector.

SMIC posted a net profit of $1.2 billion for Q2, up 18% from the prior quarter, as revenue climbed 12% to $5.4 billion. The company cited robust demand for advanced process nodes and improved utilization rates at its fabrication plants. Analysts had expected a profit of $950 million on revenue of $5.1 billion, according to a Refinitiv consensus.

The earnings beat follows a period of tight supply in the global semiconductor industry, driven by geopolitical tensions and increased demand for high-performance chips. SMIC, which operates under U.S. export restrictions, has focused on domestic production to mitigate supply chain disruptions.

Broader chip stocks also gained ground, with the Philadelphia Semiconductor Index (SOX) rising 1.5% on the day. Major peers such as Taiwan Semiconductor Manufacturing Co (TSMC) and SK Hynix advanced 2% and 1.8%, respectively, while U.S.-listed SMIC American Depositary Receipts (ADRs) surged 4.5%.

Analysts at Citi maintained a neutral rating on SMIC but raised their price target to $12 from $10, citing improved operational efficiency and potential long-term growth in China’s semiconductor market. The stock closed at $11.20, up 3.8% on the session.

The company’s management highlighted ongoing investments in 7-nanometer and 5-nanometer process technologies, despite ongoing restrictions on advanced equipment imports. SMIC’s ability to scale production using less advanced tools has positioned it as a key player in China’s push for semiconductor self-sufficiency.