Semiconductor Manufacturing International Corp (SMIC) shares surged on Wednesday after the company reported better-than-expected quarterly earnings and upwardly revised its full-year revenue guidance.
The Shanghai-based chip foundry posted a net profit of $421 million for the second quarter, up 15% from the previous quarter and beating analyst estimates of $380 million. Revenue rose 12% sequentially to $2.1 billion, driven by strong demand for advanced process nodes and recovery in automotive and industrial chip orders.
SMIC also raised its 2024 revenue guidance to a range of $8.4 billion to $8.6 billion, up from its prior forecast of $8.0 billion to $8.3 billion. The company cited robust demand across smartphones, AI and data center applications as key drivers.
Analysts at Citi and Goldman Sachs upgraded their price targets on SMIC following the results, with Citi lifting its target to $12 from $10 and Goldman Sachs to $14 from $12. The stock, which trades on the Hong Kong and Shanghai exchanges, was up 7.2% in Hong Kong by midday, extending gains from Tuesday’s 5.1% advance.
SMIC’s outperformance contrasts with broader weakness in the global semiconductor sector, where inventory corrections have weighed on chipmakers in recent months. The company’s focus on mature process nodes, which are less exposed to cyclical downturns in advanced logic, has insulated it from some of the volatility seen in peers like TSMC and GlobalFoundries.
Management highlighted that geopolitical risks, particularly U.S. export controls on advanced semiconductor equipment, remain a key overhang. However, SMIC emphasized that its current operations are not materially impacted by these restrictions, as its focus remains on 28nm and above process technologies.
Investors will be watching closely for updates on SMIC’s capacity expansion plans, particularly in its newly launched 14nm process, which is expected to ramp up in the second half of 2024.
