SHANGHAI (Reuters) — UBS has raised its outlook on Semiconductor Manufacturing International Corp (SMIC), forecasting robust growth for the Chinese chipmaker amid sustained demand for domestic semiconductors and state-backed industrial policy.
The Swiss bank upgraded its rating on SMIC to Buy from Neutral, setting a new price target of $12.50 per American Depositary Share (ADS), up from the prior $8.50. The adjustment reflects expectations that China’s semiconductor self-sufficiency drive will accelerate, reducing reliance on foreign suppliers and bolstering SMIC’s market position.
UBS analysts highlighted SMIC’s expanding 7-nanometer production capacity, which has begun ramping up in recent quarters. The bank noted that the company’s technology roadmap is advancing faster than previously anticipated, positioning it to capture a larger share of China’s domestic chip market. Revenue growth is projected to outpace industry averages over the next two to three years, supported by government subsidies and procurement preferences for locally produced semiconductors.
The upgrade comes as U.S. export controls on advanced semiconductor equipment to China remain in place, limiting access to cutting-edge tools for domestic manufacturers. Analysts said SMIC’s ability to scale production under these constraints underscores its strategic importance to China’s chip ecosystem.
SMIC’s shares have gained roughly 15% this year in U.S. trading, outperforming the broader semiconductor sector. The company is scheduled to report its second-quarter earnings on Aug. 29, with market watchers expecting a year-over-year revenue increase driven by strong demand from Chinese smartphone and automotive manufacturers.
UBS’s upgraded target implies a potential upside of more than 40% from current levels, though risks remain tied to geopolitical tensions and ongoing supply chain disruptions in the global semiconductor industry.
