According to the report of the comprehensive Hong Kong media, JPMorgan Chase (Xiaomph) issued a research report pointing out that SMIC International has suffered from inventory sales and continued pressure bearings, as well as rising discounted costs and increasing proportion of high-end wafers, but the lower yield rate has resulted in no significant increase in ASP (average sales price). Maintaining the SMIC International's "reduced" rating, the target price is increased from HK$32 to HK$36.
The report pointed out that as China's demand for smartphones is reducing the efficiency of its smartphones, coupled with competition and expansion, affecting the performance of image sensor business, it is expected that SMIC's fourth-quarter revenue will drop by 2% to US$2.32 billion, and gross profit margin will drop by 0.5 percentage points in the quarter. In addition, although the company continues to expand its advanced process capacity, due to the low yield of advanced process and fierce market competition, the average sales price of crystal circles is expected to fall by 2 to 4% per year from 2025 to 2027.
Report believes that as SMIC continues to expand its crystalline capacity by 28 nanometers and below, capital expenditure will remain at US$7 billion to US$7.5 billion in the next two to three years, and the discounted cost will continue to rise, so gross profit margins are difficult to recover significantly.