Core Viewpoint - SMIC's management indicated that despite the traditional seasonal slowdown in Q4, customer inventory replenishment has slowed, but the industry chain's iterative effects continue, resulting in a "not-so-slow" off-season, with production lines remaining fully loaded [1] Group 1 - The gross margin guidance for the company is set at 18%-20%, which remains consistent with the guidance provided for Q3 [1] - The company's estimated annual sales revenue is expected to exceed $9 billion, marking a new milestone in revenue scale [1]

Capital Expenditure - SMIC's full-year capital expenditure for this year is projected to be similar to or slightly higher than last year [1] Geopolitical Impact - The company's capital expenditure and procurement are affected by geopolitical factors [1]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $2,382 million, representing a sequential increase of 7.8% [4][11] - Gross margin improved to 22%, up 1.6 percentage points sequentially [4][15] - Profit from operations was $351 million, with EBITDA at $1,430 million and an EBITDA margin of 60% [4] - Profit attributable to the company was $192 million [4] - Total assets at the end of Q3 were $49.4 billion, with total cash on hand at $11.4 billion and total liabilities at $16.4 billion [6] - Debt-to-equity ratio was 34.8%, and net debt-to-equity ratio was 0.4% [6] - Net cash generated from operating activities was $941 million, while net cash used in investing activities was $2.062 billion [7] Business Line Data and Key Metrics Changes - Wafer revenue from 12-inch and 8-inch wafers accounted for 77% and 23% respectively, with stable proportions [11] - The utilization rate was 95.8%, and wafer shipments increased by 4.6% sequentially to 2,499,000 standard logic 8-inch equivalent wafers [11] - Blended wafer price increased by 3.8% sequentially due to a favorable product mix [11] Market Data and Key Metrics Changes - Revenue by region showed China accounting for 86%, the Americas 11%, and New Asia 3% [13] - Revenue from the China region increased by 11% sequentially, driven by demand pull-in and domestic market expansion [13] Company Strategy and Development Direction - The company is focusing on strengthening its product platforms, with advancements in specialty technologies and 28-nanometer ULP logic processes [18][19] - The company is seizing growth opportunities in the automotive chip market by launching multiple specialty processes [19] - The overall production lines are still in short supply, indicating a robust demand for the company's products [20] Management's Comments on Operating Environment and Future Outlook - The fourth quarter is expected to follow a traditional seasonal pattern, with revenue guidance flat to up 2% sequentially and gross margin expected between 18% to 20% [8][17] - Full-year revenue is anticipated to exceed $9 billion, marking a new milestone [17] - The company is collaborating with customers to ensure sustainable orders amid the ongoing reshuffling in the domestic industrial chain [20] Other Important Information - For the first three quarters of 2025, revenue reached $6.838 billion, up 17.4% year-over-year, with a gross margin of 21.6% [16] Q&A Session Summary Question: Inquiry about the impact of the super cycle on the company - Management discussed the potential effects of the super cycle on the company's operations and market positioning [24] Question: Questions regarding MCU and other product lines - Management provided insights into the performance and future expectations for MCU and other integrated circuits [26] Question: Inquiry about the company's growth in AI and other sectors - Management addressed the growth in AI and other major application fields, noting moderate growth or stability [20]

Core Viewpoint - SMIC is on track for a record revenue year, expecting to exceed $9 billion for the first time, driven by strong demand and full-capacity operations [1] Financial Performance - Q3 revenue reached 171.62 billion yuan, a year-on-year increase of 9.9% and a quarter-on-quarter growth of 6.9% [2][3] - Gross margin for Q3 was 25.5%, significantly up by 4.8 percentage points from the previous quarter [2][3] - Net profit attributable to shareholders for Q3 surged by 43.1% to 15.17 billion yuan, with a year-to-date net profit of 38.18 billion yuan, reflecting a 41.1% increase [2][3] - Capacity utilization rate rose to 95.8%, indicating strong demand [2][3] Future Outlook - Despite a seasonal slowdown in Q4, SMIC's management anticipates revenue growth of 0% to 2%, aligning with market expectations [1][3] - The projected gross margin for Q4 is expected to decline to between 18% and 20%, down approximately 6 percentage points from Q3 [3] Market Position - The company is benefiting from a supply-demand imbalance in the memory market, with prices significantly increasing [1] - Goldman Sachs maintains a "Buy" rating on SMIC, citing long-term growth potential driven by local demand and AI-related opportunities, with a target price of 117 HKD and 211 RMB [1]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $2,382 million, representing a sequential increase of 7.8% [4][11] - Gross margin improved to 22%, up 1.6 percentage points sequentially [4][15] - Profit from operations was $351 million, with EBITDA at $1,430 million and an EBITDA margin of 60% [4] - Profit attributable to the company was $192 million [4] - Total assets reached $49.4 billion, with total cash on hand at $11.4 billion and total liabilities at $16.4 billion [5] - The debt-to-equity ratio was 34.8%, and the net debt-to-equity ratio was 0.4% [5] - Net cash generated from operating activities was $941 million, while net cash used in investing activities was $2.062 billion [6] Business Line Data and Key Metrics Changes - Wafer revenue from 12-inch and 8-inch wafers accounted for 77% and 23% respectively, with stable proportions [11] - The utilization rate was 95.8%, and wafer shipments increased by 4.6% sequentially to 2,499,000 standard logic 8-inch equivalent wafers [11] - Blended wafer price increased by 3.8% sequentially due to a favorable product mix [11] Market Data and Key Metrics Changes - Revenue by region: China accounted for 86%, America 11%, and New Asia 3% [12] - Revenue from the China region increased by 11% sequentially, driven by demand pull-in and domestic market expansion [12] Company Strategy and Development Direction - The company is focusing on strengthening its product platforms, with advancements in specialty technologies and a variety of applications [18] - The company is actively collaborating with customers to ensure shipments and meet demand amid industry reshuffling [19][20] - The fourth quarter is expected to follow a traditional seasonal pattern, with revenue guidance flat to up 2% sequentially [8][17] Management's Comments on Operating Environment and Future Outlook - Management noted that the overall production lines are still in short supply, indicating strong demand [20] - The company anticipates a successful completion of 2025, with full-year revenue expected to exceed $9 billion [17][21] Other Important Information - For the first three quarters of 2025, revenue reached $6.838 billion, up 17.4% year-over-year [16] - The gross margin for the first three quarters was 21.6%, up 5.3 percentage points compared to the same period last year [16] Q&A Session Summary Question: Inquiry about the super cycle and 2026 outlook - Management discussed the potential for a super cycle in 2026 and the company's readiness to meet demand [23][24] Question: Questions regarding MCU and product lines - Management provided insights on MCU production and the company's focus on various product lines, including NOR Flash and NAND Flash [25][26] Question: Further inquiries on specific technologies and market trends - Management addressed questions related to specific technologies such as CMOS Image Sensors and market trends in automotive and consumer electronics [27][28]

Market Overview - Memory market currently experiences supply shortage and significant price increases [1] - Foundry and memory industries will see accelerated capacity expansion in the coming year [1] Industry Impact - Memory upgrades benefit the manufacturing sector [1] - Original equipment manufacturers (OEMs) using memory, such as those in automotive, smartphone, and consumer electronics, will face price pressures [1]

Core Insights - The executives of SMIC indicate that the pace of capacity expansion in both the foundry and memory sectors is expected to increase in the coming year [1] Industry Summary - The foundry industry is projected to see heightened capacity expansion in the next year [1] - The memory industry is also anticipated to experience an increase in capacity expansion rates [1]

Core Viewpoint - The current acceleration in the industry chain transition is highlighted, with the company actively cooperating with clients to ensure shipments, leading to an increase in production capacity and shipment volume in Q3 [1] Group 1: Company Performance - The average selling price increased by 3.8% quarter-on-quarter due to a rise in shipments of more complex products [1] - The company anticipates total sales revenue to exceed $9 billion for the year, marking a significant milestone in revenue scale [1] Group 2: Market Conditions - In Q4, typically a slow season for the industry, client inventory replenishment has slowed; however, the ongoing effects of industry chain iteration are expected to keep demand strong, resulting in a "not-so-slow" off-season [1] - The production lines remain in a state of supply shortage despite the seasonal slowdown [1]

Group 1 - The core viewpoint of the article highlights that there is a tight supply of storage devices, leading to a rapid increase in prices [1] Group 2 - The joint CEO of SMIC indicates that the current market conditions are causing significant pressure on storage device production capacity [1] - The article suggests that the rising prices of storage devices may impact various sectors reliant on these components [1]

Group 1 - The core viewpoint is that the current memory market is experiencing a supply shortage, leading to significant price increases [1] Group 2 - Company executives from SMIC have indicated that the demand for memory products is outpacing supply [1] - The price of memory products has risen substantially due to this imbalance in supply and demand [1]