Hua Er Jie Jian Wen·2025-08-07 10:30Core Insights - SMIC reported a mixed Q2 performance with strong year-on-year revenue growth but a significant decline in net profit, indicating challenges faced by the wafer foundry giant [1] Financial Performance - Q2 revenue reached $2.209 billion, a year-on-year increase of 16.2%, but a slight quarter-on-quarter decline of 1.7%; total revenue for the first half was $4.46 billion, up 22.0% year-on-year [2][9] - Q2 gross profit was $449.8 million, down 11.1% quarter-on-quarter, with a gross margin of 20.4%, a decrease of 2.1 percentage points from the previous quarter but an increase of 6.5 percentage points year-on-year; the gross margin for the first half was 21.4%, up 7.6% year-on-year [2][10] - Q2 net profit was $132.5 million, a 19% year-on-year decline, falling short of market expectations of $167.1 million [3] Capacity and Utilization - Capacity utilization rate improved to 92.5%, up 2.9 percentage points quarter-on-quarter [4] - Monthly production capacity increased to 991,000 wafers (8-inch equivalent), a 1.8% increase from the previous quarter [6][14] Business Segmentation - 12-inch wafers accounted for 76.1% of revenue, with consumer electronics applications making up 41.0% and smartphone applications 25.2%; industrial and automotive applications increased to 10.6% from 8.1% year-on-year [6][9] - The Chinese market represented 84.1% of total revenue, remaining stable compared to the previous quarter, while the U.S. market share slightly increased to 12.9% [9] Guidance and Outlook - Q3 revenue guidance indicates a quarter-on-quarter growth of 5%-7%, while gross margin guidance is set at 18%-20%, below the previous quarter's 20.4%, reflecting cautious management expectations [7][13] - Capital expenditures are projected at $1.885 billion, a significant increase of 33.2% from Q1, indicating ongoing expansion efforts [7][14] Cost and Expense Management - Q2 operating expenses surged to $299.1 million, a 52.4% increase quarter-on-quarter and a 68.1% increase year-on-year, highlighting expansion pressures [11][12] - R&D expenses were $182 million, up 22.2% quarter-on-quarter, while general and administrative expenses rose to $189 million, up 26.5% [12] Cash Flow and Financial Position - Operating cash flow improved to $1.07 billion in Q2, a significant recovery from a negative cash flow of $160 million in Q1, indicating restored business cash generation capabilities [14] - Cash and cash equivalents totaled $5.08 billion, along with financial assets, bringing total liquid funds to $13.05 billion, providing ample resources for continued expansion [15]