Zhi Tong Cai Jing·2025-08-12 03:49Group 1 - Morgan Stanley maintains a "reduce" rating on SMIC (00981) due to continued pressure on gross margins, raising the target price from HKD 32 to HKD 36 [1] - The company is expected to maintain high capital expenditures of USD 7 to 7.5 billion over the next 2-3 years as it expands its 28nm and below wafer capacity [1] - Short-term challenges include inventory destocking in Q4 2025 and intensified competition in the CIS market, which may suppress profit margins and average selling prices [1] Group 2 - Despite an increase in the leading chip portfolio, gross margins remain weak and pricing is flat, leading to a cautious outlook from Morgan Stanley [1] - Adjustments to expectations reflect a slowdown in growth due to inventory destocking in Q4 2025 and rising depreciation costs, which continue to pressure gross margins [1] - Although the high-end wafer portfolio has improved due to yield declines, average selling prices have not increased [1]