Hua Er Jie Jian Wen·2025-09-16 04:13Core Viewpoint - Goldman Sachs raised the target price for SMIC's H-shares by 15% to HKD 73.1, citing long-term growth prospects driven by AI trends and domestic IC design demand [1] Group 1: Financial Performance - SMIC's revenue for the first half of 2025 increased by 22.0% year-on-year to USD 4.456 billion, with a gross margin of 21.4% and a net margin of 10.5% [2] - The revenue from wafer foundry business grew by 24.6% year-on-year to USD 4.229 billion, attributed to increased wafer sales, higher average selling prices, and changes in product mix [2] Group 2: Growth Drivers - The long-term growth of SMIC is expected to be stronger due to the increasing demand from Chinese IC design companies and the AI trend, which will support its production capacity and average selling prices [1][2] - Short-term catalysts include a projected 5%-7% quarter-on-quarter revenue growth guidance for Q3 2025, driven by rapid growth in AI application demand and the need for advanced process technology from local chip design companies [2] Group 3: Capacity Expansion and Structural Optimization - SMIC has added nearly 20,000 pieces of 12-inch standard logic monthly capacity in the first half of the year and is focusing on differentiated platform development [3] - The revenue structure shows significant contributions from consumer electronics, smartphones, and industrial and automotive applications, with the latter's share increasing from 7.7% to 10.1% year-on-year [3] - The share of 12-inch wafer revenue rose from 74.5% to 77.1% year-on-year, indicating a continuous optimization towards advanced processes [3]