2 1 Shi Ji Jing Ji Bao Dao·2025-11-14 10:25Core Insights - SMIC (Semiconductor Manufacturing International Corporation) has reported strong Q3 results, with revenue of $2.382 billion, a year-on-year increase of 9.7% and a quarter-on-quarter increase of 7.8%, alongside a net profit of approximately $192 million, up 28.9% year-on-year [1][3] - Despite strong performance, SMIC's guidance for Q4 is conservative, expecting revenue to remain flat or grow by only 2%, with gross margin projected to decline to 18%-20% [1][6] Group 1: Domestic Supply Chain Shift - The growth in Q3 is primarily attributed to the shift towards domestic supply chains, with revenue from Chinese customers rising to 86.2%, up from 84.1% in Q2 [3][4] - SMIC's CEO highlighted that domestic consumer electronics clients are accelerating the replacement of overseas supply chains, creating growth opportunities [3][4] - Customer inventory replenishment has also contributed to the Q3 performance, as many clients are restocking to compete in the domestic market [4][5] Group 2: Capacity Utilization and Product Mix - SMIC achieved a capacity utilization rate of 95.8% in Q3, a 3.3 percentage point increase from the previous quarter, indicating strong demand [4][5] - The revenue share from consumer electronics increased from 41.0% in Q2 to 43.4% in Q3, while the share from smartphones decreased from 25.2% to 21.5% [5] - This shift in product mix reflects SMIC's proactive adjustment to prioritize high-demand products amid supply constraints [5] Group 3: Cautious Outlook Amid Storage Chip Supercycle - The anticipated supercycle in storage chips, driven by AI demand, poses risks for SMIC, as it may lead to supply chain mismatches and cost pressures [6][7] - Major players like SK Hynix and Samsung are raising contract prices for DRAM and NAND by 20%-30%, which could impact the pricing strategies of SMIC's clients [6][7] - The rising storage chip prices may force clients to reduce orders for other chips, including those produced by SMIC, leading to potential revenue pressures [7][8] Group 4: Internal Cost Pressures and Capital Expenditure - SMIC's capital expenditure for Q3 was $2.394 billion, with a total of $5.7 billion for the first three quarters, indicating ongoing investment in capacity expansion [8][9] - The company anticipates that increased depreciation from new equipment will further pressure gross margins in Q4 [9] - Despite the challenges, SMIC's management remains focused on enhancing performance, quality, and customization in their product offerings to maintain competitiveness [9]