Ge Long Hui·2026-02-12 02:51Core Viewpoint - UBS report indicates that SMIC's Q4 profit increased by 4.5% quarter-on-quarter, outperforming seasonal expectations and market forecasts, primarily due to a slight rise in wafer shipment volume and average selling prices of mixed products [1] Financial Performance - Q4 revenue growth was supported by a 64% quarter-on-quarter increase in other income due to the year-end shipment of photomasks [1] - Gross margin stood at 19.2%, aligning with the guidance of 18% to 20%, but below the market expectation of 20%, attributed to a 2.8 percentage point decline due to rising depreciation costs [1] Demand and Pricing - Management indicated strong and sustained demand for BCD processes, memory, and related products, with supply unable to meet demand, leading to a price increase expected by 2025 [1] - Other product areas such as CIS and LCD driver chips are experiencing stable pricing as industry capacity is redirected to high-demand sectors like BCD [1] Forecast Adjustments - The firm raised SMIC's revenue forecast for 2026 to 2029 by 4% to reflect greater localization opportunities and improved supply-demand dynamics [1] - However, the earnings forecast was lowered by 8% to 18% due to higher depreciation burdens [1] - The rating remains "Neutral" with a target price set at HKD 76 [1]