SMIC(SH:688981) Donghai Securities·2025-02-19 09:10Investment Rating - The report suggests a positive outlook for the electronics sector, highlighting a moderate recovery in demand and recommending focus on specific investment themes such as AIOT and AI-driven technologies [4][5]. Core Insights - The report emphasizes that major foundries like SMIC and Hua Hong have shown strong performance in Q4 2024, with SMIC achieving a revenue of $2.207 billion, a year-on-year increase of 31.52%, and Hua Hong reporting $539.2 million, an 18.4% increase [4][10]. - Upcoming product launches from Apple, including the iPhone SE4, are expected to drive interest in the supply chain and AI-related sectors [4][11]. - The overall electronics industry is experiencing a mild recovery, with specific focus on four main investment themes: AIOT, AI-driven technologies, equipment materials, and consumer electronics [4][5]. Summary by Sections Company Performance - SMIC's Q4 2024 revenue reached $2.207 billion, with a gross margin of 22.6%, marking a 6.2 percentage point increase year-on-year. The total revenue for 2024 was $8.03 billion, a 27.02% increase from the previous year [4][9]. - Hua Hong's Q4 2024 revenue was $539.2 million, with a gross margin of 11.4%. The total revenue for 2024 was $2.004 billion, a decrease of 12.3% year-on-year due to ASP declines [4][10]. Market Trends - The report notes that 40.2% of SMIC's Q4 revenue came from consumer electronics, with smartphones, computers, and tablets contributing 24.2% and 19.1% respectively [4][9]. - The electronics sector underperformed the broader market, with the Shenwan Electronics Index rising only 0.27% compared to a 1.19% increase in the CSI 300 Index [4][21]. Investment Recommendations - The report recommends focusing on the AIOT sector, highlighting companies such as Espressif Technology and Rockchip, as well as AI innovation-driven companies like Cambricon and Loongson Technology [4][5]. - It also suggests monitoring the upstream supply chain for semiconductor equipment and materials, with specific companies like China Shipbuilding Gas and Huate Gas being of interest [5].