citic securities·2026-02-13 08:02Investment Rating - The report aligns with the views of CITIC Securities and maintains a positive outlook on SMIC, indicating that the company's performance is expected to meet market expectations [5][6]. Core Insights - SMIC's Q4 2025 performance and Q1 2026 guidance are in line with expectations, with a revenue increase of 4.5% quarter-on-quarter to $2.49 billion, surpassing the guidance of 0%-2% [6]. - The company anticipates that the supply of consumer electronic storage chips will ease within 9-12 months due to new capacity ramp-up and inventory release [7]. - Capital expenditures for 2026 are projected to remain flat at $8.1 billion, while depreciation expenses are expected to rise by 30% year-on-year [8]. Summary by Sections Financial Performance - Q4 2025 revenue reached $2.49 billion, with a gross margin of 19.2%, which is within the guidance range of 18%-20% [6]. - The Q1 2026 revenue guidance is expected to remain stable at $2.49 billion, with a gross margin forecasted between 18%-20% [6]. Capital Expenditure and Depreciation - Capital expenditures for 2025 were $8.1 billion, exceeding guidance due to strong customer demand and geopolitical uncertainties affecting equipment delivery [8]. - The company plans to increase its 12-inch wafer capacity by 40,000 pieces per month in 2026, while maintaining high capacity utilization to mitigate depreciation pressure [8]. Market Dynamics - The report highlights that SMIC will benefit from the deepening domestic substitution of mature and advanced process chips [9]. - Factors such as improved yield rates in advanced processes and progress in domestic deep ultraviolet lithography (DUV) are seen as catalysts for growth [10].