Core Viewpoint - SMIC reported a slight increase in revenue for Q1 2025, driven by demand in the industrial and automotive sectors, but anticipates a decline in revenue for Q2 2025 due to falling average selling prices and rising depreciation costs [1][3]. Group 1: Financial Performance - In Q1 2025, SMIC achieved sales revenue of $2.247 billion, a quarter-on-quarter increase of 1.8% [1]. - The revenue breakdown shows wafer revenue at 95.2% and other revenue at 4.8%, with wafer revenue increasing by 5% quarter-on-quarter [1]. - The total shipment volume reached 2.29 million 8-inch equivalent wafers, reflecting a 15% quarter-on-quarter growth [1]. Group 2: Sector Performance - Revenue from the industrial and automotive sectors grew over 20% quarter-on-quarter, increasing its share from 8% to 10% of total revenue [2]. - The automotive electronics segment benefited from advancements by major clients and SMIC's investments in automotive electronic platforms [2]. - Demand for BCD, MCU, and special memory products surged, with revenue in these areas increasing by approximately 20% [2]. Group 3: Future Guidance - For Q2 2025, SMIC projects a revenue decline of 4% to 6%, with stable shipment volumes but a decrease in average selling prices [3]. - The gross margin guidance for Q2 is set at 18% to 20%, down by 1 percentage point from Q1 [3]. - Despite challenges, SMIC maintains a full capacity utilization rate and observes positive signals of recovery in various sectors, including industrial and automotive [3]. Group 4: Market Challenges and Opportunities - The company is closely monitoring the impact of the U.S. "reciprocal tariffs" and its potential effects on market demand and inventory levels [4]. - There is uncertainty regarding visibility for the latter half of the year, particularly in Q3 and beyond [4]. - SMIC emphasizes the importance of maintaining focus on core operations and enhancing resilience against risks [4]. Group 5: Customer Sentiment - Following the introduction of new U.S. tariff policies, the direct impact on the industrial sector is assessed to be minimal, less than 1 percentage point [5]. - Customers are eager to expedite shipments before potential tariff increases, which has led to a slight increase in orders [5]. - SMIC's production capacity for Q4 2024 is already full, limiting additional growth opportunities [5].