Summary of SMIC Conference Call Company Overview - **Company**: Semiconductor Manufacturing International Corporation (SMIC) - **Ticker**: 0981.HK - **Industry**: Semiconductor Foundry Key Points Demand and Market Outlook - **Near-term Demand**: No material change expected in near-term demand, with full loadings anticipated in a seasonally slower 4Q25E due to supply chain localization and domestic customer share gains [1][2] - **Memory Prices**: Memory prices are a critical factor influencing the end-demand outlook for 2026E, with management expressing concerns about memory shortages impacting handset and consumer electronics production [1][2] - **Customer Planning**: Customers are cautious in their 2026 business planning due to uncertainties regarding adequate memory supply [1][2] Financial Performance and Projections - **Revenue Forecasts**: Revenue projections for FY25F, FY26F, and FY27F are largely unchanged, with slight adjustments made to gross margin (GM) and operating profit margin (OPM) reflecting efficiency gains [1][3] - **Earnings Per Share (EPS)**: Revised EPS for 2026F and 2027F increased by 20% and 29% respectively, reflecting the anticipated 100% net profit consolidation of SMNC starting from 2Q26F [1][3] - **Target Price (TP)**: The target price has been raised to HKD75.0, based on a price-to-book (P/B) ratio of 3.5x for 2026F [1][4] Financial Metrics - **Revenue Growth**: Projected revenue growth rates are 15.2% for FY25F, 18.1% for FY26F, and 12.0% for FY27F [3][9] - **Profitability Ratios**: - Gross margin expected to improve to 21.1% in FY25F and 21.7% in FY26F [3][16] - Operating margin projected at 10.9% for FY25F and 9.4% for FY26F [3][16] - **Net Profit**: Expected net profit for FY25F is USD590 million, increasing to USD734 million in FY26F [3][9] Capital Expenditure and Capacity - **Capex Plans**: SMIC plans to maintain a capex budget of USD7.5 billion for 2025E, similar to 2024 levels, with capacity additions expected to be uneven quarter to quarter [2][3] - **Supply and Competition**: SMIC will add more supply into 2026E, driven by domestic semiconductor localization demand, but will not engage in aggressive pricing unless necessary [2][3] Risks and Challenges - **Upside Risks**: Include better-than-expected end-demand, slower-than-expected technology migration by competitors, successful mergers and acquisitions, and increased policy support from the Chinese government [12][24] - **Downside Risks**: Include weak end-demand and intensifying geopolitical issues [24] Additional Insights - **Market Capitalization**: As of November 14, 2025, SMIC's market cap is approximately USD56.76 billion [4][8] - **Stock Performance**: The stock has shown significant growth over the past year, with a 12-month absolute return of 176.8% [8] This summary encapsulates the key insights from the SMIC conference call, highlighting the company's outlook, financial performance, and market dynamics.