Core Viewpoint - Semiconductor industry is experiencing a "stronger gets stronger" effect, with SMIC positioned as the second-largest pure foundry globally, following TSMC [1][2] Financial Performance - In the first half of 2025, SMIC reported revenue of 32.348 billion RMB, a year-on-year increase of 23.1% [1] - The net profit attributable to shareholders was 2.301 billion RMB, reflecting a year-on-year growth of 39.8% [1] - EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the same period reached 17.418 billion RMB, up 26.5% year-on-year [1][2] Market Dynamics - SMIC's wafer sales volume increased by 19.9%, from 3.907 million wafers in the previous year to 4.682 million wafers [1] - The average selling price of wafers rose to 6,482 RMB, compared to 6,171 RMB in the same period last year [1] - The global semiconductor industry is witnessing a continuous rise in output value, driven by diverse downstream application scenarios [3] Capacity and Innovation - SMIC has added nearly 20,000 pieces of 12-inch standard logic monthly capacity in the first half of 2025, maintaining a leading overall capacity utilization rate [3] - The company is actively collaborating with supply chain partners and educational institutions to enhance talent development and innovation [3] Future Outlook - For the second half of 2025, SMIC aims to focus on annual performance growth, new application development, and deep cooperation in research and education [4][5] - The company anticipates challenges from U.S. tariff policies and geopolitical uncertainties, but remains committed to achieving performance targets above industry averages [5]

Core Viewpoint - The wafer foundry industry is a crucial segment of the semiconductor sector, characterized by its capital and technology intensity, and is experiencing significant growth driven by AI and automotive electronics demand [1][11]. Group 1: What is Wafer Foundry? - Wafer foundry refers to the specialized manufacturing of semiconductor wafers, accepting orders from integrated circuit (IC) design companies without engaging in design itself [1][14]. - The wafer foundry industry consists of an upstream segment involving semiconductor materials and equipment, a midstream segment for wafer processing services, and a downstream segment for packaging and testing [1][18]. - Manufacturing processes are categorized into advanced logic processes and specialty processes, with advanced processes defined as those below 14nm and mature processes as those at 28nm and above [1][27]. Group 2: Advantages and Challenges of Wafer Foundry - The wafer foundry industry shows a clear trend towards domestic production, with increasing market demand and government support for the semiconductor industry [2][37]. - Challenges include geopolitical instability, significant first-mover advantages held by leading companies, reliance on key materials, and yield issues [2][42]. Group 3: Current Market Status - The semiconductor industry is currently in a favorable economic cycle, with global wafer production capacity expected to grow from 31.5 million wafers per month in 2024 to 33.7 million in 2025, representing growth rates of 6% and 7% respectively [3][47]. - Global semiconductor sales are projected to exceed $1 trillion by 2030, with a compound annual growth rate (CAGR) of 9% from 2025 to 2030 [4][50]. - The competitive landscape is characterized by a "one strong, many strong" structure, with TSMC holding a 60% market share, while China is expected to dominate mature processes by 2027 [4][54]. Group 4: Major Companies in Mainland China - Major players in China's wafer foundry sector include SMIC, Hua Hong Semiconductor, and Jinghe Integrated [5][60]. - SMIC is recognized as a leading integrated circuit wafer foundry in China, achieving significant revenue growth and technological advancements in logic and specialty processes [6][62]. - Hua Hong Semiconductor is noted for its comprehensive specialty process platform and has consistently expanded its revenue, ranking fifth globally among pure wafer foundry companies [7][64]. - Jinghe Integrated has achieved the top market share in the liquid crystal panel driver chip foundry sector and has shown substantial revenue growth [8][67]. Group 5: Technology Development Trends - The global wafer foundry capacity is expanding, with advanced processes like 3nm and 2nm becoming increasingly competitive, driven by the rise of AI and high-performance computing (HPC) demands [10][29]. - The investment required for advanced processes has significantly increased, with estimates suggesting that 2nm technology may require close to $28 billion in investment [30][30]. - The concept of "Wafer Foundry 2.0" has emerged, encompassing not only wafer manufacturing but also packaging, testing, and other integrated services [32][32].

Core Insights - Company reported a revenue of RMB 57.796 billion for 2024, a year-on-year increase of 27.7%, while net profit decreased by 23.3% to RMB 3.699 billion [1] - The semiconductor market is experiencing a recovery, driven by demand from smartphones, personal computers, and consumer electronics, with emerging markets like IoT and wearables expanding [2] - The company is focusing on innovation, cost reduction, and market expansion to meet the growing demand for local manufacturing and to adapt to customer needs [2] Financial Performance - Revenue growth was attributed to an increase in wafer sales volume, which rose by 36.7% from 5.867 million units in 2023 to 8.021 million units in 2024 [1] - Average selling price of wafers decreased from RMB 6,967 in 2023 to RMB 6,639 in 2024 [1] - Gross margin stood at 18% with a capacity utilization rate of 85.6% [1] Market Segmentation - In 2024, the revenue breakdown by application was as follows: smartphones (27.8%), personal computers (16.6%), consumer electronics (37.8%), IoT and wearables (10.0%), and industrial and automotive (7.8%) [3] - By region, the revenue distribution was: China (84.6%), USA (12.4%), and Eurasia (3.0%) [3] Industry Outlook - The global semiconductor industry is characterized by both cyclicality and growth potential, with short-term supply-demand imbalances not affecting long-term trends [2] - The company anticipates stable or moderate growth in various application areas in 2025, with AI continuing to grow rapidly [4] - The company aims for revenue growth above the average of comparable peers in 2025, with capital expenditures expected to remain stable compared to the previous year [4]