Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC) / Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>The 1Q24F outlook is still showing a decline, with a slightly increase in revenue of 2% QoQ. However, the GM is expected to decrease to 9-11% from 16.4% in 4Q23.</li>
<li>Management predicts that there will be a double U-shaped recovery in 2024F. Revenue in 2024F is expected to grow annually by mid-single-digit.</li>
<li>The main areas of growth for SMIC in 2024F will be in mobile phones, smart homes, IoT, and computing.</li>
</ul>


The 1Q24F outlook is still showing a decline, with a slightly increase in revenue of 2% QoQ. However, the GM is expected to decrease to 9-11% from 16.4% in 4Q23.
Management predicts that there will be a double U-shaped recovery in 2024F. Revenue in 2024F is expected to grow annually by mid-single-digit.
The main areas of growth for SMIC in 2024F will be in mobile phones, smart homes, IoT, and computing.


SMIC (981.HK): The GM Reaches a New Low of 9-11% in 1Q24F, Despite Revenue Growing by 2% QoQ.

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Reports emphasizing that SMIC fell short of 3Q expectations don't make much sense. The real test starts this quarter with 7nm smart phone processors for Huawei in mass production.</li>
<li>Profits are under pressure from low capacity utilization, rising depreciation and continued high investment. Cash flow is adequate. The balance sheet is sound.</li>
<li>The share price dropped 6.8% on Friday after rising 44% from late August to early November. 4Q guidance points to near-zero operating and net profit. Recovery will take time.</li>
</ul>


Reports emphasizing that SMIC fell short of 3Q expectations don't make much sense. The real test starts this quarter with 7nm smart phone processors for Huawei in mass production.
Profits are under pressure from low capacity utilization, rising depreciation and continued high investment. Cash flow is adequate. The balance sheet is sound.
The share price dropped 6.8% on Friday after rising 44% from late August to early November. 4Q guidance points to near-zero operating and net profit. Recovery will take time.


SMIC (SEHK: 00981; SSE Star Market: 688981): Back to Reality

<ul>
<li>Based on the some judgments, SMIC consider it will be relatively flat demand in 2024F.</li>
<li>SMIC took into consideration geopolitical instability and allowed equipment vendors to submit orders in advance. </li>
<li>Currently, only a few manufacturers are stockpiling smartphones in response to this wave. The overall industry remains relatively stable.</li>
</ul>


Based on the some judgments, SMIC consider it will be relatively flat demand in 2024F.
SMIC took into consideration geopolitical instability and allowed equipment vendors to submit orders in advance. 
Currently, only a few manufacturers are stockpiling smartphones in response to this wave. The overall industry remains relatively stable.


SMIC (981.HK): Probably A Double U-Shape Correction for Around 2 Years Until the End of 2024F.

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>1810 HK/981 HK/AAPL US: Xiaomi’s Africa smartphone sales outgrow market in 2Q24 (+/+/-)</li>
<li>XPEV US:Xpeng Motors' revenue in the second quarter was in line with our expectations, and its losses were greater than our expectations(/)</li>
<li>1211 HK/1810 HK/XPEV US/NIO US/LI US:In the 33rd week of 2024, the delivery of new energy vehicles by Xiaomi fluctuated, Leapmotor and Li were strong, and NIO remained weak  (/////////)</li>
</ul>


1810 HK/981 HK/AAPL US: Xiaomi’s Africa smartphone sales outgrow market in 2Q24 (+/+/-)
XPEV US:Xpeng Motors' revenue in the second quarter was in line with our expectations, and its losses were greater than our expectations(/)
1211 HK/1810 HK/XPEV US/NIO US/LI US:In the 33rd week of 2024, the delivery of new energy vehicles by Xiaomi fluctuated, Leapmotor and Li were strong, and NIO remained weak  (/////////)


[Blue Lotus Daily]:1810 HK/981 HK/AAPL US/XPEV US/1211 HK/NIO US/LI US/LKNCY US/002352 CH/2618 HK

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

<ul>
<li>The latest Mate 60 Kirin SOC is a major accomplishment for the Huawei, SMIC combo</li>
<li>SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV</li>
<li>SMIC's accomplishment is not reflected in its share price which lies midways between 52 week highs &amp; lows</li>
</ul>


The latest Mate 60 Kirin SOC is a major accomplishment for the Huawei, SMIC combo
SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV
SMIC's accomplishment is not reflected in its share price which lies midways between 52 week highs &amp; lows


China

Semiconductor Manufacturing International Corporation operates a semiconductor foundry. The Company provides integrated circuit foundry and technology services including the testing, development, design, manufacturing, packaging, and sale of integrated circuits. Semiconductor Manufacturing International offers its products and services around the world.

Semiconductor Manufacturing International Corp (SMIC) (981 HK)

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Semiconductor Manufacturing International Corp (SMIC) (981 HK)

SMIC (981.HK): The GM Reaches a New Low of 9-11% in 1Q24F, Despite Revenue Growing by 2% QoQ.

SMIC's 1Q24F outlook predicts a slight revenue increase but a large decrease in GM. SMIC expects a double U-shaped recovery in 2024F, with growth...

Patrick Liao

SMIC (SEHK: 00981; SSE Star Market: 688981): Back to Reality

3Q results should not have been a negative surprise. Sales and profits down sharply on low capacity utilization, intro of 7nm, high depreciation...

Scott Foster

SMIC (981.HK): Probably A Double U-Shape Correction for Around 2 Years Until the End of 2024F.

Based on the some judgments, SMIC consider it will be relatively flat demand in 2024F. SMIC took into consideration geopolitical instability and...

Patrick Liao

[Blue Lotus Daily]:1810 HK/981 HK/AAPL US/XPEV US/1211 HK/NIO US/LI US/LKNCY US/002352 CH/2618 HK

Xiaomi's smartphone sales in Africa outperform market, Xpeng Motors' Q2 revenue meets but losses exceed expectations, new energy vehicle...

Blue Lotus Research Institute

SMIC's Semi Shocker

SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV. The implications...

William Keating

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

SMIC (981.HK): The GM Reaches a New Low of 9-11% in 1Q24F, Despite Revenue Growing by 2% QoQ.

​SMIC's 1Q24F outlook predicts a slight revenue increase but a large decrease in GM. SMIC expects a double U-shaped recovery in 2024F, with growth...

Patrick Liao

SMIC (SEHK: 00981; SSE Star Market: 688981): Back to Reality

3Q results should not have been a negative surprise. Sales and profits down sharply on low capacity utilization, intro of 7nm, high depreciation...

Scott Foster

SMIC (981.HK): Probably A Double U-Shape Correction for Around 2 Years Until the End of 2024F.

Based on the some judgments, SMIC consider it will be relatively flat demand in 2024F. SMIC took into consideration geopolitical instability and...

Patrick Liao

[Blue Lotus Daily]:1810 HK/981 HK/AAPL US/XPEV US/1211 HK/NIO US/LI US/LKNCY US/002352 CH/2618 HK

​Xiaomi's smartphone sales in Africa outperform market, Xpeng Motors' Q2 revenue meets but losses exceed expectations, new energy vehicle...

Blue Lotus Research Institute

SMIC's Semi Shocker

SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV. The implications...

William Keating

SMIC's 1Q24F outlook predicts a slight revenue increase but a large decrease in GM. SMIC expects a double U-shaped recovery in 2024F, with growth...

Xiaomi's smartphone sales in Africa outperform market, Xpeng Motors' Q2 revenue meets but losses exceed expectations, new energy vehicle...