SMIC: Semiconductor Manufacturing International Corporation (00981) expects a quarter-on-quarter increase in revenue for Q3 2025, but its visibility for inventory in Q4 2025 has decreased.

Semiconductor Manufacturing International Corporation announced its unaudited performance for the second quarter of 2025 on the Hong Kong Stock Exchange. In Q2 2025, the revenue was $2.209 billion, an increase of 16.2% year-on-year and a decrease of 1.7% quarter-on-quarter, exceeding the guidance (a quarter-on-quarter decrease of 4-6%); the gross profit margin was 20.4%, an increase of 6.5 percentage points year-on-year and a decrease of 2.1 percentage points quarter-on-quarter, slightly exceeding the guidance (18-20%). Customer stocking demand continued into Q3 2025, with stable growth in shipment volume and capacity utilization quarter-on-quarter in Q2 2025. The company expects an increase in both shipment volume and ASP in Q3 2025 quarter-on-quarter, but visibility for Q4 2025 may be reduced. The shipment volume in Q2 2025 showed steady growth, with continued improvement in capacity utilization. The revenue in Q2 2025 was $2.209 billion, an increase of 16.2% year-on-year and a decrease of 1.7% quarter-on-quarter, exceeding the guidance. The gross profit margin was 20.4%, an increase of 6.5 percentage points year-on-year and a decrease of 2.1 percentage points quarter-on-quarter, slightly exceeding the guidance. The net profit attributable to the parent company was $132 million, a decrease of 20% year-on-year and 30% quarter-on-quarter. The shipment volume of equivalent 8-inch wafers was 2.39 million pieces in Q2 2025, an increase of 4.3% quarter-on-quarter. The ASP of equivalent 8-inch wafers decreased by 6.4% quarter-on-quarter due to production fluctuations and changes in product mix. In Q2 2025, there was significant growth in demand for analog chips, as well as good growth in revenue for image sensors, RF, and automotive electronics. In the breakdown of revenue by platform, smartphones accounted for 25%, consumer electronics 15%, internet and wearable technology 41%, industrial and automotive 8%, and others 11%. The demand for analog chips, especially in areas like smartphone fast charging and power management, saw accelerated domestic substitution, driving the company's capacity utilization. The revenue for image sensors and RF products also saw good growth quarter-on-quarter. The company's shipments of automotive electronic products continued to grow steadily, with consecutive double-digit percentage growth in analog PMIC, image sensors, and embedded storage chips. In Q3 2025, the company's products are still in high demand, but visibility for Q4 2025 may be reduced. Performance guidance for Q3 2025 includes an expected increase in revenue of 5-7% quarter-on-quarter, with both shipment volume and ASP expected to increase quarter-on-quarter. The gross profit margin is expected to be between 18% and 20%, remaining relatively stable quarter-on-quarter. The industry sentiment for the first three quarters has been strong, with customers stocking up in advance and showing strong confidence. However, there may be a slowdown in urgent orders and early shipments in Q4 2025, leading to decreased visibility for orders and performance. This slowdown is not expected to have a significant impact on capacity utilization. Risk factors to consider include lower-than-expected recovery in downstream demand, short-term fluctuations in ASP, excess supply of capacity, delayed equipment deliveries, sanctions affecting advanced processes, increased depreciation, and risks associated with unexpected delays in capacity expansion. The above information was shared during the company's 2025 Q2 performance briefing in August 8, 2025, attended by the Joint CEO, CFO, and the company secretary.