SMIC Profit Forecast to More Than Double in Third Quarter

Revenue is projected at $3.12 billion, up 31% from a year earlier and 3.65% from the second quarter. Analysts expect gross margin of 26.9%, within SMIC’s guidance range of 26% to 28%. The company is widely expected to exceed the revenue record it set in the second quarter.

SMIC’s global foundry market share increased to 5.4% in the second quarter from 5.0% in the first, approaching Samsung’s 5.9%, according to TrendForce data. Demand has strengthened for AI-related peripheral chips, server networking products and consumer electronics.

Investors will also assess the effect of wafer price increases on margins. After the second-quarter results, co-CEO Zhao Haijun said higher wafer prices had contributed more to improving gross margin than product-mix optimization. He said the price increases were expected to feed gradually into earnings in coming quarters. The company’s latest margin results and guidance will be closely watched.

SMIC has benefited from strong orders for legacy and specialty semiconductors as AI-related demand tightens production capacity worldwide. Demand for supporting products, including power-management chips, has also risen. Investors are looking for management’s assessment of order visibility in coming quarters as rising AI spending unsettles markets.

SMIC’s Hong Kong-listed shares fell 32% in the third quarter and have dropped a further 22% so far this quarter. A reassessment of returns on Big Tech’s aggressive AI capital spending has weighed on global semiconductor stocks. SMIC has been particularly exposed to the selloff after trading at an elevated valuation relative to peers, reflecting its strategic importance to China’s drive for technological self-sufficiency.