Semiconductor Manufacturing International Corporation (SMIC) will release its fiscal 2025 third-quarter earnings on November 13. Market focus is on changes in revenue and gross margin, the resilience of net profit and EPS, and the structural opportunities brought by mature processes and automotive demand.
According to projections from the Tiger International APP data source, SMIC's third-quarter revenue is expected to be RMB 2.345 billion, a year-on-year increase of nearly 8%; adjusted EPS is forecasted at 0.02 yuan.
Last Quarter Review
Last quarter, the company achieved revenue of approximately RMB 2.209 billion, a year-on-year increase of 16.19%; gross margin was about 20.4%, an increase of approximately 6.5 percentage points year-on-year; net profit attributable to the parent company was about RMB 321 million, a year-on-year increase of approximately 35.6%; net profit margin was about 10.5%; adjusted earnings per share were approximately RMB 0.02, flat year-on-year. The company emphasized the increase in capacity utilization and strong demand for mature processes, with orders for 8-inch and automotive-related platforms driving improvement on the quantity end. Revenue from the manufacturing and sale of integrated circuits business was approximately RMB 4.456 billion, an approximate year-on-year increase of 22%, reflecting the reality of channel stockpiling and inventory replenishment.
Current Quarter Outlook
Capacity Utilization and Price Structure
The market is generally concerned about whether the company can achieve stable average price and gross margin through structural optimization based on a capacity utilization rate near 92.5%. Last quarter saw an increase in wafer shipments alongside pressure on ASP, and if the proportion of 12-inch products rises this quarter and price discounts from the first quarter recede, it may support average price and gross margin. Management previously provided guidance for a gross margin of 18% to 20% this quarter, and if the pressure from R&D and depreciation can be partially offset by the scale effect of new capacity release, profit quality is likely to remain relatively stable.
Price and product structure remain key variables determining the quality of earnings. The increased proportion of 8-inch products in mature processes will exert structural pressure on average price, but improvements in demand for automotive, image sensors, and RF platforms are beneficial in enhancing production line utilization, mitigating gross margin fluctuations from a quantitative perspective. If demand in mobile phones and consumer electronics remains stable, and double-digit growth is maintained in industrial and automotive sectors, the revenue and gross margin combination may be closer to the middle range of guidance.
Automotive and Power Management Order Visibility
Last quarter, the management mentioned in the earnings call that shipments of automotive electronic products continued to grow steadily, covering multiple types of automotive chips such as analog, power management, image sensors, logic, and embedded memory. This structure contributes significantly to production line stability within mature processes, and the focus of the market is on the continuation of this trend this quarter.
Aligning with international customers' "In China for China" supply chain strategy, the company is cooperating in building front-end capabilities for third-generation semiconductors like SiC and GaN. Despite its limited short-term revenue contribution, it has positive implications for order stability and long-term client structure optimization. If demand for automotive and power device platforms continues to outstrip supply this quarter, it is expected to provide support for capacity utilization and order visibility.
Rigid pressure from R&D and depreciation remains a core constraint this quarter. While management and R&D expenses stay high, the increase in depreciation expenses due to new capacity introduction must be watched for risks of gross margin reaching the lower end of guidance; however, if orders are full and shipment structure improves, net profit margin is expected to maintain stability around the single-digit range.
Consumer Electronics and Imaging/RF Platforms
Smartphones and consumer electronics remain major revenue sources. Last quarter, the proportion of consumer electronics increased, the proportion of smartphones decreased due to structural adjustments and changes in stocking rhythm. If the seasonal off-season of the industry and annual forecast adjustments by manufacturers impose constraints on fourth-quarter visibility, the market will approach smartphone chain orders with a more cautious stance.
Significant quarter-on-quarter improvements in the image sensor and RF platform last quarter, if continued this quarter, may be key pillars for average price improvement and revenue resilience. At the same time, increased demand for networking, wired/Wi-Fi, and other alternatives will provide incremental support for communication-related platforms, benefiting the utilization rate of the 8-inch production line.
From the combination of revenue and profitability, the market will pay more attention to whether the increments in automotive and communication platforms can offset uncertainties in consumer electronics and consequently maintain the stability of revenue growth and gross margin.
Analyst Opinions
In research reports and commentary over the past six months, institutions have generally maintained a cautiously optimistic outlook on SMIC's latest quarterly preview, with a higher proportion of bullish views.
Hua Xin Securities noted in a previous weekly report that the company's second-quarter revenue and gross margin exceeded guidance. SMIC gave an outlook of 5% to 7% quarter-on-quarter revenue growth and a gross margin range of 18% to 20% for the third quarter, emphasizing that increased capacity utilization and capital expenditure reflect the expansion and full orders ("Q3 revenue guidance for QoQ growth of 5% to 7%, gross margin guidance of 18% to 20%"). This view is based on the logic of full capacity in mature processes, continued advancement of domestic substitution in automotive and power management, providing certainty in orders and utilization rates.
An industry commentary on August 8, 2025, highlighted, "Orders were significantly higher than capacity until October, unable to take all orders and immediately put them off the line," emphasizing high capacity utilization to offset the impact of rising depreciation on gross margin. This perspective underscores the real strength of order visibility and production line utilization.
Integrating analyst and media opinions, the proportion of bullish stances is higher, with core reasons being: forecast data for this quarter's revenue, EPS, and EBIT all show year-on-year improvement structures, especially EBIT with a high YoY growth rate; management's guidance on revenue and gross margin is within achievable ranges; continued demand from automotive and power management, image and RF platform improvements provide some stability in the price-volume combination. Constraints to watch include rigid costs of depreciation and R&D, year-end fluctuations in the consumer electronics chain, and structural pressure on average prices.
This content is generated based on tiger AI data and is for reference only.