BOCI has released a research report indicating that for SMIC (00981), the bank believes its capacity expansion and price increases are relatively moderate. Expansion is primarily focused on Shenzhen and Lingang/Shanghai, and profit margin expansion will be cautious as it must balance yield improvements at advanced nodes (N+3, comparable to TSMC's N5/6).

BOCI has downgraded its rating for SMIC from "Buy" to "Hold" and reduced the target price from HK$98.6 to HK$80. The bank ranks the industry as TSMC > Hua Hong Grace > SMIC. Hua Hong benefits from higher exposure to the AI power analog field, a better profit margin expansion trajectory, and potential value from the injection of Huali Micro's assets, earning it a higher valuation multiple. In contrast, SMIC is being downgraded to "Hold" due to its more moderate growth trend and the ongoing pressure on its balance sheet from expansion and mergers.