JPMorgan released a research report stating that SMIC's (00981) share price rose significantly in Q3 due to its role as a leading domestic foundry supporting AI chip localization. However, the bank believes sustained valuation premiums require concrete profit data, which is unlikely in the next 6-12 months. It maintains a cautious view with an "Underweight" rating, raising 2026-27 EPS forecasts by 8% and 42% respectively, while lifting the target price from HK$36 to HK$57.

The report notes that despite strong demand for advanced-node products and near-full capacity utilization, SMIC's gross margin remains around 20%, with limited upside expected in coming years due to rapidly rising depreciation costs. Additionally, yield rates for advanced nodes remain suboptimal, keeping average selling prices under pressure even as these products gain share.