By Sherry Qin

Semiconductor Manufacturing International Corp. is scheduled to report second-quarter results on Thursday. Here's what you need to know:

NET PROFIT FORECAST: China's largest contract chip maker is expected to post second-quarter net profit of $145 million, according to the consensus estimate of 10 analysts polled by FactSet. That would be 12% lower than the same period last year.

REVENUE FORECAST: SMIC's revenue likely rose 13% to $2.145 billion, according to FactSet. That would be in line with the company's guidance of 4%-6% sequential decline from $2.25 billion for the first quarter.

The chip maker's Hong Kong-listed shares have risen 60% so far this year despite dropping 3% in the second quarter. Investor sentiment has been buoyed by China's push to localize chip production, though there are concerns about SMIC's profitability and gross margin outlook amid an industrywide overcapacity issue.

WHAT TO WATCH:

--Management said in a post-earnings call in May that SMIC faced production issues affecting its yield rate in the first quarter. Those issues may have continued to affect output in the second quarter and the first half of the third quarter. Due to growing depreciation costs on continued new capacity ramp-up as well as its low yield issue, Citi analysts see limited upside to the gross margin outlook in the coming quarters.

--Management said there has been limited impact from U.S. tariffs as the majority of its sales come from domestic customers. However, investors will pay attention to management's updates on the tariff impact as the situation continues to develop.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

August 05, 2025 05:19 ET (09:19 GMT)

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