Goldman Sachs issued a research report stating that rising demand from China's own chip design and fabless semiconductor companies (companies that design chips but outsource manufacturing to professional foundries) benefits foundry SMIC (00981), as this demand can drive utilization rates and gross margin recovery. Combined with the company's continued stable capacity expansion and new AI opportunities, the firm remains optimistic about SMIC.

Goldman Sachs maintains a "Buy" rating on SMIC, raising its target price from HK$63.7 to HK$73.1, equivalent to 40x projected fiscal 2028 P/E ratio (previously 36x).

The firm expects the company's short-term uptrend in the third quarter this year to serve as a catalyst, with revenue projected to grow 5-7% quarter-over-quarter and gross margin expected to range between 18-20%.

Goldman Sachs noted that the rise of artificial intelligence is driving demand for AI computing chips, which is expected to strengthen SMIC's long-term growth opportunities. The firm overall expects SMIC's revenue compound annual growth rate from 2025 to 2029 to be 21%, with gross margin recovering from this year's 21% to 28% in 2029.

The firm expects that strong growth in AI and fabless semiconductor companies will support SMIC's sales volume and average selling prices. Goldman Sachs has revised upward its revenue forecasts for the company by 0.4% and 2% for 2028-2029 respectively, while raising gross margin forecasts by 0.4 and 0.6 percentage points, thereby boosting earnings per share estimates by 3% and 7% respectively for the period.