Semiconductor giant SMIC has reported its first-quarter financial results, demonstrating stability amid a recovering industry. The company achieved revenue of $2.505 billion, reflecting an 11% increase year-over-year and a modest 0.7% rise quarter-over-quarter, in line with analyst predictions. Gross margins improved slightly to 20.1%, exceeding the company's guidance range of 18-20%.
For the second quarter, SMIC forecasts revenue growth between 14% and 16% quarter-over-quarter, with expectations that gross margins will remain healthy, ranging from 20% to 22%. This positive trajectory has led CICC to maintain an Outperform rating on the stock, with a target price set at HKD100.
As of the close of the first quarter, SMIC's production capacity reached 1.08 million wafers per month, with a utilization rate of 93.1%. While this marks a slight decline from the previous quarter—largely due to seasonal fluctuations and reduced demand from consumer electronics—the overall performance reflects the current industry upcycle. Capital expenditures during the quarter totaled $1.56 billion, while depreciation and amortization rose to $1.088 billion, an increase of 25.7% year-over-year. The stable gross margin indicates that SMIC is managing these costs effectively despite the upward pressure from depreciation.
Looking ahead, the semiconductor industry is expected to continue its upward trend through 2026, positioning SMIC to benefit from this momentum. Analysts believe the company will see accelerated revenue realization, countering ongoing depreciation challenges. The positive outlook for Q2 and beyond suggests that SMIC is not only weathering current market conditions but also poised to capitalize on future opportunities in the semiconductor sector.
SMIC's recent performance highlights its resilience and ability to navigate a complex market environment. The company's strong revenue growth and stable margins, combined with optimistic projections for the upcoming quarter, reinforce its status as a key player in the semiconductor industry.
