Key Takeaways:
- CLSA raised SMIC's H-share target price to HK$97.5 from HK$94.1
- 2Q26 revenue and gross margin beat the upper end of guidance
- 3Q26 revenue guidance of 2-4% QoQ growth topped market expectations
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CLSA lifts SMIC target to HK$97.5 after 2Q earnings beat
CLSA raised SMIC's H-share target price to HK$97.5 after 2Q26 revenue and gross margin beat the upper end of guidance.
The broker lifted its 2026-2028 earnings forecasts for the Chinese foundry by 69 percent, 44 percent and 38 percent, respectively, while keeping an "Outperform" rating, CLSA said in a report.
SMIC's 3Q26 guidance also topped market expectations, with revenue expected to grow 2-4 percent quarter on quarter and gross margin reaching 26-28 percent. The company attributed 2Q26 shipment growth to capacity ramp-up and demand from AI-related chip orders.
The stock opened up 4.7 percent and traded 3.39 percent higher intraday, with short selling of HK$511.73 million at a 4.243 percent ratio. CLSA also raised its A-share target price to RMB180.2 from RMB153.4.
SMIC said it is optimistic about the demand outlook, driven by AI, returning overseas orders and localization trends. The company expects wafer prices to remain stable at least through full-year 2026.
The beat extends a run of strong quarters for China's largest foundry as domestic chipmakers accelerate localization under US export controls. The AI-driven demand narrative also supports the broader China semiconductor sector, where peers such as Hua Hong Semiconductor face similar tailwinds from government-backed capacity expansion.
The guidance raise shows management expects AI demand to accelerate through the second half. Investors will watch whether SMIC can hold gross margin above 26 percent as it ramps new capacity, and whether returning overseas orders offset any seasonal softness.
This article is for informational purposes only and does not constitute investment advice.
