SMIC: SMIC International guided 25Q3 revenue increase quarter-on-quarter, with decreased visibility in 25Q4 stocking.

SMIC International Hong Kong Stock released unaudited performance for the second quarter of 2025, with revenue of $2.209 billion, a year-on-year increase of 16.2% and a quarter-on-quarter decrease of 1.7%, exceeding guidance; gross margin was 20.4%, a year-on-year increase of 6.5 percentage points and a quarter-on-quarter decrease of 2.1 percentage points, slightly exceeding guidance. The electronic team of CMB Securities believes that the company's products are still in short supply in the third quarter of 2025, and visibility in the fourth quarter of 2025 may decrease. 1) Performance guidance: It is expected that revenue will increase by 5-7% quarter-on-quarter in the third quarter of 2025, with both shipments and ASP expected to increase quarter-on-quarter; gross margin is expected to be between 18-20%, remaining relatively stable quarter-on-quarter, mainly due to increased output offsetting the impact of rising depreciation. 2) Industry outlook: Customers have built up inventory ahead of schedule in the first three quarters, showing strong confidence, and the company's products are still in short supply; it is expected that the pace of rush orders and early shipments will slow down in the fourth quarter, leading to a weakening of order visibility and performance, but it is expected not to have a significant impact on capacity utilization.