JPMorgan Chase: Raises target price of SMIC to 36 Hong Kong dollars, maintains "underweight" rating.

JPMorgan Chase releases research report stating that the gross margin of SMIC continues to be under pressure, maintaining a "underweight" rating on the stock, with the target price raised from HK$32 to HK$36. As the company continues to expand its capacity for 28 nanometer and below wafers, capital expenditures may remain high in the next 2-3 years, estimated by the bank to be between $7-7.5 billion. In the short term, the bank believes that inventory clearance in the fourth quarter of 2025 and intensified competition in the CIS market may suppress profit margins and average selling prices. The report indicates that despite an increase in leading chip combinations, soft gross margins and flat pricing are keeping the bank cautious. The bank adjusted its expectations to reflect a slowdown in growth in the fourth quarter of 2025 due to inventory clearance and continued pressure on gross margins due to rising depreciation costs, despite an increase in high-end wafer combinations due to lower yields, average selling prices have not risen.