Semiconductor Manufacturing International Corp
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
HK$91.00 | Byxy | Tjqr |
SMIC Q3 Revenue Tops Forecasts; FVE Retained, Higher Sales Outlook, Higher Capital Expenditures
Business Strategy and Outlook
Even though restrictions on SMIC may not end soon, we maintain our view that SMIC can win customers in nascent industries by a combination of reasonable pricing, reliable supply and wide product offering. The company’s long-term growth driver is to ride on China’s massive investments in data centers, artificial intelligence, or AI, autonomous driving and automation. This echoes the Chinese government’s pledge to deploy CNY 10 trillion in support of AI and semiconductor sectors. Most of these applications require powerful compact chips, boosting demand in advanced nodes. Assuming development in these industries does not slow, we think it would take at least 20 years for the new markets to mature, supporting SMIC’s long-term investment thesis as China’s prime foundry.