SMIC 2Q26 Growth and AI Demand Pulse

SMIC reported strong 1Q26 margins and guided for an above-consensus 14-16% revenue growth in 2Q26. Growth is driven by robust domestic AI demand and enhanced pricing power amid a capacity squeeze.

Key Takeaways

• 1.SMIC delivered 1Q26 results with gross margins of 20.1%, beating consensus due to strong localization demand and domestic orders.
• 2.Management issued aggressive 2Q26 revenue guidance of 14-16% q/q growth, significantly higher than the peer average and consensus.
• 3.The AI chip capacity squeeze is providing SMIC with enhanced pricing power, leading to projected ASP increases and improved utilization.

Table of Contents

• AI quick pulse: SMIC guides for strong 2Q26 growth amid robust demand
• Our view
• Profitability improved in 1Q26
• Above-consensus guidance for 2Q26
• AI and localization trends continue to drive growth
• Steady capex expansion to meet robust domestic demand
• Appendix
• Equity selection system
• Equity selection: An assessment relative to a benchmark
• Global asset class preferences definitions
• Statement of Risk
• Risk Information

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