Understanding the Market | SMIC rises over 4% again as Goldman Sachs raises the company's earnings forecast; domestic demand is expected to support production and average selling prices

SMIC rose over 4% again, as of the time of writing, up 3.23% to HKD 72, with a turnover of HKD 4.466 billion. In terms of news, Goldman Sachs recently released a research report stating that it has raised the target price for SMIC's H shares by 15% to HKD 73.1. This optimistic expectation mainly stems from a positive outlook on China's IC design demand and trends in artificial intelligence, which are expected to strongly support SMIC's production and average selling price. The firm also raised its revenue and earnings per share forecasts for the company for 2028-2029, noting that revenue in the third quarter of 2025 is expected to grow by 5%-7% quarter-on-quarter, which could become a short-term catalyst for the stock price. It is worth noting that SMIC plans to issue A shares to acquire a 49% minority stake in SMIC North. Cathay Securities stated that after completion, its capacity expansion and local-for-local trend will be further strengthened. In addition, the current domestic advanced process technology continues to iterate, and AI chips are expected to gradually shift to domestic wafer foundries, while SMIC, as a core asset in advanced processes, is expected to welcome a broad domestic substitution space in the AI era