--- title: "SMIC (Minutes): Mobile phone and other expectations revised downward, prices will continue to decline" description: "SMIC (0981.HK/688981.SH) released its Q1 2025 earnings report (as of March 2025) after Hong Kong market close on May 8, 2025 Beijing time. Below is the earnings call Minutes of SMIC Q1 2025. For Quick" type: "topic" locale: "en" url: "https://longbridge.com/en/topics/29467414.md" published_at: "2025-05-09T03:19:44.000Z" author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # SMIC (Minutes): Mobile phone and other expectations revised downward, prices will continue to decline SMIC (0981.HK/688981.SH) released its Q1 2025 financial report after Hong Kong market close on May 8, 2025 Beijing time (as of March 2025): **Below are the earnings call minutes for SMIC's Q1 2025. For financial analysis, please refer to** [**"SMIC: Guidance Goes 'Boom', When Will 'Made-in-China Chips' Break Through?"**](https://longportapp.cn/zh-CN/topics/29451852) **I.** $SMIC(00981.HK) **Key Financial Highlights** 1\. Overall Performance: a. Operational Results: Revenue of $2.247 billion, up 1.8% QoQ; Gross margin of 22.5%, down 0.1 ppt QoQ; Operating profit of $310 million; EBITDA of $1.292 billion with EBITDA margin of 57.5%; Net profit attributable to shareholders of $188 million. b. Balance Sheet: Total assets of $48 billion, cash and equivalents of $4.6 billion; Total liabilities of $15.7 billion, total debt of $11.3 billion; Shareholders' equity of $32.2 billion; Debt-to-asset ratio of 34.9%, net debt-to-equity ratio of -4.5%. c. Cash Flow: Net cash from operations of -$160 million, investing activities (cash change) of $1.328 billion, financing activities net cash of -$354 million. **2\. Q2 Guidance: Revenue expected to decline 4%-6% QoQ with stable shipment volume but lower ASP. Gross margin projected at 18%-20%, 1 ppt below prior guidance due to increased equipment depreciation.** **3\. Equity Matters:** Critical period for capacity expansion requiring continued investment, resulting in negative free cash flow; **2025 capex to remain flat**, prioritizing capital allocation to core businesses to enhance competitiveness. **II.** $SMIC(688981.SH) **Earnings Call Details** **2.1 Management Commentary** 1\. Overall Revenue: $2.247 billion, up 1.8% QoQ but missing guidance, **mainly due to fab production volatility lowering ASP, with impact expected to persist into Q2**. 2\. Revenue Breakdown: a. By Business: Wafer sales accounted for 95.2% (up ~5% QoQ). 8-inch and 12-inch wafer revenue grew 18% and 2% QoQ respectively. b. By Region: China (84%, stable), US (13%), and EMEA (3%). Overseas revenue grew QoQ despite headwinds. c. By Application: Smartphones (24%), PCs/tablets (17%), consumer electronics (41%), and IoT (8%) remained stable; **Industrial/auto revenue grew >20% QoQ, contributing 10% vs 8% previously**. 3\. Growth Drivers: a. **Geopolitical shifts accelerated customer orders**. b. Domestic policy boosted **commodity demand and industrial/auto inventory replenishment**. c. Strong auto electronics traction with ecosystem partners. 4\. Technology Platforms: a. BCD, MCU and specialty memory demand robust, related platforms revenue up ~20% QoQ. b. Small-size AMOLED display drivers in shortage; 40nm display driver chips in mass production. c. Expanding CIS/ISP capacity for more orders. 5\. Capacity: Utilization at 89.6% (+4.1 ppt QoQ), with 8-inch catching up to 12-inch levels. 6\. Strategy: Fundamentals unchanged with high utilization and supply chain localization. **H2 outlook uncertain especially late Q3 onward**; focus remains on core business resilience. **2.2 Q&A** **Q: Impact of new US tariffs since April 2 on equipment procurement and customer demand?** A: Tariff impact is manageable (<1% currently) through negotiations and diversified supply chains. **Q: Sustainability of demand post-Q2?** A: Front-loading orders due to tariff uncertainty provide limited boost given capacity/logistics constraints. Market adjustments typically occur Aug-Sept. **Q: How does the "Stay Focused" strategy guide pricing/capex?** A: Unplanned fab maintenance and equipment issues temporarily impacted yields, but these are one-time. SMIC won't chase unproven expansions, prioritizing core competitiveness. **Q: Why did R&D spending drop to $150M in Q1?** A: Temporary shift to production for urgent orders. Annual R&D budget remains 8%-10% of revenue. **Q: How is SMIC boosting revenue per employee?** A: Higher utilization (+4.1 ppt) and automation (8-inch output up 18% with flat headcount). Non-core functions like dormitories are being spun off. **Q: What does "One Center, Global Operations" mean geopolitically?** A: Supporting global clients without overseas fabs. International revenue to grow further in 2025. **Q: 3-5 year capacity roadmap?** A: Steady annual addition of ~50k 12-inch wafer capacity ($7.5B capex, 82%-85% for equipment). Maintains >90% utilization and 20%+ gross margin floor. **Q: ASP vs cost dynamics?** A: ASP down 5% annually but no aggressive price cuts. Yield issues are temporary. **Q: PC/tablet revenue decline?** A: Smartphone/PC shipments may disappoint, leading to inventory adjustments. Panel oversupply pressures prices but SMIC won't lead discounting. **Disclaimer:** [**Dolphin Research Disclosures**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [688981.CN - SMIC](https://longbridge.com/en/quote/688981.CN.md) - [00981.HK - SMIC](https://longbridge.com/en/quote/00981.HK.md) --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.