SMIC will report its third-quarter results after market close tomorrow night. A gross margin of around 28% is the key figure to watch. Revenue is expected to come in at about $3.09 billion, up nearly 30% year over year, and net profit at about $366 million, up 91%.
First-half revenue of $5.51 billion, up 23.7% year over year, has already laid the groundwork. Hong Kong-listed shares also rose 3.73% today ahead of the results, with optical communications stocks rallying alongside them. In other words, the market has already priced in strong growth; now it’s a question of whether capacity utilization and AI-related chip demand can support gross margins.
I’m not chasing this pre-earnings rally. I’m watching two figures tomorrow night: revenue reaching $3.09 billion and gross margin holding at 28%. Only then will high expectations have been met and the hardware-sector rotation be able to continue. If gross margin falls and higher revenue fails to translate into higher profits, the gains from this pre-earnings run-up could be given back.
First-half revenue of $5.51 billion, up 23.7% year over year, has already laid the groundwork. Hong Kong-listed shares also rose 3.73% today ahead of the results, with optical communications stocks rallying alongside them. In other words, the market has already priced in strong growth; now it’s a question of whether capacity utilization and AI-related chip demand can support gross margins.
I’m not chasing this pre-earnings rally. I’m watching two figures tomorrow night: revenue reaching $3.09 billion and gross margin holding at 28%. Only then will high expectations have been met and the hardware-sector rotation be able to continue. If gross margin falls and higher revenue fails to translate into higher profits, the gains from this pre-earnings run-up could be given back.