20231110-招银国际-SMIC_Hua_Hong_Semi_3Q23__in-line_revenue__ASP_GPM_pressure_to_persist_into_4Q23E_5页_754kb

Summary of the report focuses on the performance of SMIC and Hua Hong Semiconductor in the 3Q23 period, highlighting key financial results, challenges, and outlook for the semiconductor sector.

Key points from the report:

• The sector is rated OUTPERFORM, with SMIC and Hua Hong Semi both showing mixed quarterly results amid persistent gross profit margin (GPM) pressure and inventory concerns.
• SMIC reported revenue of $1.62bn for 3Q23, representing a 3.9% quarter-over-quarter increase, but GPM declined to 19.8%, below consensus. The company raised its 2023 capital expenditure (capex) to $7.5bn, driven by geopolitical factors and capacity expansion plans, including increased 8-inch and 12-inch wafer production. Outlook remains cautious with stable mature node demand but lack of growth momentum; smartphone and consumer electronics markets are expected to be flattish in 2024.
• Hua Hong Semi saw revenue decrease by 10% quarter-over-quarter to $568.5mn, with GPM falling to 16.1% due to lower average selling prices (ASP) and utilization rates. Q4 guidance was below consensus, reflecting inventory write-downs and persistent market challenges. The company is ramping up 12-inch capacity, but faces pressures in 8-inch ASP and overall market conditions.
• Both companies emphasize smartphone inventory corrections delaying demand recovery in overseas markets, while China's market may show slight improvement by 2024. Capacity utilization is mixed, with auto-related product demand tight in some areas but overall inventory concerns noted.
• Names to monitor include Luxshare (002475 CH), Q-tech (1478 HK), BYD (285 HK), Sunny Optical (2382 HK), and other Chinese foundries like SMIC and Hua Hong.
• Overall recommendations and risk disclosures are provided, note that the market is subject to fluctuations and external factors like US chip export restrictions and inventory adjustments.