Revenue hit record highs while management admitted they are running to stand still against depreciation. The domestic pull is overriding the global cycle.
Thesis: SMIC is the primary beneficiary of China's forced localization. Revenue from Chinese customers grew 34 percent year-over-year. While the market focuses on leading-edge AI gaps, the volume ramp in 12-inch automotive and consumer nodes is creating a captive demand profile. The 6 percent ASP increase in Q4 proves they can pass through costs in a reshuffled supply chain.
Verdict: LONG — Conviction: MEDIUM
Catalyst: Q1 2025 revenue execution hitting the upper end of the 6 to 8 percent growth guidance.
Key Risk: Homogeneous competition in legacy nodes leading to a price war that SMIC is forced to enter to maintain market share.
The Tell: Management admitted they will directly face price competition with strategic customers to maintain market share. This confirms they have no structural price floor despite being the primary domestic supplier.
Friction Level: MODERATE_FRICTION — The 20 percent depreciation growth projected for 2025. One side sees this as a structural margin cap while the other sees it as a known headwind offset by a 6 to 8 percent sequential revenue ramp in Q1.
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