Semiconductor Manufacturing Intl Co

China's Shanghai Composite stock index closed higher today (Aug. 26), rising 23.08 points, or 0.59%, to 3,912.52 points. Investors are watching the meeting of the Standing Committee of the National People's Congress (NPC), held from Aug. 25-28, amid hopes that the meeting will introduce policies to support the economy, following earlier weak economic data from Chinese authorities. Stocks that rose include Zijin Mining Group, up 2.35%; SMIC, up 3.46%; Luxshare Precision Industry, up 4.10%; and Sungrow Power Supply, up 2.76%. Additionally, China Merchants Bank issued a 3-year floating-rate bond linked to the overnight bond repurchase rate, making it the first Chinese commercial bank to do so. This reflects the People's Bank of China's (PBOC) efforts to elevate the overnight repo rate as a key benchmark for short-term funding costs, aligning its monetary policy framework more closely with international standards.

Wanxun Automation said during an institutional survey on August 25 that its semiconductor business is making simultaneous progress in both domestic and overseas markets, with its product portfolio covering the entire process flow of wafer manufacturing, CP testing, and packaging and testing. At present, pressure sensors and transmitters, as well as vacuum gauges, have secured some orders in domestic and overseas markets, and are used in semiconductor process equipment such as etching and deposition, test fixtures, and supporting scenarios including specialty gases and facility services. Gas detectors and alarms have been successfully introduced to leading domestic wafer manufacturers such as SMIC, as well as global industrial gas leaders like Air Liquide. The company is steadily advancing product validation for pressure sensors and transmitters, mass flow controllers and flowmeters, gas detectors and alarms, and gas analyzers with multiple domestic and overseas customers. In the first half of 2026, revenue from semiconductors and other emerging fields reached 14.0766 million yuan, still in the early stages and accounting for a relatively low proportion of the company's overall revenue, with no material impact on revenue.

InnovestX Securities views AI as still a key driver for Chinese tech, as hyperscalers accelerate capital spending to support data centers and AI computing, while foreign chip technology restrictions push China to build a domestic supply chain. The firm expects the share of AI server system production in China to reach more than 90% by 2030, up from about 70% in 2025, and the share of chip production for AI inference to rise to more than 50% from below 10% over the same period. Capital expenditure estimates for Chinese hyperscalers Alibaba, Tencent, ByteDance and Baidu have been revised up by 28%, 74%, 67% and 82% respectively, reflecting an acceleration in expanding AI and data processing capabilities. Mr. Sittichai Duangrattanachaya, Head of Investment Strategy at InnovestX Securities, said at the economic and investment seminar "Final Call 2026" that the next phase of the AI game is not about investing in the trend, but about finding winners in each layer of the ecosystem, from chips to data centers and energy. Investors should shift from buying the AI theme to selecting companies that genuinely benefit from AI. He recommended three groups of Chinese stocks: China Internet and Tech such as Tencent, Alibaba and GDS; China Semiconductor such as SMIC, Hua Hong and NAURA; and China Non-Tech such as CATL, HKEX and AIA.

SMIC and Hua Hong Semiconductor both posted record second-quarter revenue, as AI-driven semiconductor demand continued to strengthen. SMIC's second-quarter revenue exceeded 3 billion US dollars, with net profit surging nearly fourfold, and the company expects third-quarter revenue to grow 2 to 4 percent quarter on quarter. Hua Hong Semiconductor also reported record second-quarter revenue, with net profit up 386 percent year on year, and third-quarter revenue guidance reaching as high as 780 million US dollars. Ping An Securities expects the global wafer fabrication equipment market to reach 143.9 billion US dollars in 2026, with advanced process nodes, DRAM, and NAND capacity expansion as the main growth drivers.

Semiconductor Manufacturing International Corp said on Friday it has raised prices for its most sought-after capacity, with AI-related demand continuing to underpin orders. Co-CEO Zhao Haijun said on an earnings call that SMIC raised prices following customer negotiations in the first quarter and will charge more for wafers processed in the third quarter. The company posted revenue above $3 billion for the first time in the second quarter, while profit attributable to shareholders tripled to $479.2 million, both beating LSEG analyst estimates. SMIC shipped 2.9 million 8-inch-equivalent wafers in the second quarter, up 14% from the previous quarter, and average selling price rose 5.7%. The company expects third-quarter revenue to rise 2% to 4% from the second quarter.

Semiconductor Manufacturing International Corporation, China's largest contract chipmaker, reported second-quarter results on the 13th that showed profit more than tripled from a year earlier, beating analyst expectations. Profit attributable to shareholders was 479.2 million dollars, nearly double the average analyst estimate of 253.4 million dollars compiled by LSEG. Revenue rose 36 percent to more than 3 billion dollars, exceeding the analyst forecast of 2.8 billion dollars. In a filing to the stock exchange, SMIC said it expects AI to continue driving solid semiconductor demand in the second half of the year.

On the evening of August 13, multiple listed companies on the Shanghai and Shenzhen stock exchanges released important announcements. Unitree Technology's online investors abandoned subscription for 8,734 shares, which were fully underwritten by the sponsor. Honghe Technology terminated its investment in a project to produce 72 million meters of high-performance electronic-grade fiberglass cloth annually, while also disclosing that first-half net profit grew 334.32% year on year. Longcheer Technology plans to acquire 80% equity in Anruike for 1.12 billion yuan. Bohai Chemical plans to acquire 51% to 80% of shares in Gerui New Materials to enter the modified plastics sector. Joyson Electronics' controlling subsidiary plans to introduce a total capital increase of 1.5 billion yuan from Xingyin Investment and Zhongyou Investment. SMIC reported second-quarter sales revenue of 3 billion US dollars, up 20% quarter on quarter. Hygon Information Technology posted first-half net profit of 1.798 billion yuan, up 49.69% year on year. China Mobile reported first-half net profit of 78.934 billion yuan, down 6.3% year on year, and plans to distribute 25.1 yuan per 10 shares. G-bits Network Technology saw first-half net profit rise 69.31% year on year and plans to distribute 100 yuan per 10 shares. Xiechuang Data Technology's preliminary results showed first-half net profit of 1.863 billion yuan, up 331.11% year on year. Gao Neng Environment and its subsidiary jointly secured a 500 million yuan solid waste treatment project in Vietnam. Jifeng Auto Parts received a nomination for a passenger car seat assembly project, with an estimated total life-cycle value of 2.12 billion yuan.

G-bits disclosed that in the first half of 2026 it achieved operating revenue of 3.727 billion yuan, up 48.01% year on year, and net profit attributable to the parent of 1.092 billion yuan, up 69.31% year on year, and plans to distribute a cash dividend of 100 yuan, tax included, for every 10 shares. On the same day, Avary Holding's first-half AI server PCB revenue approached 1 billion yuan, and high-speed optical module PCB revenue exceeded 600 million yuan. Jifeng Auto Parts received a nomination for a passenger car seat assembly project, with an estimated total life-cycle value of 2.12 billion yuan. SMIC's second-quarter overall sales revenue reached 3 billion US dollars, up 20% quarter on quarter. In addition, Grace Fabric Technology's first-half net profit rose 334.32% year on year. Dalian Thermal Power's first-half net profit was 50.135 million yuan, turning from a loss to a profit year on year. BGE and its subsidiary jointly won a 500 million yuan solid waste treatment project in Vietnam.

The Shanghai Composite Index closed at a three-week high after China's July exports expanded more strongly than expected. The index ended at 3,940.04 points, up 39.68 points or 1.02 percent. Exports rose 23 percent year-on-year, beating analyst forecasts of 22.2 percent, while imports increased 27.5 percent, slightly below expectations. China posted a trade surplus of 112.5 billion dollars, higher than forecast. Artificial intelligence stocks gained, led by Cambricon Technologies up 2.72 percent and SMIC surging 3.38 percent.

China has started industrial-scale production of immersion deep ultraviolet lithography machines, marking a major step in its semiconductor self-reliance strategy. The state-owned Shanghai Aishengna Electronic Technology Group is responsible for the project. Sources say the Chinese DUV machines still need to pass several testing stages and their performance still lags behind ASML's machines. The production plan targets around five units this year, rising to about twenty units in 2027, with the first batch scheduled for delivery to SMIC, Hua Hong Semiconductor, and CXMT within this year.

China has started manufacturing domestically developed immersion deep ultraviolet lithography machines, US news site The Information reported. The machines are expected to be delivered within this year to major Chinese semiconductor makers such as SMIC, Hua Hong Semiconductor, and CXMT, marking an entry into a market long monopolized by the Netherlands' ASML. Initial production will be limited, with about five units expected this year and around twenty by 2027. ASML shares fell more than 8%.

China's Ministry of Commerce is considering export controls that would bar Taiwan Semiconductor Manufacturing Company and Qualcomm from manufacturing chips based on designs from Huawei, Alibaba, and ByteDance, according to a Financial Times report. Despite the proposal, TSMC's bull case remains robust after second-quarter net profit surged 77% year-over-year to a record T$706.6 billion, revenue climbed 36% to NT$1.27 trillion, and the company raised its full-year 2026 revenue growth guidance above 40% in U.S. dollar terms while lifting 2026 capex toward $62 billion. The foundry has also finalized base price hikes of 5% to 10% across advanced and mature nodes starting in 2027, leveraging its two-to-three-generation lead over China's largest semiconductor foundry SMIC, whose ceiling is 7nm. Insider buying and growing hedge fund ownership, with 234 funds holding $39.2 billion in stakes and short interest at just 0.57% of float, further support the bullish outlook.

InnovestX divides the AI investment approach via DR23 into three main themes, allowing investors to choose according to their own risk levels and investment goals. The first theme is Mega Cap AI Leaders, comprising stocks of large technology companies driving AI investment, such as GOOG23, AMZN23, NVDA23, BABA23, and TENCENT23. The second theme is Early Innovation, focusing on future technologies that could be the next wave of growth, such as SPACEX23, GEV23, IONQ23, MP23, and OKLO23, suitable for those who can tolerate high volatility. The third theme is AI Infrastructure and Semiconductor, investing in the infrastructure behind AI, such as TSEMI23, FABRINET23, SYNP23, LITE23, and SMIC23, which benefit from the expansion of AI capital expenditure without having to pick winners in the AI market. Investors should choose a theme that aligns with their own views and risk tolerance.

Chinese chip stocks rallied strongly yesterday, with SMIC rising around 8% and Hua Hong jumping nearly 20%, driven by several positive factors. One was a report that Z.AI, a Chinese AI company, has built a large data center using entirely domestically manufactured chips, boosting confidence that China can develop AI infrastructure despite restricted access to advanced US AI chips. This fueled expectations for domestic chipmakers like SMIC and Hua Hong. Chinese chip stocks also rebounded swiftly after heavy selling earlier, in line with a broader recovery in Asian chip shares, while the market anticipates supportive measures from the Chinese government. Investors are watching the Politburo meeting in late July, where the government is expected to continue backing the AI and semiconductor industries to promote technological self-reliance.

The Shanghai Composite Index closed higher today after China's State Council pledged to implement policies to keep economic growth on track for the full year 2026. The index closed at 3,864.37 points, up 68.09 points or 1.79 percent. Chinese authorities also rolled out support measures for the technology sector, helping Cambricon Technologies surge 11.58 percent, SMIC jump 11.2 percent, Eoptolink Technology climb 7.25 percent, and Zhongji Innolight rise 2.51 percent.

The 2026 second-quarter reports of public funds show that well-known fund managers including Zhang Kun, Liu Yanchun, and Zhu Shaoxing collectively reduced their positions in core consumer assets such as baijiu during the second quarter, shifting their allocation focus toward the tech growth sector. In the top ten holdings of the E Fund Blue Chip Select managed by Zhang Kun, SMIC and Dongshan Precision were included for the first time. The concentration of holdings dropped from 90.5% at the end of the first quarter to 50.9%, and the overall position fell from 93% to 75%. The number of shares held in Wuliangye and Shanxi Xinghuacun Fenjiu declined by 70.68% and 70.91% respectively. The top ten holdings of the Invesco Great Wall Dingyi Mixed Fund managed by Liu Yanchun were completely replaced, with new additions including Konfoong Materials International and Zhongji Innolight. From the appointment of an additional manager on May 9 to June 30, the net value rose by 26.51%. The top ten holdings of the Fullgoal Tianhui Selected Growth Fund managed by Zhu Shaoxing underwent significant changes, with Zhongji Innolight and Zelgen Biopharmaceuticals entering for the first time. Kweichow Moutai dropped out of the top ten after being a major holding for 25 consecutive quarters, while the position in Sinocera was substantially reduced by 69.11%.