SMIC surges up to 7% intraday on analyst support, closes +4.06% at HKD74.4 on margin outlook boost

SMIC stood out in Hong Kong trading on May 15, 2026, as traders rewarded stronger margin guidance, firmer pricing power, and fresh analyst support. The stock jumped more than 7% intraday before closing the midday session at HKD74.4, up 4.06%. That move made it the best-performing blue chip, even as the Hang Seng Index fell 229 points, or 0.87%, to 26,160. Market turnover reached HKD151.149 billion, showing heavy activity across the board.

The rally came after SMIC reported Q1 2026 revenue of $2.505 billion, up 0.7% QoQ and 11.5% YoY. Gross margin reached 20.1%, ahead of the prior 18% to 20% guide. Profit attributable to owners rose 5% YoY to $197.4 million, though it missed the $215.2 million analyst estimate tracked by LSEG.

SMIC Stock Rally Beats Weak Hong Kong Tape

SMIC gained while several major technology names fell. Alibaba, Meituan, NetEase, and Baidu dropped more than 2%, while Bilibili tumbled 6.35%. That contrast matters because it shows the move was company-specific, not just sector-wide buying. BNP Paribas rated the stock Outperform with a HKD86 target price. The broker cited stronger pricing power, higher ASP, and rising shipment volume across consumer and IoT demand.

Morgan Stanley also kept an Overweight view, with reports pointing to strong Q2 guidance as a key support factor. The stock’s move reflected better confidence in near-term execution. Still, the rally did not erase all pressure. Investing.com data showed 0981.HK trading around HKD71.80 later, with a 52-week range of HKD38.65 to HKD93.50. That range shows volatility remains high after a sharp semiconductor run

Q1 Results Show Better Revenue Quality

SMIC delivered Q1 revenue of RMB17.617 billion under Chinese accounting standards, up 8.1% YoY. Net profit reached RMB1.361 billion, up 0.4% YoY. Under IFRS, revenue was $2.505 billion, while gross profit was about $504 million. EBITDA reached $1.435 billion, with a strong 57.3% margin.

Gross margin improved to 20.1%, up 0.9 percentage points QoQ from 19.2%. That beat the earlier guide and gave the market a cleaner reason to price in operating stability. Depreciation remains a drag, however. Costs are expected to rise about 30% YoY in 2026. Depreciation accounted for 44% of revenue per dollar in Q1, above the prior 37% to 38% range.

Q2 Outlook Gives SMIC A Stronger Setup

SMIC guided Q2 2026 revenue growth of 14% to 16% QoQ, implying about $2.85 billion to $2.9 billion in sales. The company also guided gross margin at 20% to 22%. That outlook gave traders a forward-looking reason to look past the profit miss.

Pricing also became a major support point. Blended ASP rose $9 per wafer QoQ to $999 in Q1. Management said it had negotiated sequential price increases for tight-supply mature-node products. That effect should become more visible in Q2, Q3, and Q4.

Key Q2 drivers include:

• Revenue guidance of 14% to 16% QoQ.
• Gross margin guidance of 20% to 22%.
• ASP improvement to $999 per wafer.
• Stronger demand from consumer and IoT segments.
• Better visibility from existing customer orders.

Capacity Expansion Supports The Growth Story

SMIC kept Q1 utilization high at 93.1%, showing solid factory loading. It added nearly 9,000 12-inch equivalent wafers of capacity during the quarter. Monthly capacity reached 1.078 million 8-inch equivalents, up 10.8% YoY. Another estimate placed total capacity at 2.695 million 8-inch equivalent wafers, underlining the scale of its expansion push.

Capital spending remains large. Q1 capex reached $1.56 billion, or RMB10.871 billion. Full-year 2026 capex is expected to stay roughly flat YoY at about $8.1 billion. The company needs that spending to meet localization demand. Yet it also creates depreciation pressure, which can limit profit growth even when revenue improves.

AI Chip Ambitions Add Strategic Weight

SMIC remains central to China’s semiconductor localization drive. Foreign clients are shifting some legacy orders back to China as AI and HBM demand squeeze capacity at overseas foundries. China accounted for about 89% of Q1 revenue, while the U.S. share was 9%. That mix shows domestic demand now drives most of the business.

Advanced-node progress remains harder. Reported 7nm N+2 yields for Huawei’s Ascend 910C chips sit around 20% to 40%, making production costly. Pilot work on 5nm is still strategically important, especially after the reported Alibaba partnership in December 2025. China’s $47.5 billion Big Fund III, registered in May 2024, also supports the wider push for local chip capacity.

Conclusion

SMIC rallied because the market focused on margin recovery, price increases, and stronger Q2 guidance. The Q1 profit miss mattered, but the 20.1% gross margin and 14% to 16% Q2 revenue outlook mattered more. We also saw stronger support from analysts and a clear contrast against weak Hong Kong tech stocks.

Disclaimer

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.