Shanghai-based Semiconductor Manufacturing International Corporation (SMIC), the world’s second-largest pure-play foundry after TSMC, has seen its stock price rise in the past two months, doubling its value. It has become. Bloomberg reports that China’s push for semiconductor independence is accelerating this demand, and that U.S. sanctions have made it difficult for local companies to obtain chips using Western components. He says he relies on companies. Separately, China is also investing billions of dollars in its semiconductor industry, and SMIC is benefiting from that.
But despite its fast-growing semiconductor manufacturing industry, China still lags behind Western countries in cutting-edge chips and AI, largely due to moves by the U.S. government. For example, without access to ASML’s latest high-NA EUV machines, Chinese companies cannot produce the nodes needed for next-generation processors. Also, although SMIC is focusing on legacy chips used in industrial processes and automobiles, a move recommended by Chinese chip industry leaders, some experts say other local chips It said competition in the sector could intensify next year as factories and even TSMC may lower production lines. Prices rise, making their products more attractive to customers and reducing SMIC’s advantage.
Unlike Nvidia’s stock price rally, which was fueled by mass sales of AI processors, SMIC’s stock price movement is said to be speculative and based on news events. That is, the assumption is that something happens due to several factors. Therefore, we can expect a company’s stock price to fluctuate to some extent, especially when expectations do not match reality.
This is why some experts think SMIC stock appears overvalued. They acknowledge that there is local demand for SMIC’s products and services and that it could remain profitable in the near term, but it also faces competition from other foundries both domestically and internationally. Additionally, a portion of SMIC’s sales are due to Chinese government investment and fiscal stimulus to promote the semiconductor industry. While this will have a positive impact on the company’s bottom line, it also warns that the market may be too optimistic about the impact of this government subsidy.
Despite these warnings, SMIC’s soaring valuation signals growing demand for chips in China. If the company can maintain its growth, it could become a major player in chip manufacturing in terms of volume, if not the most advanced technology.
