SMIC: Memory and BCD are in high demand, prices are increasing

SMIC (688981.SH) released an investor relations activity record stating that, looking ahead to 2026, the effects of overseas return of the supply chain and domestic customers replacing overseas old products with new ones will continue, bringing sustained growth opportunities to the domestic supply chain. At the November earnings presentation, the impact of the large storage cycle on the industry and wafer foundries was mentioned. Over the past two months, we have extensively communicated with industry chain partners and observed that strong demand for storage driven by AI has squeezed the supply of storage chips available to other applications such as mobile phones, especially in the mid-to-low-end segments, causing terminal manufacturers in these fields to face shortages and rising prices of storage chips. Even if terminal manufacturers can pass on the cost increases through price hikes, it will lead to a decrease in demand for terminal products. These factors combined have resulted in a reduction of mid-to-low-end orders received by wafer fabs, while orders related to AI, storage, and mid-to-high-end applications have increased. In this market environment, the company leverages its technical reserves and leading advantages in niche fields such as BCD, analog, storage, MCU, and mid-to-high-end display drivers, along with its product layout with customers, to maintain a favorable position during this industry cycle. The company will actively respond to urgent market demands and promote continued revenue growth in 2026. Price is a reflection of supply and demand. SMIC’s memory and BCD products are in short supply and are increasing in price. Some mature capacities of competitors are being phased out, leading to a decline in overall supply in the market. We see that prices for major categories like CIS and LCD drivers have stabilized, but for new, iterative, and competitive products, prices are rising. Products with rapid iteration, such as WiFi, LCD drivers, and AMOLED drivers, are experiencing price growth; standard products that do not iterate tend to see some price declines. The company will prioritize supporting iterative products in R&D, engineering, and capacity expansion to strengthen product pricing and enhance its control over ASPs.

(Source: Cailian Press)