SMIC: Preparing in advance to cope with market uncertainties, capital expenditures will significantly increase

SMIC (00981.HK) Joint CEO Zhao Haijun stated that considering the demand for equipment replacement, the proportion of capital expenditure is expected to significantly increase by 2026. At the same time, he emphasized that capacity expansion is a long-term plan, but in the face of market and customer demand uncertainties, the company must be prepared in advance.

Management pointed out that the overall industry's capacity demand growth rate is accelerating, and major peers are actively promoting expansion plans. To respond to market changes, SMIC also needs to prepare a certain amount of capacity reserves in advance to meet potential demand growth in the future. This is also one of the main reasons for the increase in capital expenditure.

In addition, the issue of extended equipment delivery times has also become a major challenge. Management stated that previously, the delivery time for equipment orders only took 2 to 3 months, but with the surge in orders within the industry, delivery times are becoming longer. In this situation, SMIC has decided to place orders in advance to make adequate preparations for future capacity expansion