[ET Net News Agency, 5 September 2019] Morgan Stanley lifted its target price for SMIC
(00981) to HK$8.9 from HK$7.5 and upgraded its rating to "equal-weight" from
"underweight".
The research house said 28nm is still the most advanced node of SMIC, and that is also
the most advanced node of China fabs. However, the most advanced logic chips for Chinese
smartphones, computers, TVs, and networking equipment, are all migrating to the 16nm/14nm
or below.
SMIC is on track to start small production of its 14nm in late 2019, but will soon face
price competition from other foundries such as TSMC and Samsung, who have better cost
structures.
However, SMIC has been developing its "N+1" node, which should be 7nm without EUV
(extreme ultraviolet) lithography. Morgan said that SMIC may bring in 7nm risk production
to 2020, given the smooth 14nm technology development.
Morgan kept its EPS estimates unchanged for 2019, but raised them by 6% for 2020 and 13%
for 2021. (KL)