SMICY - Semiconductor Manufacturing International: Trade War Impact Overshadows Robust Foundry Market

• SMIC is a Chinese pure-play foundry with a market share of 5% and has strong ties to the government which provides funding for its expansion.
• The company may not fully benefit from the industry supply crunch due to trade restrictions on the company and challenges faced by its largest customer, HiSilicon.
• The technology gap between SMIC and industry leaders TSMC and Samsung could widen further as it is unable to obtain EUV equipment to go ahead with its node migration plans.
• Caught at the center of trade tensions, we believe the company’s challenges will persist and hinder its ability to compete against TSMC and Samsung.

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