|Bid||N/A x N/A|
|Ask||N/A x N/A|
|Day's Range||24.89 - 26.65|
|52 Week Range||5.00 - 26.65|
|Beta (5Y Monthly)||0.74|
|PE Ratio (TTM)||165.00|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||11.70|
Shares of ACM Research (NASDAQ: ACMR) were moving higher today as Chinese stocks surged after a state-run newspaper said that a healthy bull market was especially important following the pandemic. The news lifted the Shanghai Composite by 5.8%, its biggest one-day gain in five years, and also propelled stocks with close business ties to China, like ACM Research. ACM, which specializes in semiconductor cleaning technology, is based in California, but does the majority of its business in China.
(Bloomberg Opinion) -- As a diplomatic tit-for-tat escalates between Washington and Beijing, millions of Chinese investors — defiant and patriotic — are once again engineering a fast and furious bull market on their home turf. The theme? Self-reliance.Two years ago, when the trade war first hit, China’s $8.5 trillion stock market sank into one of its deepest bear episodes, as worries about the economic damage of decoupling took root. This time, tension with the U.S. hasn't even made a dent. Rather, mainland shares are on fire. The benchmark CSI 300 Index has rallied 14% this year, to trade at a five-year high. The S&P 500 Index, by comparison, is still in the red. Daily trading volume has exceeded 1 trillion yuan ($142 billion) for three consecutive trading days. The latest frenzy began right after Beijing imposed its national security law on Hong Kong, despite U.S. opposition. Now, investors have renewed their faith that China is finally recognizing the importance of self-sufficiency. Bullish sell-side analysts are tossing around buzz words like national champions, import substitutes and capital market reforms; ultimately, these boil down the idea that turning inward is good for stocks. There are many examples. Consider Shanghai-based Semiconductor Manufacturing International Corp., a chip foundry that counts Huawei Technologies Co. as its largest client. Rather than languishing as Huawei gets boxed out of U.S. technology, SMIC’s Hong Kong-listed shares are up over 200% this year.On the financing front, SMIC is behaving every bit like a national champion already. On May 15, the day Huawei got slapped with further sanctions, the state-owned China Integrated Circuit Industry Investment Fund, which held close to 20% of SMIC as of December 2019, said it would co-invest about $2.5 billion into one of its wafer plants. Meanwhile, securities regulators have fast-tracked the company’s plans to raise as much as $7.5 billion in Shanghai, the largest mainland initial public offering in a decade. Beijing is well aware that chip manufacturing is a capital-intensive business, and it must provide financial support as SMIC races to catch up on technology. In the industrial space, global supply-chain disruption is already benefiting Chinese players. For instance, Sany Heavy Industry Co., China’s largest excavator maker, has seen its domestic market share jump to 27% from 8% in 2010, at the expense of foreign brands, data provided by HSBC Holdings Plc show. No surprise, Sany’s stock is up 24% this year, while Caterpillar Inc., whose mainland market share shrank to 11% from 14% in 2016, is down 13.5%. Jiangsu Hengli Hydraulic Co., a large manufacturer, tells a similar story. It’s up 55% this year. Washington’s attempt to block mainland businesses’ access to U.S. money — from the delisting of Chinese American depositary receipts in New York, to forbidding federal pension funds from investing in mainland companies — is only forcing Beijing to speed up its capital markets reform. Regulators are already rewriting equity financing rules, including the launch of new registration-based IPOs, and opening new funding venues for young startups. As a result, we can expect China’s stock market to grow to 100% of its gross domestic product in the next five to 10 years, from 60% now, estimates CICC Research.When it comes to stock investing, China and the U.S. face the same set of problems. A slowing economy inevitably eats into corporate earnings growth, narrowing any justification for a further bull run.But President Donald Trump is giving China’s stock market a second wind. Huawei may prefer chips made by Taiwan Semiconductor Manufacturing Co. — after the U.S. sanctions, though, it may have no choice but hold its nose and buy domestic. Meanwhile, industry consolidation, which benefits domestic firms, is only accelerating now that Beijing is openly supporting its national champions. Trump is always looking at the stock market for validation. This time, he’s looking at the wrong one.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Semiconductor Manufacturing International Corp. is preparing to raise as much as $7.5 billion via mainland China’s largest stock sale in a decade, a big cash infusion for a chipmaker Beijing’s counting on to reduce reliance on American technology.China’s top homegrown chipmaker could sell as much as 53.2 billion yuan of shares, according to a Sunday filing with the Shanghai Stock Exchange. In May, analysts estimated a Shanghai listing could fetch somewhere in the $3 billion range. The offering would be the largest since Agricultural Bank of China Ltd.’s 68.5 billion yuan initial public offering in 2010. SMIC’s Hong Kong stock jumped 21% to a record Monday, racking up its biggest gain since 2009 after mainland bourses surged.China’s biggest contract manufacturer of chipsets represents a major piece of Beijing’s vision to create a self-reliant and world-class semiconductor industry, particularly as Washington tightens restrictions on sales of silicon and software to the nation. SMIC plans to use the stock-sale proceeds to develop next-generation chipmaking to try and compete with Intel Corp. and Taiwan Semiconductor Manufacturing Co. Like TSMC, SMIC is a so-called foundry that helps fabricate chips based on other companies’ designs, and could prove key to Huawei Technologies Co. if Washington follows through on threats to choke off its pivotal semiconductor business.What Bloomberg Intelligence SaysSMIC benefits the most from China’s push for self sufficiency in semiconductor supply. Rising research expenses to develop next-generation production technology may be the biggest drag on profitability growth. Sales gains could be constrained by delays in acquiring fabrication tools from foreign manufacturers.\- Charles Shum, analystClick here for the research.SMIC’s shares have more than tripled in Hong Kong since March’s bottom, while the Hang Seng Index is up just 21%, on bets that trade friction with the U.S. will force Beijing to focus more on homegrown tech and products that replace imports. China’s state-backed funds pumped $2.25 billion into a SMIC wafer plant in May.The effort comes at a time the Trump administration is threatening to deny domestic companies like SMIC or Huawei access to crucial components and circuitry. SMIC’s listing is also a boost for the STAR market, which has struggled to attract major technology companies since its launch last year.The initial institutional offer for the shares was 165 times oversubscribed. China Integrated Circuit Industry Investment Fund will subscribe to 3.52 billion yuan of the offering as a strategic investor while Singapore’s sovereign fund, GIC Pte., will invest 3.32 billion yuan.(Updates with biggest gain since 2009 in the second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- From Seoul to Taipei, large-cap companies are treated with reverence, boasting almost uniform buy recommendations from brokerage analysts. But in Hong Kong, a Chinese semiconductor foundry, which has gained over $7 billion in market cap this year, is stirring up controversy and splitting Wall Street titans. I’m talking about Shanghai-based Semiconductor Manufacturing International Corp., which counts Huawei Technologies Co. as its largest client. Of the 33 sell-side analysts tracked by Bloomberg, only 14 have a buy rating, with the rest an outright sell or hold, which in the analyst world amounts to a polite no. The negative sentiment is easy to justify. Shortly after May 15, when the U.S. placed further restrictions on Huawei, Credit Suisse Group AG promptly downgraded SMIC. The new rules require that any chip supplier using American technology get a license before selling to Huawei. So unless that’s granted, or this policy is withdrawn, foundries from Taiwan Semiconductor Manufacturing Co. to SMIC will have to stop doing business with the tech giant, the bank noted. Last year, Huawei accounted for 19% of sales at SMIC, and 14% at TSMC. The Taiwanese company has already halted new orders from Huawei, according to some reports. Goldman Sachs Group Inc. disagrees. In a research note published this week, the bank reaffirmed its conviction, adding fuel to SMIC’s already meteoric run. The stock closed 11.9% higher Tuesday, bringing this year’s gain to a whopping 78.8%. SMIC has become expensive by all traditional metrics. It’s now trading at 53 times 2021 earnings, versus TSMC’s 17.7 times. It’s cheaper on a price-to-book basis, but its return-on-equity is only 4.6%, well below the very profitable TSMC’s 23.4%. So what does Goldman see in SMIC? China’s vast domestic demand. SMIC’s advanced-processing-nodes unit has the potential to mass produce at least three times as many smartphone chips as Huawei by 2025, the bank estimates. As long as SMIC gets some new business at home, U.S. sanctions on Huawei won’t move the needle.This is a seductive narrative. SMIC fits nicely into President Xi Jinping’s Made in China 2025 initiative, which aims to produce 70% of chips domestically, versus about 20% currently. Tsinghua Unigroup’s Unisoc, China’s second largest mobile chip designer after Huawei’s HiSilicon, could start using SMIC for mass production, Goldman mused. Both are backed by the state-owned China Integrated Circuit Industry Investment Fund, simply known as the Big Fund. As of 2019 year-end, the Big Fund owned close to 20% of SMIC. On the financing front, SMIC sure behaves like a national champion already. Last year, it received $293 million in government funding, an 87% jump from 2018; subsidies accounted for a quarter of its Ebitda. On May 15, the day Huawei got slapped with further sanctions, SMIC said the Big Fund and a Shanghai municipal fund would invest about $2.5 billion into one of its wafer plants. It’s also on a fast track to raise at least 20 billion yuan ($2.8 billion) on the mainland’s Nasdaq-style Star market. To be sure, the technology gap between SMIC and market leader TSMC will persist, which explains why the Taiwan rival is so much more profitable. But as long as SMIC is seen as a national champion — it’s China’s most advanced semiconductor foundry — cheap state money will keep rolling in and will help close the gap. The company’s return-on-equity could improve to 14% by 2025, says Goldman. Mainland investors are certainly big believers. Last week, they bought a net $148 million worth of SMIC stock, the most hotly sought company on the southbound trade of the Hong Kong Stock Connect. Buying remains brisk this week.Just like the rest of its economy, Hong Kong’s $4.8 trillion stock market is a busy battleground for cultural clashes, with U.S. fund managers’ dominance gradually giving way to aggressive mainland investors. While foreigners may see SMIC as collateral damage to Huawei’s sanctions; all the Chinese see is state support. This disconnect is being played out in analyst ratings. Goldman is just taking the Chinese view.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The Trump administration has fired multiple salvos against Huawei Technologies Co. since the start of a campaign to derail China’s technological ascendancy. The latest blow threatens to cripple the country’s tech champion.Huawei’s leafy campus in southern China has been engulfed in a state of emergency since the Commerce Department in May banned the sale of any silicon made with U.S. know-how -- striking at the heart of its semiconductor apparatus and aspirations in fields from artificial intelligence to mobile services. Its stockpiles of certain self-designed chips essential to telecom equipment will run out by early 2021, according to people familiar with the matter.Executives scurried between meetings in the days after the latest restrictions, according to one person who attended the discussions. But the company has so far failed to brainstorm a solution to the curbs, they added, asking not to be identified talking about private matters. While Huawei can buy off-the-shelf or commodity mobile chips from a third party like Samsung Electronics Co. or MediaTek Inc., it couldn’t possibly get enough and may have to make costly compromises on performance in basic products, they added.What Huawei’s brass fears is that Washington, after a year of Entity List sanctions that’ve failed to significantly curtail the company’s rapid growth, has finally figured out how to quash its ambitions. The latest curbs are the culmination of a concerted assault against China’s largest tech company that began years ago, when the White House tried to cut off the flow of American software and circuitry; lobbied allies from the U.K. to Australia to banish its network gear; even persuaded Canadian police to lock up the founder’s daughter. The latest measures however are a more surgical strike leveled at HiSilicon, the secretive division created 16 years ago to drive research into cutting-edge fields like AI inference chips. That unit surged in prominence precisely because it’s viewed as a savior in an era of American containment, and its silicon now matches rivals’ like Qualcomm Inc.’s and powers many of Huawei’s products: the Kirin for phones, Ascend for AI and Kunpeng for servers.Now that ambition is in doubt. Every chipmaker on the planet, from Taiwan Semiconductor Manufacturing Co. to China’s own Semiconductor Manufacturing International Corp., needs gear from American outfits like Applied Materials Inc. to fabricate chipsets. Should Washington get serious about throttling that spigot, Huawei won’t be able to get any of the advanced silicon it designs into the real world -- stymieing efforts to craft its own processors for mobile devices and radio frequency chips for 5G base stations, to name just two of the most vital in-house components. Dubbed the Foreign-Produced Direct Product Rule or DPR, Trump’s latest constraints have implications for China’s 5G rollout, for which Huawei is by far the dominant purveyor.The ban “focuses on HiSilicon-designed chips, which present the biggest threat to the U.S.,” Jefferies analyst Edison Lee wrote in late May. “The DPR could quash HiSilicon and then Huawei’s ability to make 5G network gears.”Read more: U.S.-China Fight Over Chip Kingpin Rattles Tech IndustryThe scene at Huawei’s Shenzhen nerve center invokes deja vu from a year ago, when Huawei billionaire Ren Zhengfei emerged from seclusion to declare his company’s survival in doubt. In the months following that proclamation, two things happened. U.S. companies, spooked by the prospect of losing billions, lobbied Washington for exceptions to the Entity List and suppliers from Intel Corp. to Micron Technology Inc. relocated assembly to increase foreign-produced components and continue supplying the Chinese company. Huawei employees -- spurred on by patriotism given perceptions the nation was under attack -- went to 24-hour days to design alternatives to American parts.The latest curbs could prove more effective because they remove Huawei’s chipmaker of choice from the equation. In theory, any chipmaker can petition the Commerce department for approval to ship Huawei-designed semiconductors, and opinion is divided on both sides of the Pacific as to how far the agency will allow shipments to proceed. But if it chooses to enforce the new curbs to the hilt, HiSilicon can no longer take its designs to TSMC or any foreign contract manufacturer. And local peers such as SMIC typically operate two generations behind TSMC.In fact, the latest curbs could severely disrupt production of some of the more critical and visible products in Huawei’s portfolio, including the Kirin brains and communications chips of future 5G phones, AI learning chips for its cloud services and servers and the most basic kinds of chips for networking. In February, Huawei touted how its next-generation antenna chips have been installed in “the industry’s highest-performance” 5G base stations. It may no longer able to ship those base stations after the chip inventory runs out.“HiSilicon won’t be able to continue its innovation any further until it’s able to find alternatives through self-development and collaboration with local ones, which will take years to mature,” said Charlie Dai, a principal analyst at Forrester Research. “We estimate that Huawei’s inventory of high-end chips (including baseband chips and CPUs for Huawei’s high-end smartphones) may last 12 to 18 months maximum.”Read about how Trump’s blacklisting of Huawei failed to halt its growth.Modern chip manufacturing at the highest levels simply cannot happen without American gear from the likes of Applied Materials, KLA Corp. and Lam Research Corp. Even in basic wafer fabrication, replacing TSMC is impossible because the Taiwanese foundry is the only company able to reliably make semiconductors using 7 nanometer or smaller nodes -- a must for high performance. Moving everything in-house -- essentially building an American-free plant -- is a pipe dream because it requires extreme ultraviolet lithography machines from ASML Holding NV -- a prerequisite for next-generation chipmaking. Yet ASML’s machines also use American technology from the likes of suppliers such as II-VI Inc. and Lumentum Holdings Inc, according to data compiled by Bloomberg. The best Chinese alternative could be Shanghai Micro Electronics Equipment, but its EUVs are again a few generations behind the Dutch firm’s.All that’s even before factoring in the uncertainty over Huawei’s access to design software developed by Cadence Design Systems Inc. and Synopsys Inc. The pair provide electronic design automation (EDA) tools that Hisilicon’s engineers rely on to draw up blueprints for next-generation processors. As Assistant Secretary of State for International Security and Nonproliferation Christopher Ford told reporters in late May: “If one wants to be working in the area of the very best chips, the chips that have the most computing power packed into the smallest space, it is necessary to use U.S. design tools right now because we have a commanding comparative advantage in that area.”“While there will be lots of opportunity to continue selling lesser quality chips to Huawei, this will be an additional challenge for the really good stuff,” he added.How Huawei Landed at the Center of Global Tech Tussle: QuickTakeIn the long run, the lack of consistent in-house chip supplies will disrupt China’s grand ambition of challenging the U.S. for global tech supremacy. More immediately, they threaten to curtail China’s crucial $500 billion 5G rollout -- a key piece of Beijing’s longer-term strategic vision.Huawei stands at the center of Beijing’s $1.4 trillion New Infrastructure initiative to seize the lead in 5G-based technology. Now it’s uncertain if it can even fulfill the 90-plus contracts it’s won so far to build networks for local operators like China Mobile Ltd. and other carriers around the world. That’s because HiSilicon’s chips are essential in products waiting to be shipped out. The uncertainty of not just fulfilling contracts -- but also around Huawei’s very ability to maintain clients’ networks once they’re up and running -- may also spook potential future customers.Internally, executives remain hopeful of finding a workaround, and are repeating the same mantra of a year ago -- doing without American technology isn’t impossible. “The good news is we still have time,” said one person involved in Huawei’s supply chain management. Chip architecture and supply “redesign takes time, but not something that can’t be done.”(Updates with table of Huawei’s chipmaking options after the tenth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Semiconductor Manufacturing (SMICY) has seen solid earnings estimate revision activity over the past month, and belongs to a strong industry as well.
Semiconductor Manufacturing International Corp., China's biggest chipmaker, is aiming to raise $2.8 billion via a listing in Shanghai. In a prospectus made public this week, the chipmaker, which trades on the Hong Kong Exchange, said proceeds from the share sale will go to bankroll projects and shore up operating capital as tensions between the U.S. and China intensify. The company is anticipating increased business after the U.S. Department of Commerce in May expanded the Foreign Direct Product Rule to prevent Chinese smartphone maker Huawei from purchasing semiconductors from U.S. companies.
(Bloomberg) -- China’s state-backed funds pumped $2.25 billion into a Semiconductor Manufacturing International Corp. wafer plant to support advanced-chip making as Washington tightens technology restrictions on the Asian nation.The Semiconductor Manufacturing International Corp. plant’s registered capital jumps from $3.5 billion to $6.5 billion after the investment, the company said in an announcement on Friday.The chipmaker’s stake in the Shanghai facility will drop from 50.1% to 38.5%, it said. The plant has capacity to produce 6,000 14-nanometer wafers a month and plans to boost that to 35,000.The new investment came as Washington moved to prevent sales to Huawei Technologies Co. by chipmakers using U.S. technology. The Commerce Department on Friday said it would require licenses before allowing U.S. technology to be used by the Chinese company or its 114 subsidiaries, including its chip-design unit HiSilicon.U.S. Tightens Rules to Crack Down on Huawei’s Chip Supply SMIC is planning a Shanghai share sale that could raise more than $3 billion, based on its closing value of more than $13 billion on Friday. China is betting the local chipmaker can reduce the country’s reliance on U.S. technology.China Chipmaker’s $3 Billion Listing a Hedge Against U.S. CurbsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
National Association of Manufacturers CEO & President Jay Timmons joins Yahoo Finance’s Seana Smith to discuss how the manufacturing industry is dealing with the COVID-19 pandemic.
(Bloomberg) -- Semiconductor Manufacturing International Corp. is planning a Shanghai share sale that could fetch billions of dollars for a Chinese chipmaker Beijing’s counting on to help reduce reliance on U.S. technology.The Hong Kong-listed company known as SMIC surged 11%, the most in more than two years, after its board approved plans to float as many as 1.69 billion new shares on a Shanghai market created to host fast-growing enterprises. It could end up raising more than $3 billion based on its closing value of more than $11 billion.SMIC is one of several chip companies that embody Beijing’s hope of creating a self-reliant and world-class semiconductor industry. It plans to use the proceeds to develop next-generation chipmaking to try and compete with Intel Corp. and Taiwan Semiconductor Manufacturing Co. That effort comes at a time the Trump administration may tighten restrictions on the sale of technology to China, threatening to deny domestic companies like SMIC or Huawei Technologies Co. access to crucial components and circuitry.“Strategically, we believe SMIC is gradually severing ties to the U.S. capital markets, as the tension between the U.S. and China escalates because of Covid-19 and another round of trade war is brewing,” Bernstein analysts wrote in a note.Read more: Huawei Warns of ‘Pandora’s Box’ If U.S. Curbs Taiwan SupplySMIC’s decision moves the tech giant closer to its roots, following its voluntary delisting of American depositary shares from New York last year. Its envisioned listing is a boost for the Sci-Tech Innovation Board -- better known as the STAR market -- which has struggled to attract major technology companies since its launch last year. The offering could raise some $3.2 billion and add to an existing cash pile of about $2.2 billion, according to Sanford C. Bernstein analysts Mark Li, Hanxu Wang and Edward Hou.It aims to pour new funds into research and deepen its capability in 12-inch wafers, helping it better compete with far larger rival TSMC, especially as Washington considers constraints against the Taiwanese company as well.Like TSMC, SMIC is a so-called foundry that helps fabricate silicon based on other companies’ designs. It currently competes against its bigger rival in nodes larger than 14 nanometers, a technology widely used in processors for smartphones and servers. But it lags behind in more advanced technologies that customers from Apple Inc. to Huawei crave.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.