Hold the phone, folks! Morgan Stanley just slapped a HK$40 price target on Semiconductor Manufacturing International Corporation (SMIC, 00981.HK), upgrading it from ‘Underweight’ to ‘Equal Weight’. And let me tell you, this isn’t some lukewarm adjustment – it’s a serious vote of confidence.
Why the sudden love? China’s AI game is about to explode, fueled by the DeepSeek large language model, and that means a massive increase in demand for AI chips. Simple as that. And with the US struggling to keep up with the global appetite for GPUs, SMIC is perfectly positioned to step into the breach and become a key player in supporting China’s AI design sector.
Look, we all know the equipment bottleneck is a real concern, but Morgan Stanley estimates SMIC can still pump out 3.6 million AI GPU units annually – enough to seriously address domestic demand. That’s a huge deal considering the geopolitical landscape!
Let’s dive a bit deeper into the dynamics at play:
AI chip demand isn’t just growing, it’s skyrocketing. The emergence of powerful large language models like DeepSeek is the key catalyst.
The global supply of AI GPUs is currently constrained, especially with leading manufacturers struggling to meet demand. This creates an opportunity for Chinese chipmakers.
SMIC’s ability to produce 3.6 million AI GPU units annually represents a significant capacity within the Chinese ecosystem. This could lessen reliance on foreign suppliers.
The upgrade from ‘Underweight’ to ‘Equal Weight’ indicates a fundamental shift in how Morgan Stanley views SMIC’s future potential. This isn’t just about the numbers; it’s about recognizing a shifting power dynamic.
Frankly, this story has legs. Don’t be surprised if we see further upward revisions as SMIC continues to navigate this exciting, albeit complex, environment. This is a moment to watch closely, people!
