On May 18, JPMorgan released a research report stating that SMIC's (00981.HK) gross margin in the first quarter was slightly higher than expected due to selective price increases, and the revenue guidance for the second quarter far exceeded expectations, with an estimated sequential growth of 14% to 16%. The report pointed out that AI-related demand and localization trends have driven price increases for BCD, analog chips, power management, and memory products (which collectively account for approximately 40% to 50% of SMIC's revenue). This impact was partially evident in the first quarter and will be further reflected in the second quarter. However, JPMorgan also anticipates that consumer electronics demand may weaken in the second half of the year due to early supply in the first half and price increases in end products. Nevertheless, given the broader-than-expected scope of price increases, JPMorgan has upgraded SMIC's investment rating from underweight to neutral and raised the target price from HK$57 to HK$67, corresponding to approximately 2.8 times book value. JPMorgan believes that a clearer path to margin recovery, such as broader price increases sufficient to offset rising depreciation, is necessary to drive further stock revaluation, while downside risks stem from pricing pressures due to weaker-than-expected consumer demand.