Understanding the Market | SMIC is up nearly 4% and plans to sell its stake in SMIC Ningbo to GOKE, which is beneficial for the company to focus on its main business

SMIC is currently up nearly 4%, as of the time of writing, up 3.73%, priced at HKD 41.7, with a transaction volume of HKD 323 million. In terms of news, SMIC announced that its wholly-owned subsidiary, SMIC Holdings, intends to sell its 14.832% stake in SMIC Integrated Circuit (Ningbo) Co., Ltd. to GOKE, a leader in machine vision and AI chip design in Hunan. After the completion of this transaction, SMIC Holdings will no longer hold any equity in SMIC Ningbo. The announcement disclosed that the core production equipment, supporting infrastructure, and large-scale investment in cutting-edge technology research and development at SMIC Ningbo have accumulated high fixed costs, and it is still in the capacity ramp-up phase. Its product structure, process optimization, and capacity utilization have not yet reached optimal levels, and the advantages of high-end production lines have not been fully realized, resulting in significant losses during the reporting period. SMIC stated that this transaction is beneficial for the company to focus on its main business