Benjamin Graham on SMIC

SMIC gives Mr. Market a noisy test. The market record marked the shares up HK$3.25, or 4.81%, to HK$70.80 from HK$67.55 on August 14. The same record puts the shares down HK$5.50, or 7.21%, over 30 days, to HK$70.80 from a derived HK$76.30, yet up HK$18.80, or 36.15%, over one year, to HK$70.80 from a derived HK$52.00. SMIC’s changing quotes fit Graham’s mechanism: each quote is an offer, not intrinsic value.

SMIC, per TEXXR’s Q2 record, lifted revenue by about US$0.79 billion, or 36%, year on year, to about US$3 billion from a derived US$2.21 billion. SMIC reported US$479.2 million of net profit against the US$283.1 million estimate, an excess of US$196.1 million, while strong mature-node orders drove the quarter. SMIC’s Q1 record showed US$197.4 million of net profit against the US$223.6 million estimate, a US$26.2 million shortfall. The two reports support positive current earnings, but they do not supply Graham’s preferred long earnings history.

The supplied record cannot run Graham’s defensive tests. The record gives no trailing earnings multiple against his 20-times ceiling, no seven-year average earnings against his 25-times ceiling, no continuous-dividend history, and no current-asset and liability evidence for conservative financing. SMIC therefore cannot satisfy, on this record alone, Graham’s definition of an investment operation: thorough analysis that promises safety of principal and an adequate return.

SMIC also faces uncertainty around Graham’s “definite prospects.” The Reuters record says U.S. officials alleged that SMIC had sent chipmaking tools to Iran for about one year through March 2026, while the U.S. had sanctioned the company over alleged Chinese-military ties; the coverage does not confirm the shipment claim.

The TEXXR coverage record defines quarterly article count as SMIC stories logged during a calendar quarter. The record logged three stories in 2026’s second quarter, down 1.2 stories, or 28.6%, from its 4.2-story average across the eight-quarter baseline. The TEXXR record uses that count as coverage evidence, not business activity.

SMIC strengthens Graham’s current-earnings input, while the record withholds the arithmetic needed for intrinsic value. SMIC therefore presents a split Graham read: stronger reported operations, but no demonstrable margin of safety at the quoted price.

Where this lens comes from

Benjamin Graham's framework is set out at the lens page, drawn from The Intelligent Investor, Security Analysis. This page applies it to SMIC and nothing else — the company's full record is in the dossier.