Goldman Sachs reported that the bank reaffirmed Semiconductor Manufacturing International Corporation's (00981) buy rating and firmly believed that PMIC (power management integrated circuit) was one of the main growth drivers of its 8-inch wafer manufacturing.

According to the research paper, PMIC accounts for about 30% of SMIC's 8-inch wafer business revenue, and the bank expects 8-inch wafer revenue to grow 37% / 31% year-on-year in the third / fourth quarter of this year (13% / 27% in the first / second quarter of 2021). The main drivers of growth were increased shipments and product line expansion by local customers, as well as PMIC growth in smartphones and consumer electronics.

Goldman Sachs Group also stressed that there are differences between the PMIC business of Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor. The bank believes that direct competition between the two companies is limited because of their different focus on customers and end markets.

Goldman Sachs gave the stock a target price of HK $37.6, corresponding to 31 times 2022 forward price-to-earnings ratio and 2.1 times 2022 expected price-to-book ratio.