VanEck HIP Sustainable Muni ETF

Second-quarter revenue was $1,344 million, up 21.8% quarter over quarter and 43.2% year over year. Gross margin was 31.1%, up 7.4 percentage points sequentially and 3.6 points year over year. Profit from operations was $538 million, up 331.4% quarter over quarter and 731.6% year over year, including a $231 million gain from the SJ Semiconductor disposal; profit attributable to SMIC was $688 million, up 332.9% quarter over quarter and 398.5% year over year. For the first half, revenue was $2,448 million, up 33% year over year, and gross margin was 26.8%. Q3 guidance is for revenue up 2% to 4% sequentially and gross margin of 32% to 34%, with non-IFRS OpEx and profit attributable to non-controlling interest expected to increase sequentially. Full-year revenue growth and gross margin targets were both raised to around 30%, and annual EBITDA is expected to be above $3 billion.

The co-CEO said demand remained strong across traditional products, 5G migration, EV-related applications, smart home connectivity and domestic substitution, and argued those trends are creating a supply shortage across the industry. He emphasized that SMIC is prioritizing long-term strategic customers, high-ASP and high-margin products because capacity is limited, while advanced-node utilization improved in the quarter. He also said the company is pushing through Entity List-related constraints, but uncertainties remain around procurement, customer demand shifts and capacity expansion timing.

The CFO said second-quarter results were better than expected, with revenue of $1,344 million, gross margin of 31.1%, and operating profit of $538 million, helped by shipment growth, product mix optimization and pricing. He pointed to a strong balance sheet with $15.5 billion in cash and cash equivalents and financial assets, total debt of $6 billion, and negative net debt of $9.4 billion. He also said operating cash flow was $1,039 million in Q2, and confirmed the company still expects full-year capex and depreciation/amortization to proceed as planned, with annual EBITDA above $3 billion.

In Q&A, analysts focused on whether the strong Q3 setup implied a weaker fourth quarter and what was driving the caution in full-year guidance. Management said Q4 should not be worse than Q3 in a base-case scenario, but they were forecasting conservatively because uncertainty remains; they also said the Entity List affects both supply chain inputs and some customer orders/capacity usage. On capex, management said they still expect around $4.3 billion for the year, with 45,000 wafers of monthly 8-inch incremental capacity and 10,000 wafers of 12-inch capacity mainly in Beijing, while noting it is too early to discuss next year’s expansion plans.