Semiconductor Manufacturing International Corp (SMIC), China’s top logic chip foundry, announced price increases and a production ramp-up driven by robust AI demand, posting a quarterly revenue record above $3 billion.
- SMIC raised wafer prices amid strong AI chip demand
- Q2 revenue exceeded $3 billion with profits tripling
- Capacity expansion and pricing adjustments planned for H2 2026
What happened
SMIC experienced significant growth in AI-driven chip orders, resulting in a record quarterly revenue surpassing $3 billion during the second quarter. The foundry increased wafer prices, a move communicated by Co-CEO Zhao Haijun following customer negotiations in the first quarter, with plans for further price increases in the third quarter. Shipments climbed 14% quarter-over-quarter, accompanied by a 5.7% rise in average selling prices.
The company’s profitability also surged, with second-quarter net profits tripling to $479.2 million, boosted in part by one-time gains from a subsidiary. Production capacity grew modestly, with utilization rates rising to nearly 94% as SMIC added monthly wafer capacity. China accounted for the majority of revenue at 90%, while the U.S. contributed 8%, reflecting SMIC’s market focus and geopolitical dynamics.
Why it matters
The price hike and increased output signal that AI technology is a key driver of semiconductor demand, intensifying supply chain tightness across the sector. SMIC’s ability to raise prices despite a competitive environment indicates its rising status within the global chip production hierarchy, reflecting improvements in technology and market position.
As the only Chinese foundry manufacturing advanced 7-nanometer process chips at scale, SMIC’s moves have strategic significance. They demonstrate China’s efforts to strengthen its semiconductor independence amid global geopolitical tensions and export restrictions, which have limited access to higher-end chip technologies. The company’s rising revenues and profits reinforce this crucial industry position.
What to watch next
Investors and industry watchers should monitor SMIC’s capacity expansion plans closely, as the foundry aims to accelerate production line ramp-ups to ease supply shortages fueled by AI applications. The company’s capital spending and monthly wafer output growth will be key indicators of its ability to keep pace with escalating demand.
Additionally, pricing negotiations and adjustments in subsequent quarters will show how SMIC balances customer relationships with profitability goals amid fluctuating market conditions. Any shifts in geographic revenue distribution, particularly involving the US and China, will also be critical to understanding SMIC’s strategic trajectory within the evolving global semiconductor landscape.