China’s largest semiconductor foundry, Semiconductor Manufacturing International (SMIC), has reported more than $3 billion in revenue for the first time during the second quarter of 2026. Profit tripled to $479.2 million.
SMIC Raises Wafer Prices
SMIC is raising wafer prices as strong artificial intelligence demand tightens chip supply and pushes its factories close to full utilisation.
SMIC negotiated higher prices with customers during the first quarter and will charge more for wafers processed in the third quarter.
Co-Chief Executive Officer Zhao Haijun said SMIC’s manufacturing operations had reached leading industry standards in several areas, but its wafer prices remained below those charged by major competitors. The company is consequently seeking higher and more equitable prices from customers.
Average wafer selling prices increased 5.7 percent sequentially in the second quarter. The price improvement accompanied higher production volumes rather than a decline in customer demand.
SMIC is China’s only foundry capable of mass-producing logic semiconductors such as CPUs and GPUs using a 7-nanometre manufacturing process. However, management said much of the latest AI-related growth came from chips outside the CPU and GPU categories.
Wafer Shipments Rise 14 Percent
SMIC shipped 2.9 million 8-inch-equivalent wafers during the second quarter, representing an increase of 14 percent from the previous quarter.
The growth was supported mainly by AI-related orders from customers in China, along with some orders arriving earlier than anticipated. SMIC expects robust demand for foundry services to continue through the second half of 2026.
SMIC Plans Capacity Expansion
SMIC expects artificial intelligence to continue driving strong semiconductor demand during the second half of 2026.
The company plans to adjust its existing manufacturing capacity and accelerate the ramp-up of new production lines. These measures are intended to increase wafer output and help ease supply shortages affecting the global semiconductor industry.
Accelerating new production lines could help SMIC capture additional orders from Chinese AI-chip developers. However, semiconductor capacity expansion requires substantial investment in manufacturing equipment, cleanrooms and supporting infrastructure.
Monthly production capacity increased 1.7 percent quarter-on-quarter to 1.1 million 8-inch-equivalent wafers. Factory utilisation reached 93.7 percent, slightly higher than in the first quarter and indicating limited spare production capacity.
SMIC added 8,000 wafers of monthly 12-inch manufacturing capacity during the second quarter. It plans to reallocate existing capacity and accelerate the ramp-up of new production lines to address semiconductor supply constraints.
China Generates 90 Percent of SMIC Revenue
China remained SMIC’s dominant market, accounting for 90 percent of second-quarter revenue. The United States contributed 8 percent.
The figures demonstrate SMIC’s growing dependence on Chinese semiconductor designers as domestic technology companies expand AI infrastructure and seek alternatives to overseas chip manufacturing.
Domestic demand is also giving SMIC greater pricing power, enabling the company to increase wafer prices despite international trade restrictions affecting China’s access to advanced semiconductor technology and manufacturing equipment.
SMIC Capital Spending Reaches $3.4 Billion
SMIC invested $3.4 billion in capital expenditure during the first half of 2026, up from $3.3 billion in the same period a year earlier. The additional spending is supporting equipment purchases, capacity expansion and the commissioning of new production lines.
SMIC Forecasts 2–4 Percent Q3 Revenue Growth
SMIC expects third-quarter revenue to increase between 2 percent and 4 percent sequentially, supported by further wafer shipment growth and higher prices for high-demand production capacity.
SMIC’s record revenue, threefold profit increase, 14 percent shipment growth and 93.7 percent utilisation rate show how AI demand is strengthening China’s domestic semiconductor manufacturing sector.
BABURAJAN KIZHAKEDATH
