China's top chip foundry is raising prices as AI demand pushes it past $3 billion in revenue

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SMIC's second-quarter revenue hit $3 billion for the first time, rising 36% from a year earlier, as the company raised wafer prices and shipments climbed

I-HWA CHENG/AFP via Getty Images

Semiconductor Manufacturing International Corporation reported second-quarter revenue of $3 billion for the first time, while raising prices for its most in-demand production capacity as AI-driven orders pushed wafer shipments higher.

Revenue reached $3.01 billion in the second quarter, up 20% from the prior quarter and 36.1% from the same period a year earlier. Gross profit rose to $760.6 million, giving the company a gross margin of 25.3%, up from 20.1% in the first quarter. Profit attributable to shareholders came in at $479.2 million, nearly tripling from $132.5 million a year earlier. Both revenue and profit beat average analyst estimates, according to Reuters.

Co-CEO Zhao Haijun told investors Thursday that the company had secured higher prices through first-quarter talks with customers and that those increases would apply to wafers produced in the third quarter. "Since there's still a big gap between industry-leading wafer prices and SMIC's current prices, we need to negotiate with customers for fairer pricing," Zhao Haijun said, according to Reuters.

The company moved 2.9 million 8-inch-equivalent units during the quarter, a 14% gain over the preceding three months, while per-wafer prices climbed 5.7%. Zhao Haijun attributed the volume gains to accelerating demand for chips used in AI applications outside the traditional CPU and GPU categories, with most orders originating from Chinese customers and some arriving ahead of schedule.

Wu Junfeng, SMIC's chief financial officer, attributed part of the net profit surge to a one-time gain from a subsidiary recorded in the second quarter.

China accounted for 90.2% of SMIC's second-quarter revenue, while the United States contributed 8.2%. The company's monthly output capacity reached 1.1 million 8-inch-equivalent wafers, a 1.7% sequential increase, and its fabs ran at a utilization rate of 93.7%.

For the third quarter, SMIC expects revenue to increase 2% to 4% from the second quarter, with gross margin in the range of 26% to 28%, the company said. Zhao Haijun said the company expects AI to sustain strong order volumes through the rest of 2026 and that SMIC plans to reallocate current capacity while bringing additional production lines online more quickly to address tightness in the broader supply chain.

SMIC's strong results arrive as China has been redirecting its capital markets toward funding its technology competition with the United States, with Chinese tech companies raising roughly $217 billion through equity and debt markets over the past two years. SMIC stock rose 5% after the earnings call.

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