Revenue and Gross Profit Surge! Mature Processes Signal Recovery – SMIC and Hua Hong Report Strong Q2 Results, SMIC Shares Jump Over 6%

China's leading semiconductor foundry companies, Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Hong Kong Limited (Hua Hong), simultaneously released their Q2 2026 financial results on Thursday evening (June 13). Both companies reported revenues, gross profits, and net incomes that exceeded market expectations, with mature and specialty processes clearly entering an upswing, driven by spillover demand from AI applications.

SMIC achieved quarterly revenue exceeding USD 3 billion for the first time, reaching USD 3.006 billion—a 20% increase quarter-on-quarter and a 36.1% year-on-year rise. Gross profit reached USD 760.6 million, with gross margin jumping from 20.1% in Q1 to 25.3%, a 5.2 percentage point increase in a single quarter. Net profit attributable to shareholders was USD 479 million, up 142.7% from the previous quarter.

SMIC attributed the revenue growth primarily to increased wafer sales volume, higher average selling prices, and favorable product mix changes. The company sold 2.869 million wafers (in 8-inch standard logic equivalent) during the quarter, up 14.4% sequentially and 20.1% year-over-year. Capacity utilization also rose from 93.1% in Q1 to 93.7%, surpassing last year’s same-period level of 92.5% and approaching full-capacity operation.

For Q3 2026, SMIC forecasts revenue growth of 2% to 4% quarter-on-quarter, with gross margin expected to further improve to between 26% and 28%.

Hua Hong reported record-high quarterly revenue of USD 717.5 million, up 26.8% year-on-year and 8.6% quarter-on-quarter. Gross margin stood at 16.5%, up 3.5 percentage points from the prior quarter. Net profit attributable to shareholders reached USD 38.6 million, soaring 385.9% year-on-year. For Q3, revenue is projected between USD 770 million and USD 780 million, with gross margin forecasted at 16% to 18%.

Analysts noted that both SMIC and Hua Hong continue to see rising capacity utilization—SMIC at 93.7% and Hua Hong surging to 102.8%, indicating fully loaded operations. Demand from consumer electronics, industrial and automotive sectors, and embedded and standalone non-volatile memory products has been the main driver. Spillover demand from AI servers and edge chips has shifted the 8-inch mature process segment from loose to tight supply, restoring pricing power for Chinese foundries.

In the short term, the better-than-expected financial results and optimistic Q3 guidance are likely to boost sentiment toward Hong Kong-listed semiconductor stocks. In the medium to long term, however, the sustainability of wafer price increases, the pace of new capacity ramp-up, and whether demand for AI end-devices and industrial chips can persist will determine whether this upturn is merely a seasonal recovery or the beginning of a structural upcycle.

On Friday (June 14), SMIC shares opened sharply higher, surging over 6% to breach the HKD 70 mark, peaking at HKD 71.9 at one point. Meanwhile, Hua Hong opened lower and continued to decline, briefly plunging over 10% to CNY 250 per share.