AI Demand Surges, SMIC Raises Foundry Prices

Benefiting from the explosive global growth in artificial intelligence (AI) demand, China's leading semiconductor foundry, Semiconductor Manufacturing International Corporation (SMIC) (00981-HK), announced on Thursday (the 13th) that it has raised foundry prices for popular manufacturing processes due to strong market demand for its production capacity.

According to its latest financial report, SMIC's revenue in the second quarter of 2026 surpassed the US$3 billion mark for the first time. Net profit attributable to shareholders reached US$479.2 million, tripling compared to the same period last year and significantly exceeding analysts' expectations. Although Chief Financial Officer Wu Junfeng noted that part of the substantial profit growth stemmed from one-time gains from subsidiaries, overall operations still demonstrated strong momentum.

In terms of shipment volume, SMIC delivered 2.9 million 8-inch equivalent wafers in the second quarter, a 14% increase from the previous quarter, while the average selling price (ASP) rose by 5.7%.

Zhao Haijun, Co-CEO of SMIC, stated that the company had already adjusted prices following negotiations with customers in the first quarter, and wafers produced in the third quarter will be subject to higher pricing. He explained that there remains a significant gap between SMIC's wafer prices and those of internationally leading foundries. To achieve fairer pricing, the company must negotiate adjustments with its clients.

Zhao emphasized that demand driven by AI will continue to support order volumes in the second half of the year, particularly strong demand from Chinese customers for chips beyond CPUs and GPUs.

Currently, SMIC is the only foundry in China with mass production capabilities for 7-nanometer logic chips. To alleviate global semiconductor supply chain constraints, the company is accelerating the expansion of new production lines. Its capacity utilization rate rose to 93.7% in the second quarter, and it added 8,000 monthly 12-inch wafer production capacity during the quarter.

China remains SMIC's largest market, contributing 90% of its revenue, while the U.S. market accounts for 8%.

Looking ahead to the third quarter, SMIC expects revenue to grow another 2% to 4% compared to the second quarter, with wafer shipment volumes also continuing to rise.