SMIC Q2 Revenue Hits $3.01 Billion as AI Demand Boosts Pricing Power
China's largest chip foundry reports surging profits and plans to raise wafer prices to align with global industry leaders.
Semiconductor Manufacturing International Corporation (SMIC) has reached a new financial milestone, reporting second-quarter revenue of $3.01 billion. The surge underscores accelerating demand for AI-related chips and China's aggressive push for semiconductor self-sufficiency.
The company's financial performance showed significant growth across key metrics. Revenue increased 36.1% year-over-year and rose 20% from the previous quarter. Profit attributable to shareholders nearly tripled, climbing to $479.2 million from $132.5 million in the same period last year. This growth was supported by a rise in wafer shipments, which increased 14% sequentially to 2.9 million 8-inch-equivalent units. Additionally, SMIC's gross margin improved to 25.3% in the second quarter, up from 20.1% in the first quarter.
Strategic Shift Toward Domestic Markets
These results reflect a deepening reliance on the Chinese domestic market. According to company data, China accounted for 90.2% of SMIC's total revenue, while the United States contributed 8.2%. This shift occurs as China redirects massive capital into its technology sector to compete with the U.S. The global AI boom has further shifted demand toward specialized AI chips, moving beyond traditional CPUs and GPUs and providing a tailwind for domestic foundries.
Leveraging AI for Pricing Power
Beyond volume growth, SMIC is leveraging its position to improve profit margins. The company is raising prices for its most in-demand production capacity to close the gap with global industry leaders. Co-CEO Zhao Haijun emphasized the need for this adjustment, stating, "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."
By increasing wafer prices and expanding capacity, SMIC is attempting to transition from a high-volume provider to a high-value competitor. This strategy reduces the company's dependence on non-Chinese markets and reinforces Beijing's strategic goal of achieving independence in critical semiconductor manufacturing.
Future Outlook
Industry observers are watching whether SMIC can maintain these margin improvements as it scales production. While the current trajectory shows strong momentum driven by AI, the company's ability to successfully renegotiate contracts with customers will determine if this pricing power is sustainable. Furthermore, the continued flow of state-backed capital into the sector remains a critical variable in SMIC's effort to close the technical gap with the world's leading foundries.