SMIC reported a net profit of US$479.2 million for the second quarter, more than tripling compared with the same period last year and surpassing analyst expectations [1, 2]. Revenue rose 36% year-on-year to over US$3 billion, driven by robust demand for mature-node chips used in AI servers and data centers [1, 2, 3].
The company shipped 2.9 million eight-inch-equivalent wafers in Q2, a 14% increase over the previous quarter, while the average selling price of wafers rose 5.7% due to strong AI-driven demand tightening global supply chains [2]. Monthly production capacity increased 1.7% quarter-on-quarter to 1.1 million wafers, with utilization edging higher to 93.7% [2].
Following negotiations with customers in the first quarter, SMIC raised wafer capacity prices for Q3. Co-CEO Zhao Haijun said, "We believe we've reached top-tier industry standards in these areas. 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" [2].
Strong AI chip demand is driving the company's capacity plans. Zhao also stated, "Future wafer starts are far exceeding our previous expectations" and the company is adjusting expansion plans accordingly [3]. The demand for mature-node chips in AI servers and data centers is expected to remain strong through the end of 2027, according to SMIC [3].
To meet this demand, SMIC plans to expand capacity by adding equipment at existing sites where space is available [3, 4]. Zhao added, "Demand is far exceeding our previous expectations", highlighting the need for increased production capability [4].
SMIC shares rose about 4.8% in Hong Kong trading following the earnings release and capacity expansion announcement on August 14 [4]. A one-time gain from a subsidiary also boosted the company's net profit for the quarter [2].
The company is scheduled to implement the increased wafer pricing in the third quarter, reflecting ongoing efforts to align prices with industry standards while expanding capacity to capture rising AI chip orders visible through 2027 [2, 3].
