China's SMIC raises prices and plans expansion amid AI chip demand surge

China's top contract chipmaker, SMIC, is raising wafer prices and expanding factory capacity as a global AI infrastructure boom triggers a massive surge in demand for peripheral chips. Driven by this AI-fueled demand, SMIC's second-quarter 2026 revenue topped $3 billion for the first time, while net profit tripled to $479.2 million. To ease global supply constraints, SMIC is accelerating new production lines and adding equipment at existing sites, operating near its practical capacity limit with 93.7% utilization.

SMIC price increases

• ▪Semiconductor Manufacturing International Corporation raised prices for its most sought-after wafer capacity following negotiations with customers in the first quarter of 2026.
• ▪Semiconductor Manufacturing International Corporation co-CEO Zhao Haijun stated that the company will charge higher prices for wafers processed in the third quarter of 2026.
• ▪Semiconductor Manufacturing International Corporation stated there is no chance it will lower prices for other sectors despite weaknesses in the smartphone and automotive markets.

Record quarterly revenue

• ▪Semiconductor Manufacturing International Corporation's profit attributable to shareholders tripled to $479.2 million in the second quarter of 2026, beating average analyst estimates.
• ▪Semiconductor Manufacturing International Corporation posted revenue above $3 billion for the first time in the second quarter of 2026.
• ▪Semiconductor Manufacturing International Corporation chief financial officer Wu Junfeng stated that the second-quarter net profit jump was boosted by a one-time gain from a subsidiary.

AI chip demand surge

• ▪Semiconductor Manufacturing International Corporation co-CEO Zhao Haijun reported that orders for bipolar-CMOS-DMOS power-management products are visible through the end of 2027.
• ▪A global artificial intelligence infrastructure boom is driving massive demand for peripheral AI chips, including logic chips, power-management products, and optical module components.

Capacity expansion plans

• ▪Semiconductor Manufacturing International Corporation plans to accelerate the ramp-up of new production lines to help ease industry-wide semiconductor supply constraints.
• ▪Semiconductor Manufacturing International Corporation's capital spending in the first half of 2026 reached $3.4 billion, up from $3.3 billion in the first half of 2025.
• ▪Semiconductor Manufacturing International Corporation is adjusting its expansion plans and may install additional equipment at existing factory sites where space is available.

China market dominance

• ▪China remained Semiconductor Manufacturing International Corporation's largest market, accounting for 90 percent of its second-quarter 2026 revenue.
• ▪The United States market contributed 8 percent of Semiconductor Manufacturing International Corporation's revenue during the second quarter of 2026.

Wafer shipment growth

• ▪Semiconductor Manufacturing International Corporation's monthly production capacity rose 1.7 percent quarter-on-quarter to 1.1 million 8-inch-equivalent wafers, with utilization reaching 93.7 percent.
• ▪The average selling price of Semiconductor Manufacturing International Corporation's wafers rose 5.7 percent in the second quarter of 2026.
• ▪Semiconductor Manufacturing International Corporation shipped 2.9 million 8-inch-equivalent wafers in the second quarter of 2026, representing a 14 percent increase from the previous quarter.