SMIC Reports 20% Revenue Jump as AI Chip Demand Drives Quarter Above $3 Billion
China's largest chipmaker posted Q2 revenue of $3 billion and raised guidance, citing surging demand for AI peripheral chips and robust capacity utilization.
Strong Sequential Growth Driven by AI Demand
Semiconductor Manufacturing International Corporation (SMIC) reported second-quarter revenue of $3,006 million, a 20% sequential increase, as surging demand for AI peripheral chips and customer shipment acceleration drove performance above the $3 billion mark for the first time (earnings call, 2026-08-14).
The company's gross margin expanded 5.2 percentage points sequentially to 25.3%, while EBITDA margin reached 70.2%, up nearly 13 percentage points from the previous quarter. Co-CEO Dr. Zhao Haijun attributed the margin expansion to increased blended average selling prices (ASP), which rose 5.7%, and better-than-expected utilization rates, which offset higher depreciation costs (earnings call, 2026-08-14).
SMIC shipped 14.4% more wafers quarter-over-quarter and added 8,000 12-inch equivalent monthly capacity units, bringing utilization to 93.7% (earnings call, 2026-08-14). For the first half of 2026, revenue totaled $5,511 million, up 23.7% year-over-year, with capital expenditures reaching $3.4 billion.
AI and Localization Fuel Regional and Application Growth
Revenue from China, which accounted for 90% of total sales, grew 22% sequentially, driven by "robust demand for AI peripheral chips, the backflow of overseas orders and continued strengthening of localized manufacturing" (earnings call, 2026-08-14). The Americas and Eurasia regions contributed 8% and 2% of revenue, respectively, with all regions recording absolute dollar increases.
By application segment, AI peripheral chips, computer and tablets, and industrial and automotive each saw approximately 40% quarter-over-quarter revenue growth in absolute terms. Consumer electronics, which represented 44% of wafer revenue, grew 16%, while smartphone and connectivity applications rose 8% and 13%, respectively, despite an overall downturn in end devices (earnings call, 2026-08-14).
Twelve-inch wafer revenue, accounting for 78% of total wafer sales, increased 24% sequentially, while eight-inch wafer revenue rose 11%.
Guidance Points to Continued Momentum
For the third quarter of 2026, SMIC expects revenue to grow 2% to 4% sequentially, with gross margin expanding to a range of 26% to 28% after absorbing incremental depreciation and peak summer power costs. The company projects utilization will remain at approximately 95%, "which effectively dilutes unit fixed costs" (earnings call, 2026-08-14).
Dr. Zhao noted that "the industrial momentum and spillover effects generated by AI will persist driving broad-based demand for integrative circular manufacturing," adding that SMIC will "flexibly allocate existing capacity and accelerate the qualification of newly added capacity to help ease supply constraints" (earnings call, 2026-08-14).
The company acknowledged upward cost pressures from suppliers being passed through to the manufacturing segment, but expressed confidence in mitigating these headwinds. SMIC ended the second quarter with $13.9 billion in cash and a debt-to-equity ratio of 37% (earnings call, 2026-08-14).
This article was generated by MarginX from the earnings call on 2026-08-14. It is not investment advice.