China’s largest contract chipmaker, Semiconductor Manufacturing International Corp (SMIC), said increasing demand for chips used in artificial intelligence will keep its revenue stable even as chip orders from smartphones and other low-end electronics grow weaker.
The company reported a rise in wafer shipments and higher factory adoption, but also warned that chip production for consumer electronics is slowing as industries focus more on AI production.
SMIC ships more wafers because strong AI demand keeps its factories busy
SMIC said its revenue in 2026 increased by 16.2% year over year to $9.3 billion, driven by strong demand for AI chips, enabling the company to grow even as other parts of the market slowed. The company stated that net profit jumped 39% to $685.1 million because it shipped more wafers and ran its manufacturing plants closer to full capacity.
In 2025, SMIC shipped 21% more wafers, totaling 9.7 million units, compared to 8 million units shipped in 2024. The company’s plants are currently operating near maximum capacity, with factory use rising by 8% to 93.5% because demand is strong enough to run the machinery almost around the clock.
The tariffs imposed by the U.S. on China in 2025 made it imperative for China to encourage its industries to produce their own chips rather than rely on external sources. The need has increased as more local companies rely on local sources rather than external ones, thereby boosting demand for SMIC.
SMIC’s factories have become so busy that the company has started increasing prices by about 10% on some production lines, underscoring how demand for AI-related and power-management chips keeps growing.
SMIC earns less profit because phone orders are weaker and costs are higher
Even as SMIC continues to benefit from strong AI demand, its profit fell short of analysts’ expectations due to weaker orders for low-end products. As a result, the company’s Hong Kong-listed shares dropped by about 3% after it released its earnings report, and investors noticed the weaker profit result.
During the earnings call, the company’s co-CEO, Zhao Haijun, stated that orders from smartphone manufacturers and other makers of low-end electronics are being “squeezed.” This is because the global chip industry is prioritizing the development of advanced chips for artificial intelligence, leaving less room for simpler chips that once made up a large part of the industry.
This challenge is made all the more difficult by the semiconductor industry’s current shortage of critical memory chips. In their race to produce better and better chips for AI data centers, they are consuming more and more manufacturing resources and wafer capacity, thereby driving up the cost of chip supply chains across the board.
Because memory chips and wafer space are harder to obtain, several businesses, including smartphone manufacturers, have already been forced to scale back their planned production. That represents another decrease in demand for lower-end chips, adding more pressure on companies like SMIC.
Nevertheless, Zhao stated that SMIC remains well-positioned in the current industry cycle. In addition, the company is prepared to address any urgent market needs to support revenue growth in 2026. SMIC believes that, despite its challenges, there are long-term opportunities driven by AI and China’s push for local chip production.
Meanwhile, the broader AI bubble continues to evolve the global semiconductor market. In fact, worldwide semiconductor sales set a record high of $791.7 billion during 2025. It is expected that semiconductor sales could reach $1 trillion in 2026, clearly indicating the influence of AI on the next phase of semiconductor market evolution.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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