SMIC reported its first $3 billion quarterly revenue, driven by surging demand for domestic AI chips as U.S. export controls force Chinese firms to rely on local foundries.

Key Points

• SMIC revenue grew 36.1% year-on-year to $3.01 billion, with net profit reaching $479.2 million.
• Capacity utilization hit 93.7% as the company prepares to raise wafer prices for the third quarter.
• China accounted for 90% of total revenue, fueled by demand for logic ICs, power-management parts, and optical transceivers.
• SMIC remains the only domestic foundry capable of mass-producing 7nm-class logic, serving as the primary supplier for Huawei’s Ascend AI accelerators.
• Despite record growth, SMIC faces high production costs and yield challenges compared to global competitors like TSMC.

Why it Matters

SMIC’s performance highlights the effectiveness of Beijing’s push for semiconductor self-sufficiency amid tightening U.S. trade restrictions. This captive market environment allows the foundry to raise prices, though the long-term sustainability of this growth remains tied to government policy and the technical limitations of domestic chip production.