[News] SMIC 2Q26 Gross Margin Hits 25.3%, Eyes 26%–28% in 3Q as AI Spillover, Pricing Momentum Build
SMIC announced its latest earnings. According to Star Market Daily, the company reported 2Q26 revenue of US$3.0 billion, up 20% QoQ. Gross profit reached US$760 million, up from US$504 million in 1Q26 and US$450 million in 2Q25. Gross margin rose 5.2 percentage points QoQ to 25.3%. The report notes that the results exceeded SMIC’s previous guidance of 14%–16% QoQ revenue growth and a 20%–22% gross margin.
AI-related demand is emerging as a key growth driver. Star Market Daily notes that SMIC Co-CEO Zhao Haijun said Chinese internet companies have increased hardware investment far beyond the company’s previous expectations. Zhao added that direct demand and supporting chips for data center circuit boards and compute boards, including logic ICs, BCD (Bipolar-CMOS-DMOS) chips, and optical transceiver components, remain in short supply. Nikkei also notes that SMIC’s AI peripheral chip segment grew by around 40% in the April–June period.
Looking ahead, Wallstreetcn notes that SMIC expects third-quarter revenue to grow 2%–4% QoQ, with gross margin improving further to 26%–28%. The report also highlights that SMIC’s second-quarter results show AI-driven demand spreading from high-end advanced nodes to a broader range of mature nodes.
SMIC ASP Climbs 5.7%, With More Price Hikes Under Discussion
Pricing is also moving higher as demand strengthens. As noted by Star Market Daily, SMIC’s average selling price rose 5.7% QoQ in the second quarter. Notably, Zhao said wafers produced in the third quarter are already being sold under new pricing. He added that the benefits of price increases will be more fully reflected in the third quarter, supporting further gross margin growth.
For supply-constrained products, including power management and optical communication chips, Zhao said SMIC will continue discussing price increases with customers, as noted by Nikkei. Separately, despite weaker demand in the smartphone and automotive markets, the report notes that SMIC has no plans to lower prices.
SMIC Utilization Hits 93.7% as Industrial and Auto Gain Share
Strong demand is also keeping SMIC’s fabs near full utilization. As noted by Wallstreetcn, the company shipped 2.869 million 8-inch-equivalent wafers in 2Q26, up 14.4% QoQ and 20.1% YoY. Capacity utilization rose to 93.7%, from 93.1% in 1Q26 and 92.5% a year earlier.
Industrial and automotive chips saw the strongest gains in application mix. According to Futubull, their share of wafer revenue rose to 16.5% in 2Q26, from 14.0% in 1Q26 and 10.6% a year earlier. Consumer electronics remained the largest category at 44.2%, though its share fell from 46.2% in 1Q26.
China’s Top Foundries Beat Expectations
SMIC was not alone in reporting stronger-than-expected results among China’s leading foundries. The country’s second-largest foundry, Hua Hong, also reported strong second-quarter results, with revenue reaching US$717.5 million, up 26.8% YoY and 8.6% QoQ. Gross margin rose to 16.5%, up 5.6 percentage points YoY and 3.5 percentage points QoQ. The results exceeded Hua Hong’s previous guidance of US$690–700 million in revenue and a 14%–16% gross margin.
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(Photo credit: SMIC)
