China's Semiconductor Manufacturing International Corp (SMIC) reported second-quarter 2026 revenue of $3.006 billion—a first-time breach of the $3B mark—up 20% sequentially and 36.1% year-on-year. Profit attributable to shareholders surged to $479.2 million, tripling from $132.5 million in the same quarter last year. The company achieved this through both volume and pricing: 2.9 million 8-inch-equivalent wafers shipped (up 14.4% QoQ) while average selling prices rose 5.7% QoQ. Gross margin expanded to 25.3%, up 5.2 percentage points from Q1 and 4.9 points YoY.
SMIC CEO Zhao Haijun attributed volume growth primarily to surging AI-driven demand for peripheral chips (power management ICs, analog controllers—not just GPUs) and customer order pull-ins. The company raised prices in Q1 negotiations and is raising them again for Q3 orders. Capacity utilization climbed to 93.7%, nearly at full fab saturation. Looking ahead, SMIC guides Q3 revenue to grow 2-4% sequentially (to ~$3.07B) with gross margin improving further to 26-28%, and plans to add 8,000 12-inch equivalent wafers per month of fresh capacity.
This is the first time SMIC is reporting "AI chip revenue" as material enough to call out separately in guidance; prior earnings lumped it into commodity categories. CEO Zhao said SMIC will formally begin breaking out AI revenue as its own reporting line because the spillover demand (peripherals, not just high-end logic) is now a distinct business driver. China represented 90.2% of Q2 revenue, while the US was 8.2%. Utilization at 93.7% (vs. the 90% theoretical maximum for mature nodes) signals sustained tightness across the supply chain.
For infrastructure practitioners: SMIC's repricing power—both volume and ASP up simultaneously—is rare in cyclical commodity semi and signals structural tightness driven by agentic AI inference (which demands power management, voltage regulators, and interface chips alongside GPUs). The shift toward "AI companion chips" as a separate revenue line mattersfor sourcing strategy; GPUs are supply-constrained globally, but SMIC's high utilization on peripherals suggests customers are buying up supporting infrastructure ahead of large AI deployments. Watch Q3 guidance for gross margin confirmation—if it holds 26-28% while revenue grows, SMIC has achieved pricing discipline rarely seen in foundry.