SMIC revenue jumps 20% to $3 billion on AI chip demand

SMIC reported second-quarter revenue of $3.01 billion, up 20% sequentially, as AI-driven chip orders lifted wafer shipments and utilization to 93.7%.

"The industrial momentum and spillover effects generated by AI will persist, driving broad based demand for integrated circuit manufacturing," the company said in its Aug. 13 earnings release.

Gross profit rose 51% to $760.6 million, with gross margin widening to 25.3% from 20.1% in the first quarter. Profit attributable to owners jumped 142.7% to $479.2 million, or $0.06 per share. Wafer shipments climbed 14.4% to 2.87 million standard 8-inch equivalent wafers, while monthly capacity reached 1.1 million.

The company guided third-quarter revenue up 2% to 4% sequentially with gross margin of 26% to 28%, above market expectations. CLSA raised its H-share target price to HK$97.5 from HK$94.1 and lifted 2026-2028 earnings forecasts by 69%, 44% and 38%, maintaining an Outperform rating.

Revenue rose 36.1% from a year earlier, with China accounting for 90.2% of second-quarter sales, up from 88.9% in the first quarter. America's share slipped to 8.2% from 9.3%. Consumer electronics remained the largest application at 44.2%, followed by smartphone at 16.9% and industrial and automotive at 16.5%. Twelve-inch wafers made up 78.2% of revenue.

Goldman Sachs also raised its SMIC target price to HK$153, expecting capacity utilization to stay high in the third quarter. The company expects wafer prices to remain stable through 2026, according to CLSA. EBITDA reached $2.11 billion in the quarter, a 70.2% margin.

Capital expenditure reached $1.84 billion in the second quarter, up from $1.56 billion in the first quarter, as the company accelerates qualification of new capacity to ease supply constraints across the industry chain. Shares rose 7.3% in Hong Kong trading after the results.

The guidance raise points to management expecting AI demand to sustain capacity utilization above 90% into the second half. Investors will watch the third-quarter results for margin expansion as new 12-inch capacity comes online.

This article is for informational purposes only and does not constitute investment advice.