A wave of semiconductor price hikes is gathering force, with China’s top chipmaker SMIC confirming price increases that will drive its revenue up as much as 16% in the second quarter.
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SMIC forecasts 16% revenue growth on strong chip price hikes
China’s top chipmaker, Semiconductor Manufacturing International Corp., is raising prices for its customers, signaling a wider trend of rising costs in the global semiconductor industry that could see prices for some advanced processors jump by 30% or more in 2026.
"Combining the current market situation, for the product categories that are in short supply, we have negotiated with customers to increase prices," SMIC's Co-CEO Zhao Haijun said on the company's first-quarter earnings call. "The effect of the price adjustments is gradually becoming apparent."
The company guided for second-quarter revenue to grow between 14% and 16% quarter-over-quarter, a significant acceleration driven by both higher shipment volumes and increased average selling prices. Gross margins for the period are expected to be between 20% and 22%, up from 20.1% in the first quarter.
The price hikes reflect a market where some customers are stockpiling chips for consumer and Internet-of-Things products, concerned that ongoing supply chain uncertainties could lead to shortages or further price increases down the line. Zhao noted the company's order book is "plentiful."
A Structural Shift in Chip Pricing
SMIC's move is not happening in isolation. The entire semiconductor industry is grappling with a structural increase in manufacturing costs as foundries transition to more advanced process nodes. Industry leader TSMC's move to 2nm production, for example, comes with substantially higher wafer prices. This is forcing chip designers like Qualcomm and MediaTek to pass on costs, with reports suggesting Qualcomm's next-generation Snapdragon 8 Elite Gen 6 processor could exceed $300 per unit.
This new pricing environment creates clear winners and losers. While SMIC benefits from strong demand for its mature-node technologies, the rising tide of chip costs puts pressure on Android smartphone makers who rely on components from Qualcomm and MediaTek. Apple, with its vertically integrated model and custom A-series and M-series silicon, is better positioned to absorb or mask these cost increases, potentially gaining a competitive advantage in the premium market.
For investors, SMIC's pricing power in a tight market for specific nodes is a bullish signal, validating the company's strategy amidst a complex geopolitical and industry backdrop. While it operates on more mature process technologies compared to TSMC's cutting edge, the strong demand from domestic Chinese clients for consumer and IoT applications provides a substantial and profitable business. The key question remains how this industry-wide inflation will reshape consumer electronics pricing and market share over the next 18 months.
This article is for informational purposes only and does not constitute investment advice.
[1] SMIC's Zhao Haijun: The Company is Negotiating Price Increases with Customers, the Effects of Price Hikes are Gradually Becoming Apparent[2] SMIC beats margin guidance even as operating profit slides[3] Shimmick Corporation Announces First Quarter 2026 Results[4] Alger Mid Cap 40 ETF Q1 2026 Commentary[5] Snapdragon 8 Elite Gen 6 Price Surge Could Push Android Users Toward Apple, Reports Warn
