SMIC weighs new capacity as AI chip orders book into 2027

SMIC's own guidance for 2026 was for flat revenue, with weak consumer and industrial orders offsetting whatever AI-related uptick showed up. On the Q2 earnings call reported by the South China Morning Post, co-CEO Zhao Haijun told analysts that assumption is no longer holding: 'Future wafer starts are far exceeding our previous expectations,' and the foundry is now weighing equipment additions at existing fabs where space allows.

The specifics are unusually concrete. Q2 revenue landed at $3.01 billion, up 20% quarter-on-quarter and 36.1% year-on-year, with fab utilisation at 93.7% against a self-imposed 95% ceiling that keeps the remaining 5% for R&D. Wafer shipments rose 14.4% quarter-on-quarter, and demand for BCD power-management chips, the analog parts that sit alongside GPUs in AI servers and data centres, is booked through the end of 2027. Zhao added there is still 'a large gap between the wafer prices of the industry leaders and SMIC's prices,' and said the company needs to negotiate with customers for more reasonable pricing.

The picture fits a pattern our AI infrastructure tracker has been logging all summer, in which the constraint on domestic AI buildouts keeps sliding off the accelerator itself and onto everything sitting next to it: power-management, optical modules, packaging. Roughly 90% of SMIC's revenue comes from China, so most of the capacity being booked is going to domestic customers, and the foundry is effectively pacing part of the country's AI infrastructure timeline. That same domestic-first pattern showed up earlier today in Beijing's clearance of Apple's Alibaba-trained China LLM, on the model side rather than the silicon.

The call left several things a buyer would want to know unanswered. Zhao did not name which fabs get the equipment additions, did not identify the process nodes the AI orders are landing on, and did not name the customers whose order books stretch to 2027. Nothing was said about how the additions square with the US export controls that still gate the tools SMIC needs to add capacity. Further detail is promised in later announcements.

If the through-2027 visibility on power-management orders holds, the beneficiaries beyond SMIC itself are the domestic analog and power-IC houses whose designs get pulled into that capacity, and the Chinese AI-server integrators who now have a foundry backstop written into their own bill-of-materials planning.