Semiconductor Manufacturing International Corporation (SMIC), China’s largest chip foundry, said on Friday that full-year revenue is on track to hit an all-time high of more than US$9 billion, as tight foundry capacity and supply-chain localisation keep its fabs running at full tilt.

“The iterative effects across the supply chain are continuing, which leads to a stronger-than-usual off-season. Our production remains in a state of supply falling short of demand,” co-CEO Zhao Haijun said on an earnings call. “Our revenue is set to reach a new level.”

He said the persistent supply squeeze, together with a rush by Chinese chip designers to localise production, had effectively erased the usual seasonal lull and kept SMIC’s factories running close to full capacity.

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The outlook followed strong third-quarter results, released on Thursday after the market close, with revenue rising to US$2.38 billion and a gross margin of 22 per cent, as downstream clients accelerated the shift to home-grown supply chains amid geopolitical tension.

Quarterly revenue rose 7.8 per cent quarter on quarter, surpassing management’s earlier forecast of 5 to 7 per cent. Gross margin also exceeded guidance.

SMIC’s monthly capacity expanded to 1,022,750 standard 8-inch-equivalent wafers in the third quarter, up from 991,250 in the previous quarter. Its capacity utilisation rose to 95.8 per cent, up 3.3 percentage points from the previous quarter.

As the only fab in mainland China capable of processing 7-nanometre-grade chips, SMIC is at the centre of China’s ambitions to overcome US technology restrictions.

While its technology is years behind international leaders such as Taiwan Semiconductor Manufacturing Company, it is benefiting from surging demand for advanced chip foundry services from local fabless chip developers.

An aerial view of the Shenzhen branch of Semiconductor Manufacturing International Corporation. Photo: Getty Images alt=An aerial view of the Shenzhen branch of Semiconductor Manufacturing International Corporation. Photo: Getty Images>

Gross profit for the quarter climbed 17.7 per cent year on year to US$522.8 million, while profits attributed to SMIC rose 28.9 per cent year on year to $191.75 million. The company said the average selling price increased 3.8 per cent quarter on quarter, driven by a higher contribution from more advanced process nodes in its product mix.

By geography, mainland China, the Americas and Eurasia accounted for 86 per cent, 11 per cent and 3 per cent, respectively, of third-quarter sales.

Revenue from China rose 11 per cent quarter on quarter, as “the pace of supply-chain localisation continues to accelerate and the domestic market keeps expanding, leading customers to pull in more orders,” Zhao said, referring specifically to the consumer electronics category.

By wafer size, 8-inch-equivalent products contributed 23 per cent of sales, while 12-inch wafers accounted for 77 per cent.

For the first nine months of the year, unaudited revenue reached US$6.84 billion, up 17.4 per cent from a year earlier.

For the fourth quarter, SMIC expected revenue to be flat to up 2 per cent quarter on quarter, with gross margin at 18 to 20 per cent.

Zhao said the ongoing price hikes and shortages in memory chips had made smartphone makers more cautious about purchasing other semiconductor components.

He added that expanding production capacity was a broader trend across China’s wafer foundry industry.

“Next year, the pace of domestic capacity expansion will only accelerate, not slow down,” he said.

Buoyed by the upbeat outlook, SMIC’s Hong Kong-listed shares briefly climbed to HK$77.3 in early Friday trading before reversing course to close at HK$73.5, down 2.8 per cent. Its Shanghai-listed stock fell 4 per cent, ending at 118.2 yuan.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.

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