China's biggest chipmaker has started raising prices — its factories are 93.7% full and quarterly revenue passed $3 billion for the first time
On its 13 August earnings call, SMIC reported second-quarter revenue of $3.006 billion, up 20% on the previous quarter and the first time it has cleared $3 billion. Net profit was $479 million, gross margin rose to 25.3% from 20.1%, and capacity utilisation reached 93.7%. Wafer shipments grew 14.4%, while the average price per 8-inch-equivalent wafer rose 5.7% to $991 — the company is charging more in the segments where it has nothing left to sell. Management credited "surging demand for peripheral chips brought by AI", with combined growth of roughly 40% across its AI-related, computing and industrial/automotive segments. It guided to about 95% utilisation and a 26–28% gross margin for the current quarter.
Why it mattersSMIC cannot buy the newest lithography machines, so the working assumption behind export controls was that it would stay a cut-price supplier of older chips. A foundry running at 93.7% and putting prices up is not a cut-price supplier — it is one with no spare capacity to give away. And the parts driving this are not the accelerators everyone watches. They are the ordinary power, interface and control chips that sit around every AI server, that nobody restricted, and that China can already make at scale. Controls were designed to hold the top of the stack. The squeeze is showing up at the bottom of it, where the pricing power has quietly moved.
▶ Related video: SMIC: China's Main Bet Against TSMC and Samsung | WSJ
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