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Ann Cao

China’s top two contract chipmakers, Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Grace Semiconductor, saw their profits surge by triple digits in the second quarter, amid a spike in demand for domestic artificial intelligence chips free of US export controls.
Net profits for SMIC and Hua Hong jumped 261.7 per cent and 385.9 per cent year on year to US$479.2 million and US$38.6 million, respectively, in the June quarter.
SMIC, the country’s largest foundry, said Thursday that revenue for the three months ending June increased 36 per cent year on year to US$3 billion, in line with the consensus estimate of US$2.9 billion compiled by Bloomberg.
Meanwhile, revenue at its smaller rival Hua Hong reached a record US$717.5 million in the quarter, up 26.8 per cent from a year earlier, compared with the consensus estimate of US$702.7 million.
The results highlight how local foundries are aggressively running their fabrication plants at full capacity to meet domestic needs, as tech giants and start-ups scramble for computing power to train their large models and power AI applications.
“Looking ahead to the second half of this year, the industrial momentum and spillover effects generated by AI will persist, driving broad-based demand for integrated circuit manufacturing,” SMIC said in a filing to the Hong Kong stock exchange on Thursday, adding that it would flexibly allocate existing capacity and accelerate new capacity to ease supply constraints.

Separately, Bai Peng, Hua Hong Grace’s chairman and president, attributed the earnings surge to the company’s increased shipments and improved average selling prices during the AI cycle.
“I expect our price increases will continue throughout the second half of the year,” he said during the earnings call on Thursday. “Some of the pricing actually has taken [place] over the last quarter,” he said, adding that he believed the high demand was likely to persist into 2027.
Hong Kong-listed shares of SMIC were flat at HK$67.55 ahead of the earnings release on Thursday, while Hua Hong closed 3 per cent higher at HK$147.20.
The broader momentum was also evident in the financial results of upstream chip designers. Iluvatar Corex, a Shanghai-based AI chip developer, on Thursday said it expected first-half profit to range between 60 million yuan and 140 million yuan, reversing a loss of 609 million yuan in the same period last year.
Separately, Lenovo shares jumped 20 per cent in Hong Kong on Thursday after the firm posted revenue growth of 43 per cent in the quarter that ended June, reaching a record quarterly high of US$26.9 billion.
The earnings results offered a fresh barometer on the country’s chipmaking sector, which is navigating a complex landscape of agentic AI frenzy and tighter US export controls on chipmaking equipment.

Based on first quarter revenue, SMIC ranked third among global foundries, behind industry leader Taiwan Semiconductor Manufacturing Co (TSMC) and No 2 Samsung Electronics, while Hua Hong Group, the parent company of Hua Hong Grace Semiconductor, was in sixth place, according to data from TrendForce.
For the third quarter, SMIC expected revenue in a range between US$3.06 billion and US$3.12 billion, an increase of 2 per cent to 4 per cent from the current quarter, while Hua Hong guided for a top line of US$770 million to US$780 million.
Analysts expected both foundries to maintain high capacity utilisation rates in the coming months or even years, driven by the aggressive localisation of supply chains under Beijing’s tech self-sufficiency drive.
AI chip fabrication demand will soon emerge as “a secular driver of tier-1 Chinese foundries with a possible total addressable market far north of US$10 billion”, UBS analysts said in a research note released earlier this week.


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AI demand drives triple-digit profit growth for Chinese chip foundries SMIC, Hua Hong

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SMIC, Hua Hong Grace results highlight how local foundries are aggressively running their plants at full capacity to meet domestic needs


SMIC, Hua Hong Grace results highlight how local foundries are aggressively running their plants at full capacity to meet domestic needs.


AI demand drives triple-digit profit growth for Chinese chip foundries SMIC, Hua Hong

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}SMIC, Hua Hong Grace results highlight how local foundries are aggressively running their plants at full capacity to meet domestic needs

SMIC, Hua Hong Grace results highlight how local foundries are aggressively running their plants at full capacity to meet domestic needs