SMIC earnings: China's top chipmaker posts a record quarter, and its co-CEO sees AI chips tight until 2028

Almost every machine SMIC owns is now busy. In July to September, China’s biggest contract chipmaker ran its factories at 97.3% of capacity, and the reason, its bosses say, is artificial intelligence.

The SMIC earnings, released on 12 November, show record quarterly revenue of US$3.19 billion, up 33.9% on a year ago. On the call with analysts the next day, co-CEO Zhao Haijun said he expects AI chip supply to stay tight through 2027, and perhaps to rebalance only in 2028. That is his forecast, not a promise.

The AI boom is usually told through Nvidia and TSMC. This report suggests it now reaches much further: into the power chips, memory and controllers that every AI server needs, made in a country where the newest chipmaking tools are hard to buy.

SMIC earnings: a record $3.19 billion and nearly full factories

SMIC’s own results release gives these SMIC Q3 figures:

• Revenue: US$3,190.0 million, up 6.1% on the quarter before. Analysts had expected about US$3.09 billion, according to Investing.com.
• Gross margin: 29.9%, up from 25.3% in the second quarter and well above SMIC’s own forecast of 26% to 28%.
• Profit for owners: US$428.4 million.
• Utilisation: 97.3%, up from 93.7%. Monthly capacity is now 1,116,750 wafers (counted in 8-inch equivalents).
• Customers: 90.8% of revenue came from China.

By use, consumer electronics brought in 40.6% of sales, industrial and car chips 19.3%, computers and tablets 18.3%, smartphones 14.3%, and connected devices 7.5%.

• Q3 2025$2,381.8m
• Q4 2025$2,488.7m
• Q1 2026$2,505.5m
• Q2 2026$3,005.6m
• Q3 2026$3,190.0m

Unaudited figures from SMIC's quarterly results releases. Source: SMIC quarterly results releases (HKEX and smics.com)

SMIC’s third-quarter results release, from the opening to its guidance, as published on smics.com on 12 November. Image: SMIC

A chip crunch the co-CEO says could last until 2028

For the last three months of the year, SMIC expects revenue to grow 4% to 6% and its margin to fall back to 26% to 28%. On the call, Zhao said he expects full-year 2026 revenue above US$12 billion, according to the call transcript and mlq.ai.

Why so tight? Zhao pointed to data-centre building and to companies setting up their own smaller AI facilities, the South China Morning Post reports. The Post also says tighter US limits on China’s access to advanced US processors could push Chinese firms further towards home-grown chipmakers.

Not every part of the business is strong. Smartphone chips fell 8% on the quarter, according to the transcript, while car and industrial chips rose 26%. Zhao also said depreciation, the yearly cost of new machines, will rise about 30% in 2026, and that long waits for equipment may make spending on new factories uneven.

What a tight chip market means for your next phone or car

Most readers will never buy a SMIC chip directly, but they buy things with chips inside. When the factories that make basic power and memory chips are nearly full, those parts can cost more or take longer to arrive. In our analysis, that pressure tends to show up first in cars, home appliances and cheaper phones, where makers have little room to absorb higher costs.

For anyone watching SMIC stock, the Hong Kong shares rose about 5% on 13 November, according to Investing.com. This is not investment advice.

Strong demand, with growth now limited by space

On balance, this is a strong quarter. SMIC beat its own forecast and grew faster than analysts expected. It sits in the same AI wave that gave TSMC another record quarter, and that has led SK hynix to expect a memory shortage lasting even longer.

There are fair cautions. With factories 97% full, analysts quoted by BigGo say future growth depends on adding new capacity, and Zhao himself warned that equipment can be slow to arrive. Rising depreciation will press on margins, as the lower Q4 forecast already shows. And with more than 90% of its sales in China, SMIC rises and falls with one market and its trade rules. The likelier outcome, in our view, is steady growth set by how fast SMIC can build, not by demand.

The next test comes in February

SMIC’s next results are expected around February. If revenue lands in its 4% to 6% range and new capacity arrives on time, Zhao’s view of a tight market into 2028 will look more like a plan than a hope.