SMIC Raises Chip Prices as AI Demand Overwhelms China's Top Foundry

SMIC, China's largest chipmaker, reported second-quarter net profit of $479.2 million, more than triple the year-earlier figure, and revenue rose 36% to $3.01 billion, driven by AI demand for power and mature-node chips, leading to a roughly 10% price increase on parts of its mature-node production. According to TrendForce, AI server demand has lifted 8-inch foundry utilization to 85%-90% this year, and some foundries have announced price increases of 5%-20%, with SMIC's move fitting that pattern. Despite the gains, SMIC remains constrained by U.S. export controls on extreme ultraviolet lithography tools, limiting its ability to compete at the leading edge.

China's largest chipmaker is raising prices where AI demand is least glamorous: the power and mature-node chips that make servers, phones and electric vehicles actually work. SMIC is no longer just a proxy for China's blocked pursuit of advanced chips. The company posted second-quarter net profit of $479.2 million, more than triple the year-earlier figure, while revenue rose 36% to $3.01 billion, according to The Wall Street Journal. For a foundry built largely around mature processes, that is a loud result. That is the point. You don't usually think of Semiconductor Manufacturing International Corporation when you think about the AI boom. It doesn't make Nvidia's GPUs. It doesn't make the high-bandwidth memory that cloud buyers are fighting over. What it does make, in large volumes, are the lower-profile chips that sit around the expensive parts: power-management ICs, BCD chips, logic chips and embedded memory. Without them, the server rack is just a costly box of heat and ambition. According to TrendForce, AI server demand has lifted orders for power-related ICs and helped push 8-inch foundry utilization toward 85% to 90% this year, up from 75% to 80% in 2025. The research firm has also reported that some foundries have notified customers of planned price increases ranging from 5% to 20%. SMIC's reported move, roughly 10% on parts of its mature-node production, fits that pattern. The squeeze has moved into mature nodes This is where the story stops being just about one company. TrendForce said TSMC and Samsung started cutting 8-inch wafer capacity in 2025, even as AI servers, edge AI devices and power-hungry data-center equipment increased demand for power chips. That is an awkward combination. Less capacity at the top end of the foundry market leaves customers hunting for supply elsewhere, and Chinese foundries are picking up more of those orders. SMIC's factories are already running hard. The Wall Street Journal reported that its wafer utilization rate reached 93.7% in the second quarter and that gross margin came in at 25.3%, above earlier guidance. You can argue about how much of this is pricing power and how much is a temporary shortage. You can't argue with a fab that full. Other foundries are moving in the same direction. TrendForce has reported that Hua Hong, another large Chinese foundry, has benefited from tight mature-node capacity, while Nexchip has been linked to a 10% price increase from June 2026. Vanguard International Semiconductor, a TSMC affiliate focused on 8-inch production, has also been part of the same price discussion. The names matter because the shortage is not sitting in one product line. It is spreading across the dull, necessary parts of the semiconductor stack. Look at what has already happened in memory. TrendForce said conventional DRAM contract prices were expected to rise 58% to 63% quarter over quarter in the second quarter of 2026, with NAND Flash prices up 70% to 75%. Micron reported record fiscal second-quarter revenue in March, driven by AI-era memory demand. TSMC also reported second-quarter revenue of $40.20 billion in July, with 3-nanometer and 5-nanometer products together making up most of wafer revenue. The AI boom started as a story about advanced chips. It has become a story about everything that touches them. China's win is still narrower than it looks Here is the harder part for SMIC. The company is making more money from the AI buildout at the exact moment it remains boxed out of the extreme ultraviolet lithography tools needed to compete directly with TSMC at the leading edge. Washington's export controls still bite. SMIC can sell more mature-node capacity, raise prices where demand is tight and help Beijing's push for domestic chip supply. It still isn't dictating the top of the AI chip market. That distinction matters if you are reading this as a founder, investor or hardware buyer. SMIC's profit jump tells you China has real muscle in mature-node supply, especially in power chips and older processes that global customers still need. It does not tell you China has solved advanced logic. Those are different races. SMIC's own outlook keeps the excitement in check. The Journal reported that the company expects third-quarter revenue to rise 2% to 4% sequentially and gross margin to improve to 26% to 28%. That is solid guidance, not a victory lap. The company also has to keep adding capacity, and new fabs are expensive long before they are efficient. For now, SMIC is benefiting from a simple industrial truth: AI servers need more than headline chips. They need power chips, mature logic, controllers and supporting components made in huge numbers. The market ignored those parts while chasing GPUs. Now the foundries that make them are charging more. Also read: Google launches Gemini 3.7 Flash and halves its price as Gemini 3.5 Pro waits https://startupfortune.com/google-launches-gemini-37-flash-and-halves-its-price-as-gemini-35-pro-waits/ , X Open Sources Its Ranking Algorithm and Lets Users Check for Shadowbans https://startupfortune.com/x-open-sources-its-ranking-algorithm-and-lets-users-check-for-shadowbans/ , and Nvidia Bets Its Balance Sheet That $500 Billion in AI Chips Won't Age https://startupfortune.com/nvidia-bets-its-balance-sheet-that-500-billion-in-ai-chips-wont-age/