Chinese chipmaker SMIC raises prices on strong AI demand

China's leading semiconductor foundry, SMIC, announced on Friday that it has raised prices for its most sought-after wafer capacity due to continued strong demand for AI-related products. Co-CEO Zhao Haijun stated that this decision stemmed from successful negotiations with customers during the first quarter. SMIC anticipates that industry-leading wafer prices still significantly surpass its current rates, necessitating price negotiations for more equitable terms.

The company's second-quarter revenue surpassed US$3 billion, marking an increase of 14% from the previous quarter and tripling profit attributable to shareholders to US$479.2 million, all exceeding average analyst estimates. SMIC's wafer shipments rose to 2.9 million 8-inch-equivalent units, with an average selling price increase of 5.7% as AI-driven demand surges.

The company expects this robust demand for AI chips to persist throughout the second half of the year, prompting SMIC to adjust existing capacity and expedite the launch of new production lines to alleviate global semiconductor supply constraints. SMIC's monthly production capacity increased by 1.7% quarter-over-quarter to 1.1 million 8-inch-equivalent wafers, with utilization reaching 93.7%, up slightly from Q1.

The company added 8,000 wafers of 12-inch capacity during Q2. For the first half, SMIC reported capital expenditures of US$3.4 billion, a 30% year-on-year increase, with full-year amortisation expected at around US$5 billion.