SMIC Q2 2026 earnings beat forecasts on AI demand

Semiconductor Manufacturing International Corp (SMIC) on Wednesday reported second-quarter 2026 earnings that exceeded market forecasts, driven by robust demand for advanced chips used in artificial intelligence applications.

The Shanghai-based foundry said revenue rose 18% year-over-year to $3.7 billion, surpassing the consensus estimate of $3.4 billion. Net profit reached $980 million, up 22% from the same period last year, while earnings per share came in at $0.45, beating analyst expectations of $0.41.

Management attributed the outperformance to sustained AI-related demand, particularly for 7-nanometer and 5-nanometer process nodes. SMIC noted that AI chip orders accounted for 32% of total revenue in the quarter, compared with 24% in the prior-year period. The company also highlighted increased orders from domestic and international AI hardware developers.

Gross margin expanded to 41.2%, up from 38.7% in Q2 2025, reflecting improved operational efficiency and favorable pricing dynamics. Operating expenses remained stable at $820 million, while capital expenditures totaled $1.1 billion, primarily allocated to advanced node expansion.

Looking ahead, SMIC guided third-quarter revenue to grow 12-15% sequentially, with AI-driven demand expected to remain a key growth driver. The company also reaffirmed its full-year capital expenditure target of $4.5 billion, focused on 7-nanometer and below process technologies.

Analysts at Citi maintained a neutral rating on SMIC, citing geopolitical risks and export restrictions as ongoing headwinds. However, they acknowledged the company's strong execution in navigating supply chain challenges while capitalizing on the AI semiconductor cycle.

SMIC's shares were up 3.2% in pre-market trading following the results.