SMIC raises chip prices as AI demand strengthens

Semiconductor Manufacturing International Corp (SMIC) has raised prices for its advanced chips by up to 20% as demand for artificial intelligence (AI)-related semiconductors accelerates, according to industry sources.

The increase, which applies to orders placed in recent weeks, reflects tightening supply in the AI chip segment amid robust demand from data centers, cloud providers and AI hardware manufacturers. SMIC, China’s largest contract chipmaker, has been a key supplier for domestic and international customers seeking alternatives amid U.S. export restrictions on advanced semiconductor equipment.

The price adjustment follows similar moves by other foundries, including Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp (UMC), which have also raised prices for advanced process nodes. Analysts note that while the increases are driven by market dynamics, they may further strain budgets for smaller AI startups and hardware firms reliant on cost-effective chip sourcing.

SMIC’s pricing strategy underscores the broader shift in the global semiconductor supply chain, where AI-driven demand is reshaping production priorities and pricing power. The company has not publicly disclosed the full scope of the price hikes or their duration, but sources indicate the adjustments are expected to remain in place through at least the third quarter of 2024.

The move comes as SMIC continues to expand its advanced manufacturing capabilities, including its 7-nanometer process technology, despite ongoing U.S. restrictions on key equipment imports. Industry watchers suggest that sustained AI demand could support further price stability or additional increases in the coming months.