SMIC and Hua Hong Grace Semiconductor both delivered strong 2Q26 results, with revenue and gross profit rising sharply amid sustained AI-driven semiconductor demand and tightening mature-node capacity. SMIC’s revenue surpassed $3 billion, up 36.1% year over year, while net profit attributable to the parent surged 261.7%. Hua Hong Grace Semiconductor posted record revenue of $717.5 million, up 26.8%, with net profit attributable to owners of the parent soaring 385.9%. Capacity utilization reached 93.7% at SMIC and an exceptional 102.8% at Hua Hong Grace Semiconductor, while both companies provided positive 3Q26 guidance. Rising utilization, wafer-fab expansion, firming foundry prices, and AI-driven demand spillover into logic, analog, power, and memory products point to further strengthening in semiconductor industry conditions through 2H26.
After the market close on August 13, China’s two leading wafer foundries, Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Grace Semiconductor, reported strong 2Q26 results.
Given sustained AI-driven demand spillover and tightening supply in mature process nodes, both companies delivered substantial growth in revenue and gross profit. SMIC’s quarterly revenue surpassed $3 billion for the first time, while net profit attributable to the parent surged 262% year over year. Hua Hong Grace Semiconductor posted record revenue of $717.5 million, with capacity utilization hitting 102.8%, underscoring robust demand and fully loaded operations.
Both industry leaders issued positive third-quarter guidance, signaling that semiconductor industry conditions are likely to strengthen further.
“Twin Leaders” Post Surging Profits
SMIC generated total sales revenue of $3 billion in 2Q26, up 36.1% year over year and 20% quarter over quarter. Gross profit rose 69.1% year over year to $761 million, while gross margin expanded to 25.3%, up 4.9 percentage points year over year and 5.2 percentage points quarter over quarter.
The revenue increase was mainly driven by higher wafer shipments, an increase in average selling prices, and changes in product mix during 2Q26.
Hua Hong Grace Semiconductor’s 2Q26 sales revenue reached a record $717.5 million, up 26.8% year over year and 8.6% quarter over quarter. Gross profit surged 92.2% year over year to $118 million, while gross margin expanded to 16.5%, up 5.6 percentage points year over year and 3.5 percentage points quarter over quarter.
On the profit front, SMIC’s 2Q26 net profit attributable to the parent rose 261.7% year over year to $479 million. Hua Hong Grace Semiconductor’s second-quarter profit attributable to owners of the parent surged 385.9% year over year to $38.6 million.
By geographic region, revenue from China accounted for 90.2% of SMIC’s total revenue. For Hua Hong Grace Semiconductor, sales revenue from China accounted for 78.6%, or $563.7 million.
By end market, consumer electronics remained the largest segment for both companies. Consumer electronics accounted for 44.2% of SMIC’s Q2 revenue, while smartphones contributed 16.9% and industrial and automotive applications increased to 16.5%. At Hua Hong Grace Semiconductor, consumer electronics accounted for 67.1% of revenue, while industrial and automotive applications represented 22.6%.
Notably, Hua Hong Grace Semiconductor’s standalone and embedded non-volatile memory products performed particularly well in the second quarter. Revenue from embedded non-volatile memory reached $200.1 million, up 41.8% year over year, mainly driven by stronger demand for MCU and smart-card chips. Revenue from standalone non-volatile memory totaled $68.8 million, up 149.3% year over year, primarily due to increased demand for flash-memory products.
By wafer size, 8-inch wafers accounted for 21.8% of SMIC’s revenue, while 12-inch wafers accounted for 78.2%, up from 76.4% in the first quarter. Hua Hong Grace Semiconductor generated $271.8 million and $445.7 million in sales revenue from 8-inch and 12-inch wafers, respectively, representing 37.9% and 62.1% of total sales.
Capacity Utilization Continues to Rise
In terms of capacity and utilization, SMIC’s monthly capacity increased from 1,078,250 8-inch-equivalent standard logic wafers in 1Q26 to 1,096,500 in 2Q26. Hua Hong Grace Semiconductor’s monthly capacity stood at 508,000 8-inch-equivalent wafers.
Capacity utilization rates at both companies continued to rise. SMIC’s second-quarter capacity utilization rate reached 93.7%, while Hua Hong Grace Semiconductor’s climbed to an exceptional 102.8%.
In terms of capital expenditure, SMIC continued to aggressively expand its capacity. Capital expenditure totaled $1.836 billion in the second quarter, up 17.5% from $1.563 billion in the first quarter.
Bai Peng, chairman and president of Hua Hong Grace Semiconductor, said: “Since the beginning of the year, artificial intelligence has continued to drive growth in global semiconductor demand. This demand first became evident in memory-chip products and has gradually expanded into logic and analog chip products related to AI applications.”
SMIC expects the industrial stimulus and spillover effects from AI to continue through the second half of the year, generating broad-based demand for integrated-circuit manufacturing. Looking ahead to the third quarter, both companies provided positive guidance: SMIC expects revenue to increase 2% to 4% quarter over quarter, with gross margin guidance of 26% to 28%, while Hua Hong Grace Semiconductor expects sales revenue of approximately $770 million to $780 million, with gross margin of approximately 16% to 18%.
According to TrendForce, the average utilization rate of 8-inch capacity among the world’s top 10 wafer foundries had recovered to 88% in 2026 and is expected to reach as high as 90% in 2H26. Mature 8-inch process capacity has already entered a supply-constrained phase. Foundry prices began rising broadly from 1Q26 to 2Q26, with the average increase currently ranging from 5% to 15%. The industry is also continuing to prepare for a third round of price increases from 2H26 into 2027.
SEMI China said that global silicon-wafer shipments increased 7.4% year over year in 2Q26 to 3,573 million square inches (MSI).
Ginji Yada, chairman of SEMI SMG and general manager of Sales and Marketing at SUMCO Corporation, said: “Silicon-wafer shipments maintained steady growth in the second quarter. Strong and continually increasing AI-related demand has expanded from advanced logic and memory into power devices, optoelectronics, and other markets. In addition, industrial and automotive demand is recovering, while pricing pressure on memory is constraining demand for PCs and smartphones. Device manufacturers are investing heavily in capacity expansion, and silicon-wafer demand is expected to continue growing.”
As of the August 13 market close, SMIC (688981.SH) traded at RMB 129.44 per share, up 1.16%, while Hua Hong Grace Semiconductor (688347.SH) traded at RMB 276.99 per share, up 1.39%.