--- title: "SMIC: Cycle Bull + China AI Chips, Twin Catalysts Lift-Off" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/43375775.md" description: "SMIC (0981.HK/688981.SH) released its Q2 2026 results (to Jun 2026) after the HK close on Aug 13 (Beijing time). Key takeaways: 1) Revenue: $SMIC(00981.HK) reported revenue of $3.01bn, beating the Street at $2.87bn.Revenue rose 20% QoQ, topping company guidance (+14–16% QoQ). Growth was driven by industrial & auto, and by PC & tablet demand, with a volume/price breakdown to follow..." datetime: "2026-08-13T12:08:59.000Z" locales: - [en](https://longbridge.com/en/topics/43375775.md) - [zh-CN](https://longbridge.com/zh-CN/topics/43375775.md) - [zh-HK](https://longbridge.com/zh-HK/topics/43375775.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" --- # SMIC: Cycle Bull + China AI Chips, Twin Catalysts Lift-Off Semiconductor Manufacturing International Corp. (0981.HK/688981.SH) released its Q2 2026 results after the Hong Kong close on Aug 13 (Beijing time). Key takeaways are as follows. **1) Revenue:**$SMIC(00981.HK) **delivered revenue of $3.01bn in Q2 2026, well above the $2.87bn consensus and up 20% QoQ**, beating its own guide (QoQ +14–16%). Growth was driven by demand from industrial & auto and PC & tablet. On volume/price mix, $SMIC(688981.SH) **shipments rose 14% QoQ while ASP increased 5% QoQ**. Management implemented \>10% price hikes in parts of mature nodes, directly lifting blended ASP. **2) GPM:** Q2 2026 GPM was 25.3%, well above the guided range high end (20–22%). The margin uplift reflected higher ASP and lower unit cost; despite rising D&A, rapid capacity ramp diluted unit cost. **3) Biz. progress:** under import substitution tailwinds, China revenue accounted for over 90% this quarter. **As tier-1 foundries reallocated capacity to AI, the company captured spillover demand at mature nodes**, further lifting localization mix. By end-market, smartphone exposure fell below 20% amid handset weakness. **Consumer electronics remains the largest revenue pool at 40–50%, spanning IoT CMOS, RF and MCU**. **4) Opex and capex:** operating expenses were driven by R&D and G&A and stayed relatively stable. There were no notable structural shifts QoQ. **Capex was $1.84bn in Q2**; with full-year 2026 guided roughly in line with last year at about $8.1bn, H2 capex implies ~$4.7bn. Investment is set to enter peak season. **5) Q3 guide:** revenue is guided up 2–4% QoQ to $3.06–3.13bn, slightly above the $3.07bn consensus. GPM is guided at 26–28%, well ahead of the market’s 22.5%. **Dolphin Research view: Not about faith this time. It is about tangible delivery.** **SMIC’s print was strong, with both revenue and margin beating Street estimates.** On GPM drivers, **ASP rose by $49 per wafer QoQ while unit cost fell by $15 per wafer (scale dilution)**, fueling the sharp margin rebound. **Across 2026 margins: Q1 (20.1%) → Q2 (25.3%) → Q3 guide (26–28%), mature-node price hikes are clearly flowing through**. This signals an upcycle for the company and for legacy nodes broadly. The domestic customer mix now exceeds 90%, so the story goes beyond simple import substitution. Key watch items are **capex & capacity, mature-node pricing**, and **advanced-node progress**. **a) Capex & capacity**: **Q2 capex was $1.84bn (H1 $3.4bn)**, and with FY26 roughly flat YoY at ~$8.1bn, H2 will be the peak investment window. Spending will accelerate as guided. With smartphones weak, margin recovery is primarily pricing-led at mature nodes. Even at the cycle trough, SMIC maintained ~$8bn per year in counter-cyclical capex. Under sustained high investment, **quarterly capacity reached 3,062k 8-inch-equivalent wafers, up 13.6% QoQ**. The company remains firmly the No. 3 foundry globally. **b) Foundry price hikes**: AI servers, general-purpose servers and edge AI peripherals are tightening foundry supply toward AI-related products, reshaping mature-node supply/demand. **Current hikes cluster in BCD, analog, PMIC and memory**, and the market expects the effect to spill over to more product lines, lifting the broader cycle. Hikes are concentrated in 8-inch mature nodes for now, with 12-inch expected later this year; UMC has explicitly announced subsequent hikes. **SMIC’s next-quarter margin guide suggests the pricing impact is already visible**. **c) Competitiveness and node progress:** SMIC sits solidly in the second tier alongside UMC and GlobalFoundries. Among them, only SMIC is still pushing toward the first tier. Leveraging multi-patterning, it is iterating N+1/N+2/N+3. **N+3’s transistor density is roughly on par with TSMC’s 6nm, while N+4 is expected to approach TSMC’s 5nm**. Beyond mature-node pricing, valuation upside mainly reflects expectations for advanced nodes, with H as a major customer. **As Ascend 950DT and Kirin 9030 ship, advanced-node revenue should see a visible pickup in H2**. With a current market cap of HK$578.3bn, this implies about 25x 2027 core post-tax earnings (Est.) under the assumptions of a 2-year revenue CAGR of +26%, GPM of 28.5% and an 8.5% tax rate. As the legacy-cycle recovery progresses, margin and earnings improvement should work down the elevated multiple. **On PB, the foundry stack is roughly: TSMC 11 \> UMC 3.4 = SMIC (H) 3.4 \> GlobalFoundries 2.4**. Prior re-rating of UMC and GFS was driven by enthusiasm for mature-node price hikes, and after the de-rating of the ‘pricing chain’, the market is reverting to a more fundamentals-driven lens. **UMC looks more aggressive than GlobalFoundries, with a milder share-price pullback**. UMC guided 25–40% hikes for 8-inch and 10–20% for parts of 12-inch starting in H2 and moving to full hikes by 2027, while GlobalFoundries only flagged ‘selective hikes’ in H2. **Overall, mature-node pricing should aid earnings recovery for SMIC, UMC and other second-tier players**. Valuations may increasingly be viewed through a PE lens, with the market focusing on margins and earnings after the ‘pricing chain’ de-rating. **SMIC’s delivery and guidance are tangible, and a clear signal of a traditional semi upcycle**. On top of that, multiple new models from a major customer should add an advanced-node growth angle in H2. With earnings support plus advanced-node optionality, SMIC—at the core of China’s AI infra—offers better risk-reward after the sector pullback. Below are Dolphin Research’s detailed charts on SMIC. Refer to the figures that follow. This marks the conclusion. **Dolphin Research’s SMIC archive:** Highlights and links follow. **Earnings season** May 14, 2026 Trans: [SMIC (Trans): Foundry pricing steady to higher; price-hike effects to persist](https://longportapp.cn/zh-CN/topics/40808511) May 14, 2026 earnings take: [One hand on pricing power, one on a new story — Is SMIC set to surge?](https://longportapp.cn/zh-CN/topics/40778504) Feb 10, 2026 Trans: [SMIC (Trans): Smartphone pessimism overdone; memory tightness to ease in Q3](https://longportapp.cn/zh-CN/topics/38649256) Feb 10, 2026 earnings take: [SMIC: Counter-cyclical bet — the great hope for domestic AI chips?](https://longportapp.cn/zh-CN/topics/38632875) Nov 13, 2025 Trans: [SMIC (Trans): Memory price up; OEMs turn cautious on next-year plans](https://longportapp.cn/zh-CN/topics/36354701) Nov 13, 2025 earnings take: [SMIC: Not chasing near-term grades — is ‘domestic AI chips’ the real faith?](https://longportapp.cn/zh-CN/topics/36323230) Aug 7, 2025 Trans: [SMIC (Trans): Smartphone outlook cut; pricing to keep sliding](https://longportapp.cn/zh-CN/topics/29467414) Aug 7, 2025 earnings take: [SMIC: Guide ‘derailed’ — when can domestic chips break out?](https://longportapp.cn/zh-CN/topics/29451852) Feb 10, 2025 Trans: [SMIC (Trans): Capex plan in line with last year](https://longportapp.cn/zh-CN/topics/27143509) Feb 10, 2025 earnings take: [SMIC: Propped up by state subsidies — can it outlast the cycle?](https://longportapp.cn/zh-CN/topics/27124975) **Deep dive** Jun 20, 2025 company deep dive: [SMIC from an alternative lens: How wide is the faith gap behind the HK–A dual-listing spread?](https://longportapp.cn/zh-CN/topics/30925399) This article’s risk disclosure and disclaimer: [Dolphin Research disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [00981.HK](https://longbridge.com/en/quote/00981.HK.md) - [HSMD.SG](https://longbridge.com/en/quote/HSMD.SG.md) - [688981.CN](https://longbridge.com/en/quote/688981.CN.md) - [HUAWEI.NA](https://longbridge.com/en/quote/HUAWEI.NA.md) - [GFS.US](https://longbridge.com/en/quote/GFS.US.md) - [INTC.US](https://longbridge.com/en/quote/INTC.US.md) - [UMC.US](https://longbridge.com/en/quote/UMC.US.md) - [TSM.US](https://longbridge.com/en/quote/TSM.US.md) - [INTW.US](https://longbridge.com/en/quote/INTW.US.md) - [LINT.US](https://longbridge.com/en/quote/LINT.US.md) - [INYY.US](https://longbridge.com/en/quote/INYY.US.md) - [TSMX.US](https://longbridge.com/en/quote/TSMX.US.md) - [TSMY.US](https://longbridge.com/en/quote/TSMY.US.md) - [TSMZ.US](https://longbridge.com/en/quote/TSMZ.US.md) - [TSMG.US](https://longbridge.com/en/quote/TSMG.US.md) - [TSMU.US](https://longbridge.com/en/quote/TSMU.US.md) - [STSM.US](https://longbridge.com/en/quote/STSM.US.md)