The demand surge driven by AI comes at a time when the foundry is operating close to 93.7 per cent capacity utilisation in the second quarter, which according to the management is the practical capacity limit.
China’s largest chipmaker, Semiconductor Manufacturing International Cooperation (SMIC) is actively looking to add equipment to its factories as demand for mature-node chips used alongside AI processors surged beyond its forecasts, according to South China Morning Post.
“Future wafer starts are far exceeding our previous expectations,” co-CEO Zhao Haijun said during an earnings call, referring to the volume of new chip batches entering the production line. He added that SMIC may install additional equipment at existing sites, where space was available, with further details to be unveiled later.
Demand was particularly high for chips supporting AI servers and datacentres, including logic chips, power-management products and optical module components. Orders for BCD (bipolar-CMOS-DMOS) are visible through the end of 2027, according to Zhao.
The surge in demand comes at a time when SMIC is operating close to 93.7 per cent capacity utilisation in the second quarter, which according to the management is the practical capacity limit. Zhao noted that SMIC intends to cap utilisation at around 95 per cent, sparing at least 5 per cent for research and development (R&D) budget.
SMIC raised prices of some of the supply-constrained products after negotiations with clients earlier this year. Smartphone chips and display-driver integrated circuits were exempt from this price increase due to weakness in demand for consumer electronics. Further increases are likely according to Zhao if the demand recovers.
For the quarter ended June 30, SMIC reported a revenue of $30.1 billion, up 36.1 per cent year-on-year. The company expects the revenue to grow 2 to 4 per cent quarter on quarter basis, in the third quarter.
Domestic clients drive the bulk of business of SMIC accounting for 90 per cent of second quarter revenue, while the US and Eurasia regions contributed 8 per cent and 2 per cent respectively.
Sales within China saw a 22 per cent growth, which Zhao attributed to AI-related chip demand, returning overseas orders, and ongoing supply-chain localisation.
