SMIC Sees Flat First Quarter Revenue as Weak Low End Demand Balances AI Chip Momentum
Semiconductor Manufacturing International Corp, China’s largest contract chipmaker, has forecast flat revenue for the first quarter as weakening demand for low end chips offsets rising orders tied to artificial intelligence applications. The outlook highlights the uneven recovery within the semiconductor sector, where growth in advanced computing does not fully compensate for softness in more traditional segments.
The Shanghai based company reported that full year 2025 revenue rose 16.2 percent from a year earlier to 9.3 billion dollars. Net profit climbed 39 percent to 685.1 million dollars, driven by higher wafer shipments, improved factory utilization rates, and a shift toward more profitable product categories. The gains underscore SMIC’s ability to optimize capacity and adjust its product mix amid shifting market conditions.
Despite the annual growth, both full year and fourth quarter earnings fell short of analyst expectations, prompting a decline in its share price. The company’s Hong Kong listed stock slipped 2.2 percent to HK$70, while its Shanghai listed shares dropped 1 percent to 115.01 yuan. The market reaction reflected investor caution about near term revenue stability and margin pressures.
SMIC’s cautious first quarter forecast points to persistent weakness in lower end chip demand, which is often linked to consumer electronics, home appliances, and entry level industrial devices. These segments have faced subdued orders amid softer global consumption and ongoing inventory adjustments across supply chains. As customers work through excess stock, foundries have seen fluctuating order volumes in mature process nodes.
At the same time, demand for chips used in artificial intelligence systems continues to expand. AI related applications, including data centers and advanced computing platforms, require more sophisticated semiconductors with higher performance specifications. While SMIC is not positioned at the cutting edge of the most advanced global nodes due to export restrictions on certain manufacturing equipment, it has benefited from domestic demand for AI supporting components and specialized chips.
The company’s performance also reflects broader dynamics within China’s semiconductor industry. Domestic chipmakers have ramped up investment to reduce reliance on foreign suppliers, especially in the wake of export controls imposed by the United States and its allies. Capacity expansion and process improvements have enabled firms like SMIC to capture a larger share of local manufacturing demand.
However, balancing growth across diverse product lines remains a challenge. Revenue stability depends on maintaining high utilization rates while navigating cyclical swings in electronics demand. Any prolonged weakness in low margin segments could weigh on overall performance, even as higher value AI chips provide support.
SMIC’s results illustrate the dual nature of the current semiconductor cycle in China. Structural growth in artificial intelligence and advanced computing offers long term opportunity, yet short term pressures in mature markets continue to shape revenue expectations.
