SMIC Projects Full-Year 2026 Revenue to Exceed $12 Billion, Guides for 4% to 6% QoQ Revenue Growth in Q4

Regarding full-year performance, Zhao Haijun expects SMIC’s 2026 revenue to surpass $12 billion, representing a nearly 30% increase over the previous year.

According to a November 13 report by STAR Market Daily, SMIC Co-CEO Zhao Haijun stated that although the fourth quarter is traditionally an off-season for the semiconductor industry, the company’s operations are defying the seasonal downturn. By coordinating and reallocating capacity across multiple platforms, SMIC has shifted capacity freed up by softening consumer electronics orders toward high-demand, high-value-added products such as specialty memory and BCD, thereby stabilizing shipments and optimizing its product mix.

Based on its fourth-quarter operational guidance, SMIC expects shipment volumes to remain steady. As the product mix evolves and pricing adjusts in line with market conditions, the average selling price (ASP) is expected to rise, driving quarter-over-quarter revenue growth of 4% to 6%. Against the backdrop of softened orders in certain smartphone and consumer segments, this guidance demonstrates the company’s ability to sustain business growth through capacity scheduling and product portfolio adjustments.

However, revenue growth does not necessarily translate into a simultaneous rise in profitability metrics. Zhao noted that cost pressures—including depreciation and raw materials—continue to mount, while the company also plans to increase engineering and R&D wafer starts in the fourth quarter. Coupled with the ongoing release of newly expanded capacity, these factors will lead to a slight decline in the capacity utilization rate. Consequently, SMIC has guided for a fourth-quarter gross margin of 26% to 28%, flat compared to the previous quarter’s guidance.

This temporary dip in capacity utilization should be understood in the context of the company’s current operational arrangements. On one hand, the gradual release of new capacity expands the total capacity base in the short term; on the other hand, increased engineering and R&D wafer runs occupy a portion of production resources. This indicates that the fluctuation is not solely driven by end-market orders, but is simultaneously shaped by the pace of capacity expansion, R&D investment, and product qualification.

On the full-year front, Zhao projected that SMIC’s 2026 revenue will exceed $12 billion, growing by nearly 30% year-over-year. Achieving this target will reflect a further expansion in the company’s annual revenue scale, underpinned by its resilient fourth-quarter performance during the traditional off-season.

According to SMIC’s financial report released on November 12, the company generated total operating revenue of RMB 60.618 billion in the first three quarters of 2026, up 22.4% year-over-year. Net profit attributable to shareholders of the parent company reached RMB 7.314 billion, surging 91.6% year-over-year, while net cash flow from operating activities stood at RMB 28.625 billion. Both basic and diluted earnings per share (EPS) were RMB 0.91.

Specifically, in the third quarter, total operating revenue reached RMB 21.983 billion, a 28.1% year-over-year increase; net profit attributable to shareholders of the parent company was RMB 2.847 billion, up 87.6% year-over-year; net cash flow from operating activities totaled RMB 7.866 billion; and both basic and diluted EPS came in at RMB 0.33. Both revenue and profit maintained rapid growth in Q3, with net profit growth significantly outpacing revenue growth, laying a solid foundation for the company’s full-year performance.

In terms of demand structure, shifts in orders from smartphones and other consumer electronics remain one of the factors influencing short-term capacity allocation. Redirecting freed-up capacity toward specialty memory, BCD, and similar products not only improves coordination efficiency across existing production lines, but also reflects the company’s operational strategy of reallocating resources based on varying product demand. Whether ASPs can continue to improve going forward will depend on product mix, market supply and demand, and pricing dynamics.

Meanwhile, tightness in the global equipment supply chain is emerging as a critical variable in capacity expansion execution. Zhao pointed out that equipment delivery lead times have lengthened overall, with delivery schedules for certain tools remaining uncertain. While this situation will not affect the implementation of SMIC’s expansion plans this year, it could disrupt capital expenditure (CapEx) execution throughout next year.

Extended equipment lead times affect not only tool arrival schedules, but may also have knock-on effects on the installation, commissioning, qualification, and ramp-up timelines of new production lines. Therefore, the effectiveness of SMIC’s CapEx execution next year will depend not only on its own expansion plans, but also on the recovery of the global semiconductor equipment supply chain.

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