At SMIC’s third-quarter 2026 earnings meeting on November 13, co-CEO Zhao Haijun said he remained positive about the semiconductor foundry industry. He described AI computing demand as exceeding supply and said the industry expects foundry capacity to be very tight in 2027, potentially through mid-to-late 2028. These are forecasts, not confirmed supply outcomes.
Zhao said AI-related memory supply and demand could reach a basic balance after mid-2028, while computing and other supporting chips might remain in short supply. Meanwhile, demand for smartphone and lower- to mid-range consumer products has weakened and could continue to decline.
SMIC said it is shifting capacity freed by weaker smartphone and some consumer-product orders toward higher-demand, higher-value products, including specialized memory and BCD chips. For the fourth quarter, the company expects steady shipments and a 4%–6% quarter-on-quarter revenue increase, helped by changes in its product mix and higher average selling prices. It guided for a gross margin of 26%–28%, unchanged from its previous-quarter guidance, citing rising depreciation and raw-material costs, increased engineering and R&D wafer starts, and a slight decline in capacity utilization as expansion capacity comes online.
Zhao said SMIC expects full-year sales revenue to exceed $12 billion, nearly 30% above the previous year. He projected a gross margin of about 26%, up roughly five percentage points year on year, despite total depreciation rising by about 30%.