SMIC Posts Record Q3 Revenue, Sees AI Chip Supply Staying Tight Through 2027 and Memory Balance Returning in Mid-to-Late 2028

• Dispatched: Nov 12, 2026 · 21:38 ET (Nov 13, 02:38 UTC)

One-sentence summary: SMIC's third-quarter revenue rose 34% year on year to a record $3.19 billion, with net profit of about $428 million beating expectations, while co-CEO Zhao Haijun told the earnings call that the AI chip supply chain will stay tight through 2027, memory supply and demand should reach balance toward the middle to end of 2028, and full-year revenue should top $12 billion.

Verification status: ✓ Company earnings release and earnings call, cross-reported by Reuters and InvestingLive

Core Facts & Consensus Delta:

• Publication: Reuters first reported at 21:01 ET on 2026-11-12 / 02:01 UTC on 2026-11-13; the company released third-quarter results after the Hong Kong market close on 2026-11-12, and held its earnings call on 2026-11-13.
• Third-quarter revenue was $3.19 billion, up 34% year on year and above market expectations of about $3.11 billion, the second consecutive quarter above $3 billion; revenue rose 6.1% sequentially, above the company's prior guidance range of 2%–4%; fab utilization rose from 93.7% to 97.3%.
• Third-quarter gross margin was 29.9%, above the 26%–28% guidance range; net profit was about $428 million, more than double the year-earlier level and above market expectations of about $397 million.
• Fourth-quarter guidance: revenue growth of 4%–6% sequentially to $3.32–$3.38 billion, above market expectations of about $3.23 billion; gross margin guidance of 26%–28%.
• Full-year outlook: Zhao expects 2026 full-year revenue to top $12 billion, up nearly 30% year on year; full-year gross margin of about 26%, roughly 5 percentage points higher than last year; depreciation expense up about 30% year on year.
• Supply-chain assessment: the semiconductor supply chain for AI-related applications will stay tight through 2027 on demand from data centres and private clouds; memory chip supply and demand should reach balance toward the middle to end of 2028; lead times for some equipment exceed 24 months, which could affect the pace of capital spending.

Supply-Chain & Market Read-Through:

• SMIC (HKEX: 0981) is the world's third-largest contract chipmaker (TrendForce data, 5.4% market share in the second quarter). Utilization rising to 97.3% and wafer price increases lifting gross margin show AI peripheral chips, server networking and consumer electronics demand spilling over from leading-edge nodes into mature nodes — complementary to, rather than directly competing with, TSMC's tight leading-edge and CoWoS capacity.
• The mid-to-late 2028 memory balance call is consistent with the sold-out cycles already disclosed by HBM and memory makers (SK Hynix KRX: 000660, Samsung Electronics KRX: 005930, Micron MU, SanDisk SNDK) running through 2027–2029: near-term memory price increases and tight supply still have support, while SMIC's balance date gives a clear time window for foundry expansion and demand absorption.
• Equipment lead times of more than 24 months constraining the pace of capital spending feed directly into order visibility and delivery schedules for semiconductor equipment makers (Applied Materials AMAT, ASML and peers); if the equipment bottleneck persists, foundry capacity expansion will lag order growth and pricing momentum in mature nodes could extend.
• Strictly objective and neutral; no share-price forecast or buy/sell advice.

Next Catalysts & Watchpoints:

• TSMC's November monthly revenue (usually published around the 10th of each month) and its fourth-quarter earnings call in January 2027, to test whether leading-edge demand is moving in step with the mature-node spillover.
• Micron's earnings in mid-December (estimated), to test whether memory makers share the 2028 supply-demand balance timing.
• US October PPI (08:30 ET / 13:30 UTC on 2026-11-13) and the FOMC meeting on December 8–9, to test how the inflation and rate path affect semiconductor capital spending.

Sources:

• Reuters: SMIC says AI chip supply chain will remain tight through 2027 (Published: 21:01 ET on 2026-11-12 / 02:01 UTC on 2026-11-13)
• InvestingLive: SMIC co-CEO sees 2026 revenue topping $12 billion as AI demand stretches chip upcycle (Published: 20:40 ET on 2026-11-12 / 01:40 UTC on 2026-11-13)

Information only, not investment advice.