SMIC narrows foundry gap with Samsung as Q2 sales surge 20%

Semiconductor Manufacturing International Corporation lifted second-quarter revenue 20% to $3.0 billion, narrowing the market share gap with Samsung Electronics to 0.5 percentage points, TrendForce said Sept. 9.

The surge secured third place globally for the Shanghai fabricator. SMIC controlled 5.4% of worldwide foundry revenue in the quarter ending June 30, up from 5.1% in the prior period.

Global foundry sales rose 11.5% quarter over quarter to a record $53.49 billion. Strong demand for artificial intelligence processors and advance stocking across personal computer supply chains drove the quarterly expansion.

Market leader Taiwan Semiconductor Manufacturing Company generated nearly $40.2 billion in revenue, up 12.1% sequentially. TSMC captured a 72.5% market share, supported by fully booked 3-nanometer and 5-nanometer production lines.

TSMC booked commercial revenue from its 2-nanometer process for the first time during the second quarter. Production ramps for mobile processors powering Apple's next-generation iPhone series also supported higher average selling prices, TrendForce said.

Samsung Foundry retained second place with $3.26 billion in sales, up 1.8% from the previous quarter. However, the South Korean firm saw its market share slip from 6.5% to 5.9%.

Samsung Foundry raised prices for 5-nanometer and 4-nanometer manufacturing services during the quarter, while expanding production of custom logic dies for artificial intelligence accelerators. Those gains proved insufficient to offset market share dilution.

Samsung now leads SMIC by only $260 million in quarterly foundry revenue. The performance widened Samsung's market share deficit behind TSMC to 66.6 percentage points, despite rising shipments of high-bandwidth memory base dies.

United Microelectronics Corporation ranked fourth with $2.18 billion in sales, expanding 12.7% sequentially to hold a 3.9% market share. GlobalFoundries placed fifth, generating $1.79 billion in revenue for a 3.2% market share.

China's Hua Hong Semiconductor ranked sixth with $1.27 billion in revenue, holding a 2.3% share. Together, Chinese fabricators commanded 7.7% of the global market as domestic chip designers expanded local wafer orders.

SMIC capitalized on advance component procurement across television, notebook and desktop computer supply chains. Chinese device makers accelerated orders during the quarter to protect against potential trade disruptions and anticipated tariff adjustments.

The buildout of artificial intelligence data centers in China also lifted demand for trailing-edge peripheral silicon. Foundries saw rising orders for power management chips, discrete power devices and optical transceiver components.

Chinese internet firms increased hardware investment well beyond initial projections, SMIC Co-Chief Executive Officer Zhao Haijun said during an earnings briefing. Compute board components and bipolar-CMOS-DMOS chips remained in short supply, Zhao said.

SMIC's shipments of peripheral chips designed for artificial intelligence infrastructure expanded approximately 40% between April and June. Domestic data center operators sourced local logic silicon to replace foreign imports across server power distribution boards.

SMIC expanded its gross profit to $760 million, up from $504 million in the first quarter. Gross margin widened by 5.2 percentage points to 25.3%, exceeding internal company targets.

The results highlight a structural paradox created by United States trade sanctions. While Washington blocked exports of advanced extreme ultraviolet lithography tools, Chinese fabricators accelerated investments in unrestricted mature nodes.

Beijing directed state capital into trailing-edge capacity, encouraging domestic fabless design houses to shift contracts from overseas fabs. SMIC absorbed the resulting demand across its 28-nanometer and older manufacturing lines.

That domestic substitution drive directly pressured Samsung Foundry, which has struggled to maintain high utilization rates at legacy lines. Samsung has faced delays in securing high-volume external customers for its gate-all-around nodes.

Taiwanese and American foundries also registered the shift as Chinese analog and microcontroller developers localized orders. GlobalFoundries and UMC face increasing competition across standard logic and embedded non-volatile memory contracts.

Tight global supply in specialty memory further assisted SMIC during the quarter. Pricing and wafer volumes increased for the Chinese fabricator's NOR flash and NAND flash foundry services, according to TrendForce data.

TrendForce expects mature-node foundry capacity to remain tight through the end of 2026. IC design firms are maintaining steady wafer starts to guard against anticipated fabrication price increases.

SMIC projected third-quarter revenue will grow between 2% and 4% sequentially, with gross margin expanding to between 26% and 28%. The company is scheduled to report third-quarter financial results in November 2026.

TrendForce did not publish node-level wafer shipment breakdowns for SMIC's advanced fabrication lines. The Shanghai company does not disclose revenue splits between commercial clients and state-subsidized national procurement projects.

SMIC operated four 12-inch wafer fabs in Beijing, Shanghai, Tianjin and Shenzhen during the second quarter. Aggregate fab utilization across all SMIC manufacturing facilities stayed above 85% throughout the three-month period.