SMIC’s revenue rose 33.9% to US$3.19bn; it guides its margin to 26–28% from 29.9%

01Why the margin rose: full fabs

A foundry makes chips that other companies design, so much of its cost is the fabs themselves, written off as depreciation whether they run full or not: US$945.8m of SMIC’s US$2.24bn cost of sales in the quarter, 42%. Its total depreciation and amortisation reached US$1.27bn, up 27.6% on a year earlier.² When more wafers go through the same fabs, that fixed cost is spread wider: SMIC shipped 3.03 million wafers (counted as 8-inch equivalents), 5.7% more than in April–June, and ran at 97.3% of capacity, against 93.7%. Revenue rose 6.1% on the quarter while cost of sales fell 0.4%. SMIC puts the margin gain down to the higher utilisation rate and a change in product mix.² Monthly capacity grew to 1,116,750 8-inch-equivalent wafers, from 1,096,500.²

The quarter beat SMIC’s own forecast. In August it guided revenue up 2% to 4% and gross margin to 26–28%;³ it delivered 6.1% and 29.9%.¹ The quarter before went the same way: guided in May to a 20–22% margin,⁵ SMIC reported 25.3%.³ For TSMC, the largest foundry, monthly sales are in our Trend on its October record.

02Where the wafers go

China accounted for 90.8% of SMIC’s revenue, up from 86.2% a year earlier; America’s share fell to 7.8% from 10.8%. By what the chips go into, smartphones fell to 14.3% of wafer revenue from 21.5%, while industrial and automotive rose to 19.3% from 11.9%, and computers and tablets to 18.3% from 15.2%. Consumer electronics stayed the largest group, at 40.6%. Twelve-inch wafers made up 78.9% of wafer revenue.²

03Profit, cash and what to watch

Profit attributable to SMIC’s shareholders was US$428.4m, 123.4% more than a year earlier but 10.6% less than in April–June, when gains on investments held through associates added US$275.9m of other income; this quarter that line was a US$32.1m loss.² Capital spending was US$1.09bn, against US$1.84bn in April–June. Borrowings rose to US$14.9bn, against US$13.4bn of cash and deposits.²

The release does not say why the margin guide is lower, and the filing gives no split by process node. SMIC holds its call on 13 November.¹ In February it guided 2026 revenue growth above the industry average in its markets, with capital spending roughly flat on 2025.⁴