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SMIC raises wafer prices citing sustained AI demand
The move follows strong results, with SMIC revenue topping $3 billion for the first time in Q2 as AI demand tightened supply chains.
China’s leading semiconductor foundry, Semiconductor Manufacturing International Corp, said AI related demand will keep supporting orders for its production and that it has raised prices for its most sought after capacity. Reuters reported the company’s co CEO, Zhao Haijun, said the higher pricing was set after negotiations with customers in the first quarter, and that it would charge more for wafers processed in the third quarter.
SMIC makes silicon wafers that serve as the base material for chip fabrication, and it is described as the only Chinese foundry able to mass produce logic chips such as CPUs and GPUs on a 7 nanometre process. Zhao said the company believes it has reached top tier industry standards for certain areas, but also said there remains a gap between industry leading wafer prices and SMIC’s current prices, requiring further customer negotiation for fairer pricing.
On the earnings call, SMIC pointed to momentum from AI demand, saying it posted revenue above $3 billion for the first time in the second quarter and that profit attributable to shareholders tripled to $479.2 million. The outlet also reported that SMIC shipped 2.9 million 8 inch equivalent wafers in Q2, up 14% quarter on quarter, while the average selling price of wafers rose 5.7%.
SMIC said shipment growth was driven mainly by surging demand for chip capacity beyond CPUs and GPUs, mostly from China based customers, along with orders coming in earlier than expected. Reuters added that SMIC expects AI driven demand to remain robust in the second half of the year and plans to adjust existing capacity while accelerating the ramp up of new production lines to ease broader supply constraints.