SMIC has cautioned that a potential memory chip shortage could disrupt automotive and consumer electronics production by 2026, highlighting bottlenecks as major chipmakers prioritize supplying AI accelerator leader Nvidia. Co-CEO Zhao Haijun noted that Chinese firms are becoming more cautious about placing orders with SMIC for early next year due to uncertainties over securing sufficient memory supply. Part of this hesitation stems from expectations of soaring memory prices, driven by robust demand for AI-related applications.

During an earnings call on Friday, Zhao told analysts that automakers, smartphone producers, and consumer electronics manufacturers—all reliant on memory chips—will face pricing pressures and supply constraints in the coming year. He explained that clients are hesitant to increase Q1 orders amid uncertainty about chip availability. Zhao acknowledged that current market demand exceeds SMIC’s production capacity, with 2025 capital expenditures projected to match or slightly exceed 2024’s $7.33 billion. However, he anticipates an overall acceleration in capacity expansion among Chinese chipmakers.