SMIC, China's biggest chip foundry, said it is benefiting from the "spillover effects" of the artificial intelligence boom, which has bolstered demand for AI-supporting chips and driven a surge in orders for other, non-AI products.

Semiconductor Manufacturing International Corp. co-chief executive Zhao Haijun said in an earnings call Friday that the company has received surging orders for AI-supporting chips. AI data centers rely on a vast ecosystem of supporting chips beyond primary graphic processing units, from power management to data transmission, to manage heavy workloads.

A high-density AI server rack containing 72 GPUs, for instance, requires over 16,000 power management and supply components to handle power delivery and conversion. These supporting chips "are in short supply and this remain the case in the long term," Zhao said.

The rising AI computing demand comes as U.S. hyperscalers' AI spending is expected to reach $800 billion this year and Chinese Internet companies continue to ramp up their infrastructure investment. "These all exceeded our previous projections," he added.

Meanwhile, non-AI sectors are grappling with a severe semiconductor shortage as global foundries increasingly prioritize capacity for AI-related demand. That shift has prompted many international and domestic clients to migrate mature-node manufacturing orders to China, benefiting established players such as SMIC.

Consumer electronics vendors for TVs and PCs have also started to build up inventories to prepare for next year, in case of a demand rebound, Zhao said.

As a result, SMIC has enjoyed higher blended average selling prices and better-than-expected capacity utilization rate.

These factors contributed to the company's record quarterly revenue and higher-than-expected gross margin in the second quarter, despite increased depreciation costs amid aggressive capacity expansion.

After having negotiated new prices with clients, the higher pricing for wafers will be reflected in wafers shipped in the third quarter, the company said. The price hikes are expected to push the chip manufacturer's margins even higher to between 26% and 28%.

SMIC's depreciation costs are projected to rise 30% this year, reaching $5 billion and continue to ramp up as the company evaluates further capacity expansion plans.

SMIC's Hong Kong-listed shares were last 2.2% higher at 69.05 Hong Kong dollars.