SMIC, China's biggest chip foundry, recorded sharply higher net profit and revenue, cashing in on robust orders for legacy and specialty semiconductors as artificial intelligence-driven demand squeezes production capacity worldwide.

The stronger-than-expected results come as non-AI sectors are dealing with a severe semiconductor shortage as global foundries increasingly prioritize capacity for AI-related demand. That has prompted many international and domestic clients to shift mature-node manufacturing orders to China, benefiting established players such as Semiconductor Manufacturing International Corp.

The Shanghai-based contract chip maker said Thursday that it expects industrial momentum and the spillover effects generated by AI to persist, driving broad-based chip demand.

The company's net profit more than tripled in the second quarter to $479.2 million, beating the $283.1 million expected by analysts in a Visible Alpha poll.

Revenue rose 36% from a year earlier to $3.01 billion, also exceeding market expectations and the company's own estimate.

SMIC's gross margin of 25.3% topped its 20%-22% guidance and reached the highest level in quarters. Its gross margins had been pressured by aggressive capacity expansion and the resulting surge in fixed depreciation and amortization costs.

In May, Co-Chief Executive Zhao Haijun said that the company negotiated higher prices with clients on products that were in short supply, and that the AI boom lifted demand for other supporting chips, such as SMIC's power-management chips.

Research firm TrendForce said in a June report that TV and personal-computer makers have accelerated production schedules and increased inventory levels for peripheral chips since the first quarter, prompting foundries to receive pull-in orders and additional customer bookings. Meanwhile, smartphone vendors likely also entered their new product build cycle in the second quarter. That appeared to be reflected in SMIC's wafer revenue from smartphones, which made up 25.2% of total quarterly revenue, up from 18.9% in the first quarter.

The company on Thursday forecast a further improvement in gross margin to between 26% and 28% in the third quarter, and said it expects quarterly revenue to rise 2%-4% sequentially, signaling that price increases amid the supply crunch are outweighing costs.

Despite aggressive expansion, the company's overall wafer utilization rate was 93.7% in the June quarter, up from 93.1% in the March quarter, it said.

To help ease supply constraints across the industry chain, SMIC said it "will flexibly allocate existing capacity and accelerate the qualification of newly added capacity."