In the first half of 2025, driven by the explosive growth of AI technology and domestic consumption subsidies promoting device replacement demand, the semiconductor cycle has emerged from the bottom and shown recovery momentum.

According to TrendForce statistics, the combined revenue of the world's top ten foundries reached $41.718 billion in Q2 2025, up 14.6% quarter-over-quarter. However, it's worth noting that while the industry as a whole entered recovery territory, internal differentiation intensified, with TSMC's dominant position continuing to strengthen and the market share of other major players being eroded.

In Q2 2025, TSMC recorded revenue of $30.24 billion, with global market share rising 2.6 percentage points quarter-over-quarter to 70.2%, while the remaining nine major foundries all experienced varying degrees of market share decline.

Market analysts believe that the explosive demand for AI and HPC has shifted foundry competition focus from traditional "advanced processes" to "advanced packaging." Three-dimensional packaging technologies like CoWoS and SoIC have become scarce bottlenecks determining AI chip shipment volumes, and TSMC's absolute leading advantage in both advanced processes and advanced packaging will deepen customer relationships and further strengthen the company's competitive moat.

Meanwhile, Chinese foundries continue to achieve scale in mature processes, carving out a path through pricing and depreciation pressures. Previously, mature process products experienced severe inventory buildup due to factors including weakness in the consumer electronics supply chain, but in the first half of 2025, inventory clearing was largely completed, pricing pressure eased, and domestic foundries saw varying degrees of recovery in both revenue and profitability.

Looking at revenue growth rates for the first half of 2025, SMIC > Hua Hong Semiconductor > Nexchip, with year-over-year revenue growth of 23.14%, 19.09%, and 18.21% respectively. From a gross margin perspective, Nexchip > SMIC > Hua Hong Semiconductor, with gross margins of 25.76%, 21.91%, and 17.57% respectively. SMIC's gross margin improved 8 percentage points compared to the same period last year, while Hua Hong Semiconductor and Nexchip also achieved 1-2 percentage point gross margin improvements.

With demand recovery, foundries are actively expanding capacity, with capacity utilization rates rising alongside capacity expansion as capital expenditures continue to increase to drive growth.

In the first half of 2025, SMIC added nearly 20,000 wafers per month of 12-inch standard logic capacity, with capacity utilization reaching 92.5% in Q2 2025, up 2.9 percentage points quarter-over-quarter. SMIC's capital expenditure in Q2 2025 was $1.885 billion, up 33.18% quarter-over-quarter.

Currently, SMIC operates 3 8-inch and 7 12-inch production lines, maintaining an expansion pace of adding 50,000 12-inch wafers of capacity annually. According to previous company announcements, management believes that absent major changes in the external environment, 2025 capital expenditure will be roughly similar to the previous year, approximately $7.33 billion.

Market analysts view capital expenditure as a "double-edged sword," noting that invested assets must precisely match market demand and adapt to industry cycles to generate benefits.

Looking at SMIC's revenue performance, the company's business improvement in the first half of 2025 was mainly driven by three sectors: computers & tablets, consumer electronics, and industrial & automotive. Specifically: 1) Consumer electronics segment: RMB 12.384 billion, up 53.80% year-over-year; 2) Smartphone segment: RMB 7.467 billion, down 1.67% year-over-year; 3) Computers & tablets segment: RMB 4.917 billion, up 33.31% year-over-year; 4) Communications & wearables segment: RMB 2.519 billion, down 13.63% year-over-year; 5) Automotive & industrial segment: RMB 3.066 billion, up 65.15% year-over-year.

It is recommended to monitor the recovery momentum in high-proportion segments such as consumer electronics and smartphones. Additionally, the automotive & industrial segment's revenue contribution reached a new high of 9.48%, warranting attention to this sector's future performance.