By Sherry Qin
Semiconductor Manufacturing International Corp. finished 2025 on a strong note, with annual revenue crossing the $9 billion mark, as the Chinese contract chip maker cashes in on domestic orders amid China's push for tech self-sufficiency.
SMIC, China's largest and most advanced chip foundry, is widely seen as a proxy for Beijing's chip-making ambitions amid U.S. export restrictions and the countries' race for dominance in artificial intelligence.
The Shanghai-based company on Tuesday reported a 61% rise in fourth-quarter net profit from a year earlier to $172.85 million, above the $139.5 million analysts polled by FactSet had expected.
Revenue increased 13% to $2.49 billion, also exceeding the company's guidance and market estimates. That brought the annual total to $9.33 billion, topping 2024's $8.03 billion.
The chip maker's quarterly gross margin narrowed to 19.2% from 22% in the third quarter, weighed by rising depreciation costs from expanding capacity and yield issues during the ramp-up of more advanced technology.
SMIC offered a cautious outlook for the first quarter, expecting revenue to be flat sequentially and gross margin in the 18%-20% range.
The company flagged both opportunities from chip localization and challenges brought by surging memory prices in 2026. Revenue growth this year is expected to be higher than the industry average, while capital expenditure will likely be flat after reaching $8.1 billion in 2025, it said.
SMIC has been a big beneficiary of the U.S.-China tech rivalry and Beijing's push for greater self-reliance in core technologies, with its Hong Kong-listed shares jumping 125% last year.
The stock has been volatile of late, however, as investors worry that easing U.S. export rules may diminish the appeal of locally made AI chips and disrupt China's tech self-reliance thesis. The U.S. and China reached a trade truce in late October, and in December, President Trump said he would allow Nvidia to export its H200 chips to China.
Bernstein analysts noted global concerns about an AI bubble forming, driven by tech giants' lofty investments, but don't think that is the case in China.
"It's just the end of the beginning for China's AI story," they said in a recent note.
More than half a dozen Chinese chip makers, especially AI chip designers, have listed in Shanghai and Hong Kong in recent months, seeking to tap the capital market to continue investing in research and development.
Bernstein expects China's advanced-chip production capacity to ramp up rapidly over the next three years, alleviating the AI-chip supply bottleneck to some extent.
Late last year, SMIC announced a capital injection in SMSC that would boost the unit's registered capital by 55% to $10.1 billion. The move, made with existing shareholders and new investors, including China's Integrated-Circuit Fund, is expected to be completed by the end of 2026.
The capital injection could support SMSC's focus on advanced semiconductor production and China's chip self-sufficiency drive in the long term, analysts said.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
February 10, 2026 05:36 ET (10:36 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.