Semiconductor Manufacturing International Corporation (SMIC)
China's largest chip foundry and the linchpin of Beijing's semiconductor self-sufficiency drive: SMIC makes the DUV-only 7nm silicon behind Huawei's Kirin phones and Ascend AI chips, under three overlapping US sanctions regimes.
Background
SMIC was founded on April 3, 2000 in Shanghai (incorporated in the Cayman Islands) and grew into mainland China's largest pure-play foundry and, since Q1 2024, the world's third-largest by revenue (~6% share, having overtaken GlobalFoundries). It is run by co-CEOs Zhao Haijun and Liang Mong Song (both ex-TSMC/Samsung veterans). SMIC is dual-listed — HKEX 0981 (H-shares) and Shanghai's STAR Market 688981 (its 2020 IPO raised ~46.3bn yuan / ~$6.6B, among the largest ever) — after voluntarily delisting from the NYSE in May 2019 amid the trade war and Huawei fallout. Partially state-owned, it is a designated pillar of China's military-civil fusion and chip self-sufficiency campaign.
Its defining capability is being mainland China's only producer of 7nm-class logic, via its N+2 process using DUV multi-patterning rather than EUV lithography (which US and Dutch controls deny it — SMIC ordered an ASML EUV scanner that was never delivered). It reached 7nm in July 2022; the N+2 node powers Huawei's Kirin 9000S (Mate 60, 2023) and the Ascend 910C AI accelerator, and a newer N+3 variant (Kirin 9030, late 2025) that TechInsights rates 7nm/6nm-equivalent, approaching but short of true 5nm. Its stack officially spans 350nm-7nm but is dominated by mature 28nm-and-above nodes.
Financial footing
- CONFIRMED: 2025 revenue $9.33B (+16.2% YoY, world's No.3 foundry)
- ~$7.5B capex
- N+2 7nm reached July 2022
- Fabricates Huawei Kirin 9000S/9020 and Ascend 910C
- Dec 2025 issued 547M shares (~$6B) to buy out the 49% of its Beijing subsidiary (SMNC) held by state funds
- 2020 STAR IPO raised ~$6.6B
- REPORTED/UNCONFIRMED: 2026 revenue >$11B (projection)
- Exact split of fielded Ascend compute made at SMIC vs stockpiled TSMC dies
- Backers: State capital: China's 'Big Fund' (National IC Industry Investment Fund) became the third-largest shareholder after the Dec 2025 buyout of its Beijing subsidiary; state vehicles (China IC Fund I/II, Shanghai IC Fund I/II) plus ultimate SASAC / PRC Ministry-of-Finance links; historically a Datang Telecom (state civ/military telecom) stake. Partially state-owned throughout.
SMIC posted record 2025 revenue of $9.33B (+16.2% YoY) and management has guided 2026 above $11B; it is China's revenue leader and the world's No.3 foundry. Capex ran ~$7.5B in 2025 behind an aggressive multi-fab build-out (Shanghai, Beijing, Shenzhen, Tianjin), compressing full-year gross margin to ~21% (Q4 guided 18-20%) as new-fab depreciation weighs even at ~93.5% average utilization. Wafer shipments rose ~21% to roughly 9.7M 8-inch-equivalents.
About 84% of revenue comes from the Chinese market and ~13% from the US. Growth is underwritten by state capital: in a December 2025 deal SMIC issued 547M new shares (~$6B) to buy out the 49% of its Beijing subsidiary (SMNC) still held by state funds, a transaction that made the 'Big Fund' its third-largest shareholder. Market cap fluctuates widely across its HK and STAR lines (HK 0981 near HK$790B, with A-shares at a large premium) — verify before use.
Major customers & contracts
SMIC's flagship strategic customer is Huawei/HiSilicon: its N+2 7nm line fabricates the Kirin 9000S/9020 smartphone SoCs (Huawei Mate 60/70) and the Ascend 910C, China's leading AI training/inference accelerator, plus the N+3 Kirin 9030. Historically SMIC also served Qualcomm, Broadcom and Texas Instruments, but sanctions have shifted its book toward domestic clients (~84% of revenue).
The bulk of volume, however, is mature-node (28nm and above) for automotive, industrial, IoT, power-management and consumer chips — the trailing-edge business that funds the advanced-node push. Its scarce advanced-node capacity (~20,000 7nm wafers/month, with reports of ~30,000 and plans to double in 2026) is effectively reserved for Huawei's AI and mobile silicon, the top priority of China's self-sufficiency program.
Leadership & contact surface
Leadership: Zhao Haijun & Liang Mong Song (co-CEOs)
Official site: https://www.smics.com
Competitive position
SMIC is generations behind the leaders. TSMC and Samsung are in volume 3nm/2nm with EUV; SMIC is capped at 7nm-class using DUV multi-patterning, yielding ~60-70% versus TSMC's ~76% on EUV-based N7, at far lower volume and higher cost. It cannot make true 5nm and, absent EUV, is not expected to in the near term. Within China it is the clear leader — the mainland's only 7nm producer — ahead of Hua Hong (mature nodes) and well ahead of nascent domestic players, with the state consolidating capital behind it through the Big Fund.
Its edge is strategic rather than technical: it is the sole domestic foundry able to fabricate advanced logic for Chinese AI and defense end-users precisely when TSMC and Samsung are legally off-limits to them. That makes SMIC indispensable to Beijing even while it trails the global frontier — a national-champion moat built on sanctions and subsidy, not on process leadership.
Battlefield relevance
SMIC is where China's chip-sovereignty and military-AI ambitions converge. Its 7nm silicon underpins Huawei's Ascend 910C — the accelerator behind Chinese AI training clusters (e.g. CloudMatrix) with obvious military-AI, autonomy, electronic-warfare and targeting applications — and the domestic SoCs replacing sanctioned foreign parts. It is the intended end-run around US export controls: build advanced-node capacity onshore that TSMC is barred from supplying to China's defense sector.
But the end-run is constrained. Per CFR, SMIC is 'stuck at 7nm,' the Ascend performs ~60% of an Nvidia H100, and Huawei's own roadmap shows 2026 chips regressing — evidence the controls bite. Caveat: TSMC illicitly fabricated ~2.9M Ascend dies for Huawei in 2023-24, so how much fielded Ascend compute is truly SMIC-made versus stockpiled TSMC dies remains unconfirmed.
Sources & verification
- TrendForce — SMIC 1H25 Net Profit Rises 35.6%, 7nm Capacity Reportedly to Double in 2026 (2025-08-29)
- Tom's Hardware — Trailing-edge foundry roadmaps for GlobalFoundries, UMC, and SMIC (2026-05-28)
- Council on Foreign Relations — China's AI Chip Deficit: Why Huawei Can't Catch Nvidia (2025-12-15)
- Federal Register — Notice of Availability of Designation of Chinese Military Companies (Section 1260H) (2025-01-07)
- U.S. DoD — Entities Identified as Chinese Military Companies (1260H list, Jan 2025)
- Dorsey & Whitney — Biden Administration Releases NS-CMIC List and Section 1260H List (SMIC on NS-CMIC) (2021)
- OFAC (U.S. Treasury) — Chinese Military Companies Sanctions / NS-CMIC List (EO 13959, as amended by EO 14032)
- South China Morning Post — China's Big Fund becomes SMIC's third-largest shareholder after record Star Market buyout (2025)
- Wikipedia — Semiconductor Manufacturing International Corporation (corporate facts, listings, Entity List history)