An AI-generated image of a chip Photo: VCG

Chinese semiconductor giants Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Grace Semiconductor on Thursday posted strong results for the second quarter of 2026. The rapid growth of China's domestic chip manufacturing sector highlights the strong industrial spillover and broader boost generated by artificial intelligence (AI), an industry expert said. 

SMIC said on its official WeChat account that revenue reached $3.01 billion in the second quarter of 2026, up from $2.51 billion in the first quarter and $2.21 billion in the same period last year.

Gross profit rose to $760.6 million in the second quarter, compared with $503.6 million in the previous quarter and $449.8 million a year earlier. Its gross margin increased to 25.3 percent from 20.1 percent in the first quarter and 20.4 percent in the second quarter of 2025.

For the third quarter of 2026, SMIC expects revenue to increase by 2 percent to 4 percent quarter on quarter under International Financial Reporting Standards (IFRS), with gross margin projected at between 26 percent and 28 percent, the company said.

Also on Thursday, Hua Hong Grace Semiconductor said that its second-quarter gross margin came in at 16.5 percent, above the market estimate of 14.9 percent. Revenue reached a record $717.5 million, beating the estimated $702.7 million, while net profit stood at $38.6 million, slightly below the forecast of $39.4 million.

For the third quarter, Hua Hong Grace Semiconductor expects revenue of between $770 million and $780 million, with gross margin projected at 16 percent to 18 percent, compared with a market estimate of 16.6 percent.

Bai Peng, chairman and president of Hua Hong Grace Semiconductor, said that since the beginning of the year, artificial intelligence has continued to drive demand growth across the global semiconductor industry. The demand was first reflected in memory chips and has gradually expanded to logic and analog chips related to AI applications, according to media reports.

Ma Jihua, a veteran industry analyst, told the Global Times that China's domestic semiconductor sector is benefiting from several factors at once, including strong downstream demand, policy support and market space created by US restrictions on semiconductor exports to China.

Chinese semiconductor companies are not only making steady progress in addressing technological bottlenecks, but are also building stronger capabilities across R&D, manufacturing and mass production, while increasingly competing in overseas markets, Ma said, adding that domestic products already enjoy a notable cost advantage and have significantly narrowed the technological gap with leading international players, putting the industry in a period of accelerated expansion. 

The rapid expansion of AI applications has provided another major boost, Ma said, pointing to growing demand from robotics, smart homes and intelligent driving. Together with strong policy support for the "AI Plus" initiative and sustained capital-market interest in semiconductors, this has driven investment across the entire chip R&D and manufacturing chain and strengthened the sector's growth momentum, he said.