AI infrastructure demand is putting more pressure on China’s chip supply chain, and SMIC is preparing to add capacity as orders run ahead of earlier forecasts.
SMIC is weighing additional equipment at existing fabs, accelerating new production lines, and raising prices on some constrained capacity after utilization reached 93.7% in the second quarter. Demand is especially strong for mature-node logic, power-management, and optical components used in AI servers and data centers.
For APAC distributors, OEMs, systems integrators, and infrastructure partners, the pressure could translate into tighter component availability, higher sourcing costs, and less flexibility when planning AI deployments.
SMIC looks for more room as fabs fill up
Reuters reported that Semiconductor Manufacturing International Corporation (SMIC) plans to adjust existing capacity and accelerate the ramp-up of new production lines as AI-related demand continues to support foundry orders.
Monthly production capacity reached about 1.1 million 8-inch-equivalent wafers in the second quarter, while utilization climbed to 93.7%. SMIC shipped 2.9 million 8-inch-equivalent wafers during the quarter, up 14% from the previous three months.
Average wafer selling prices also increased 5.7%, while quarterly revenue topped $3 billion for the first time. The foundry added another 8,000 wafers of monthly 12-inch capacity, and first-half capital spending reached $3.4 billion.
AI demand reaches chips surrounding the processors
The capacity squeeze is not limited to the CPUs and GPUs normally associated with AI infrastructure.
South China Morning Post said that SMIC is considering adding equipment at existing factories after customer orders exceeded forecasts made earlier this year.
Demand has been particularly strong for logic chips, power-management products, and optical module components used in AI servers and data centers. SMIC co-CEO Zhao Haijun said orders for some BCD power-management products were visible through the end of 2027, according to SCMP.
Management has said utilization generally tops out at around 95% because some capacity is used for research and development, engineering, and product qualification.
For channel partners supplying AI infrastructure, that leaves limited headroom if customer demand rises faster than new equipment can be installed. Distributors and OEM partners may need to pay closer attention to allocations, lead times, and pricing for mature-node components rather than focusing only on advanced AI processors.
Higher wafer prices add to sourcing pressure
SMIC has already raised prices for some supply-constrained capacity following negotiations with customers earlier this year.
Reuters noted that the company would charge more for wafers processed in the third quarter. SCMP said those increases were targeted rather than portfolio-wide, with smartphone chips and display-driver ICs excluded because demand in consumer electronics remained weaker.
China accounted for about 90% of SMIC’s second-quarter revenue, keeping the immediate supply pressure centered on the Chinese market. APAC partners with exposure to Chinese component suppliers or regional AI infrastructure projects could still encounter higher costs or tighter availability as demand builds.
SMIC expects third-quarter revenue to grow another 2% to 4% from the second quarter. For channel companies, the next indicators are how quickly SMIC can add equipment, whether mature-node shortages spread to more product categories, and how pricing changes as customers secure capacity for 2027.
Also read: AI infrastructure pressure is also showing up on the power side, with Amazon backing a 7.65GW gas plant to support a Texas data center.