Semiconductor Manufacturing International Corp. projected a sharp acceleration in sales for the second quarter, forecasting revenue growth of up to 16% as China’s top chipmaker sees a recovery in demand.
"The company gave revenue guidance of 14% to 16% quarter-on-quarter growth for the second quarter," SMIC said in a statement. "The gross margin is guided to be in the range of 20% to 22%."
For the first quarter, China’s largest contract chip manufacturer reported sales of $2.505 billion, a slight increase of 0.7% from the previous quarter. Its gross margin for the period was 20.1%, an increase of 0.9 percentage points from the fourth quarter of 2025. The stronger-than-expected guidance suggests a potential turning point for the Chinese semiconductor industry, which has been navigating US trade restrictions and a broader market downturn.
The bullish outlook from SMIC could boost investor confidence in China's domestic chip sector and its efforts to build a self-sufficient supply chain. The company's performance is a key barometer for the health of China's technology industry amid ongoing geopolitical tensions with the United States. Investors will be watching to see if the company can achieve its guidance, which would signal a significant rebound in both pricing and utilization.
The robust second-quarter forecast from Semiconductor Manufacturing International Corp. (SMIC) suggests a rebound is taking hold in China's chip market, following a period of sluggish demand and intense competition. The guided range of 14% to 16% sequential revenue growth significantly outpaces the 0.7% growth seen in the first quarter, indicating that client orders are picking up momentum.
The projected improvement in gross margin to between 20% and 22% further supports this view. This suggests SMIC is seeing improved pricing power and higher factory utilization rates after a period where a supply glut pressured margins across the industry. The company's ability to expand profitability while ramping up output will be a critical factor for investors.
SMIC remains at the center of the tech rivalry between the U.S. and China. Washington has implemented export controls aimed at restricting China's access to advanced semiconductor technology, directly impacting SMIC and its domestic peers like Hua Hong Semiconductor. Despite these challenges, SMIC is pushing ahead with capacity expansion to serve Chinese clients like Huawei Technologies Co., which are increasingly turning to domestic suppliers.
The company's results and guidance are closely watched for signs of how effectively China is building its domestic semiconductor ecosystem. A sustained recovery for SMIC would suggest that local demand and government support are helping to offset the impact of American sanctions.
The positive forecast from the nation's chip champion may lift the entire Chinese semiconductor sector. The strong demand signal could indicate that the inventory correction that plagued the industry is nearing its end. This could benefit other players in the supply chain, from equipment makers to materials suppliers.
The guidance implies a significant rebound in the second half of the year. Investors will watch the Q2 earnings call for further details on demand drivers and the sustainability of the margin recovery.
This article is for informational purposes only and does not constitute investment advice.
