• SMIC (0981.HK), China's largest foundry, has increased prices on some production capacity by approximately 10%, according to people familiar with the matter.
  • The move aligns with broader semiconductor industry trends, driven by high demand from AI, EVs, and memory sectors, alongside tariff pressures.
  • Analysts note that SMIC's strong Q2 2025 revenue growth and domestic chip demand support this pricing adjustment, though profit margins face headwinds from depreciation costs and geopolitical constraints.

SMIC's price hike, reported by sources close to the negotiations, reflects a tightening global semiconductor market where sales hit $627 billion in 2024 with 19% growth, and are projected to reach $697 billion in 2025. The company, which holds a 5.1% global market share as the world's third-largest foundry, is leveraging its position to navigate cost pressures from U.S. and Dutch export controls that limit access to advanced EUV tools. "Efforts to optimize pricing have become essential as we balance domestic demand with international challenges," one insider noted, though SMIC did not immediately respond to requests for comment.

Industry watchers point to similar moves elsewhere, with TSMC (TSM) considering 10% increases on advanced wafers and memory firms like Samsung (SSNLF) and Micron (MU) signaling price rises into late 2025. SMIC's decision comes as it ramps up production of mature and advanced nodes, including 7nm processes, producing up to around 30,000 wafers monthly despite technological hurdles. The price adjustment is partly a response to tariffs that have boosted orders for domestic substitution in China, where companies seek self-reliance amid ongoing restrictions.

Financial performance underpins this shift: SMIC reported robust Q2 2025 revenue growth, driven by high capacity utilization, though profits were squeezed by depreciation costs accounting for 35.6% of wafer prices. Its stock has surged over fourfold by September 2025, mirroring an industry recovery from the 2023 downturn. Without such pricing strategies, the company could face intensified margin compression, especially as it eyes a push to 5nm processes by end-2025 with higher costs compared to competitors like TSMC.

In the short term, the semiconductor sector is poised for continued growth of 10-17% into 2025, fueled by AI and memory tightness. SMIC's focus on mature nodes for volume production may offer a buffer, but experts caution that geopolitical risks and tariff preparations loom large. As one analyst put it, "This isn't just about SMIC—it's a sign of how global supply chains are adapting under pressure." The company's actions highlight a broader trend where regional shifts, such as increased investments in the Americas under initiatives like the CHIPS Act, reshape competitive dynamics.

Updates: This article reflects pricing discussions as of late 2025; market conditions may evolve with ongoing tariff negotiations and technological advancements.