Semiconductor Manufacturing International Corporation (SMIC) reported higher revenue in the fourth quarter of 2025, supported by strong wafer shipments and high factory utilization. However, margins declined as depreciation expenses rose following capacity expansion.
Fourth-quarter revenue reached nearly USD 2.49 billion, up 4.5% from USD 2.38 billion in the third quarter and up 12.8% from USD 2.21 billion a year earlier. Full-year revenue totaled USD 9.33 billion, an increase of about 16.2% from 2024.
Despite revenue growth, profitability softened in the quarter. Gross profit fell to USD 478.1 million, compared with USD 522.8 million in the previous quarter and USD 499 million a year earlier. Gross margin declined to 19.2%, down from 22.0% in the third quarter and 22.6% in the fourth quarter of 2024.
Management attributed the margin pressure mainly to higher depreciation. Depreciation and amortization totaled USD 1.07 billion in the quarter, rising both sequentially and year over year as new capacity came online.
Revenue rose 4.5% sequentially in the fourth quarter, while capacity utilization remained high at 95.7%. The figures indicate solid production volumes. However, the additional fixed costs associated with expansion reduced margins, even with factories running near full capacity.
For the full year, the company reported profit attributable to owners of USD 685.1 million, up 39.1% from USD 492.7 million in 2024. It said the increase was driven by higher wafer shipments, improved utilization rates, and changes in product mix.
Total wafer shipments reached approximately 9.7 million eight-inch equivalent wafers in 2025. Annual utilization rose by eight percentage points year-on-year to 93.5%. By year’s end, monthly capacity had increased to about 1.06 million eight-inch equivalent wafers, up roughly 111,000 wafers from the end of 2024.
Capital expenditure for 2025 totaled USD 8.1 billion, reflecting continued investment in new fabrication plants and equipment. The company expects 2026 capital expenditure to be roughly flat, suggesting spending will remain elevated.
The financial results show the tradeoff between expansion and profitability. Although revenue increased, gross margin narrowed from the previous quarter. High utilization has not yet translated into stronger operating leverage, as new capacity continues to add costs.
Revenue mix in the fourth quarter shifted further toward consumer markets. Consumer electronics accounted for 47.3% of wafer revenue, up from 40.2% a year earlier. Smartphone-related revenue represented 21.5%, while industrial and automotive applications contributed 12.2%. Greater exposure to consumer segments may support volumes in the near term but also increases sensitivity to demand cycles.
For the first quarter of 2026, the company expects revenue to remain flat sequentially and gross margin to range between 18–20%. The guidance suggests that margin pressure may persist in the near term.
SMIC’s management said 2026 will present opportunities from the reshoring of parts of the semiconductor supply chain, as well as challenges from the memory cycle. It expects full-year 2026 revenue growth to exceed the industry average in its markets, assuming no significant changes in the external environment.
The outlook highlights the dual forces shaping SMIC’s trajectory. On one side, the localization of semiconductor supply chains continues to support demand for domestic foundries. On the other, the global semiconductor industry remains cyclical, particularly in memory and consumer segments.
Overall, SMIC recorded strong volume momentum in 2025. Higher shipments and sustained utilization drove revenue growth. At the same time, rising depreciation tied to large-scale capital spending compressed margins, and near-term guidance suggests that this pressure may continue into early 2026.
Going forward, SMIC’s performance will depend not only on maintaining high utilization, but also on whether additional revenue and improvements in product mix can absorb its growing cost base from ongoing capacity expansion.