SMIC reports record 2025 revenue and lower gross profit margins due to 7nm challenges and increased depreciation

SMIC's Q4 2025 revenue reached $2.489 billion, a 4.5% increase quarter-over-quarter and 12.8% year-over-year. Full-year 2025 revenue hit a record high of $9.327 billion. Net profit attributable to shareholders was $173 million in Q4 2025, down 9.9% QoQ but up 60.7% YoY. Gross profit margin for Q4 2025 decreased to 19.2% from 22.0% in Q3 2025 and 22.6% in Q4 2024. The company expects Q1 2026 gross profit margin to be 18%-20%. The decline in gross margin is attributed to increased depreciation and lower yields on 7nm-equivalent nodes. The increase in Q4 2025 revenue was mainly due to a 3.8% rise in average selling price (ASP), supported by an improved 12-inch wafer shipment mix, while shipment volume increased only 0.6%. China-related sales accounted for approximately 90% of total quarterly revenue. Consumer electronics was a key growth driver, increasing 10% QoQ, representing 47% of Q4 2025 revenue. Capital expenditure for 2025 reached $8.1 billion, exceeding initial forecasts, and is expected to remain flat in 2026. SMIC's 8-inch wafer monthly capacity reached 1.059 million units by year-end, an increase of 111,000 units YoY, with an average annual utilization rate of 93.5%. The company plans to increase 12-inch wafer production capacity by approximately 50,000 units in 2025 and an additional 40,000 units per month by the end of 2026. Total depreciation in 2026 is expected to increase by about 30% YoY due to new factory depreciation.