China's largest contract chipmaker, Semiconductor Manufacturing International Corp (SMIC), expects its first quarter revenue to stay flat. This is because a drop in low-end product orders offsets the rise in demand for AI memory chips. In 2025, SMIC reported a 16.2% revenue increase to US$9.3 billion and a 39% jump in net profit to US$685.1 million. This growth came from higher wafer shipments, better utilization, and product mix changes. However, profits missed analyst estimates, causing SMIC's shares to fall 3% in Hong Kong and 1.3% in Shanghai. Co-CEO Zhao Haijun said orders for smartphones and lower-end items were “squeezed” due to the strong AI chip demand. He added SMIC remains “well positioned” and plans to boost revenue in 2026 by meeting urgent market needs. The semiconductor sector faces a memory chip shortage as AI data center demand spikes production and costs. SMIC shipped 9.7 million wafers in 2025, a 21% rise, with a capacity utilization of 93.5%. The company recently raised prices by 10% on some production lines, driven by power-management and AI chip demand. Domestic efforts in China to boost chip self-reliance keep SMIC’s demand high. Q4 revenue grew 13% to US$2.49 billion, beating analyst estimates, while profit rose 61% to US$172.9 million but still fell short of expectations. Globally, semiconductor sales hit a record US$791.7 billion in 2025, up 25.6%, with a forecast of US$1 trillion in 2026. Other chipmakers like Taiwan Semiconductor are also expanding capacity, reporting strong revenue and profit growth, driven by AI chip demand.