At last week’s earnings calls, China’s two leading foundries, SMIC and Hua Hong, reported utilization rates of 93.7% and 102.8%, respectively, underscoring how tightly stretched their capacity has become. Beyond pricing power, the foundries’ next moves on capacity allocation and expansion are now drawing close attention.
According to the South China Morning Post, SMIC is considering additional equipment investments at existing fabs as demand for mature-node chips supporting AI processors continues to outstrip expectations.
SMIC Co-CEO Zhao Haijun, as noted by the report, said wafer starts are now far exceeding previous expectations, as AI server and data-center demand fuels stronger orders for supporting chips, including logic, power-management and optical components. BCD power-management products, in particular, are already booked through the end of 2027, he added.
The surge comes as SMIC’s fabs are running near their practical ceiling. South China Morning Post reports that SMIC’s capacity utilization climbed to 93.7% in the second quarter from 93.1%. The company plans to keep utilization around 95%, preserving about 5% of capacity for R&D rather than pushing production lines to their absolute limits, the report suggests.
Against this backdrop, Zhao said SMIC is revisiting its expansion plans and could add equipment at existing fabs with available space, with more details to come in future announcements and briefings, South China Morning Post reports.
According to Reuters, SMIC lifted monthly capacity by 1.7% QoQ to 1.1 million 8-inch-equivalent wafers in the second quarter. The company also added 8,000 wafers of monthly 12-inch capacity during the period.
On the other hand, Hua Hong maintained higher capacity utilization than SMIC: in the second quarter, its overall utilization reaching 102.8%, up 3.1 percentage points QoQ.
According to Securities Times and Wallstreetcn, on the capacity front, Hua Hong’s monthly capacity reached 508K 8-inch-equivalent wafers at the end of the second quarter, up from 489K at the end of the first quarter. With utilization remaining elevated, the company also saw average product prices rise further, providing solid support for record-high revenue, the reports note.
Against the backdrop of utilization exceeding 100%, Hua Hong has several capacity-related projects underway, including the Fab 9B project in Wuxi and its acquisition of HLMC’s Fab 5. According to Sina, Fab 9B project is expected to receive a total investment of RMB 3.8 billion and be completed by January 2027, with plans to build a 12-inch specialty process production line with monthly capacity of 55K wafers.
Another Shanghai Securities Times report notes that Hua Hong’s acquisition of HLMC received registration approval from the China Securities Regulatory Commission (CSRC) in July 2026. Once completed, the transaction is expected to further strengthen the company’s technology portfolio, enhance economies of scale and improve profitability, providing fresh momentum for future growth.
