SMIC’s Grim 2026 Forecast: Automotive and Consumer Tech Brace for a Bloodbath
Buckle up—the chip giant just flashed warning lights for two of tech's biggest sectors.
Semiconductor storm clouds gather
SMIC's crystal ball shows shrinking margins and inventory pileups coming for carmakers and gadget makers alike. The 'supply chain renaissance' narrative? About to hit a pothole.
Who gets hit hardest?
Automotive suppliers betting on endless EV demand might need to revisit those rosy projections. Consumer electronics? Say goodbye to pandemic-era shopping sprees as wallets snap shut.
Funny how these 'unexpected' downturns always seem to arrive right after executives cash out their stock options. But sure—this time it's different.
Warning from SMIC about 2026 production
The biggest global producers of memory chips are Micron in the United States and South Korea’s SK Hynix and Samsung. Zhao believes the current memory market is in short supply and prices have “surged significantly,” which creates more pressure for device makers.
According to him, the ongoing “super cycle” in the memory sector is pushing customers to negotiate lower prices for other types of chips in order to balance the rising cost of memory components.
Zhao said that prices for memory chips are expected to surge because the cost to run the business is increasing. Manufacturers also have to be cautious about committing too early or too heavily.
Companies in China are holding back on placing large orders for other chips and hardware components, since the memory shortfall could limit how many finished devices they can build.
SMIC’s own capacity and investment
SMIC says demand currently exceeds its own supply capabilities, and its capital expenditure will remain flat or only increase slightly compared with the $7.33 billion from last year.
SMIC’s revenue ROSE by 9.7% from a year earlier to $2.38 billion, supported by solid local demand, and its profit increased by 28.9% to $191.75 million. Both figures were above analysts’ expectations. The company’s monthly production capacity also grew by 3.2% from the previous quarter to 1.02 million eight-inch equivalent wafers, with utilization rising to 95.8% from 92.5%.
The company shipped 2.5 million equivalent wafers in the quarter, up by 4.6% from the previous three months. China remained its largest market, making up 86% of revenue, up slightly from the previous quarter, while the U.S. contributed 11%, down from 13%.
Consumer electronics excluding smartphones, computers, tablets, and industrial or automotive chips also grew quarter-to-quarter, driven by strong local demand. Zhao said this was because SMIC’s customers gained more market share in China.
In China, domestic production of electronics is important, and companies like Huawei Technologies Co. rely on local suppliers such as SMIC, so resolving the memory shortage is crucial to avoid disruptions within the industry.
This shows that the boom in AI is not only affecting advanced chips but also more basic memory chips. When chipmakers focus on high-end AI parts, there are fewer chips left for everyday products.
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