SMIC, the Shanghai-based contract chipmaker, said in its third-quarter results on 12 November that revenue rose 33.9% from a year earlier to $3.19 billion, and profit attributable to owners of the company rose 123.4% to $428.4 million. Gross margin was 29.9%, up from 22.0%, and the utilization rate was 97.3%.
By our arithmetic on the release’s split by application, wafer revenue from smartphones fell about 10% from a year earlier, to about $437 million, while computer and tablet rose about 62% and industrial and automotive more than doubled. By our count, $3.19 billion is the highest quarterly revenue in the IFRS series SMIC publishes from 2012.
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A short explainer on how a few big pieces can make up most of a total. It teaches the general idea only and does not discuss SMIC.
The key insight: As we read the release, the record quarter came from more wafers at near-full factories rather than from phones: shipments rose 21.4% and utilization reached 97.3%, while smartphones fell to 14.3% of wafer revenue from 21.5%.
Revenue rose 6.1% from $3,005.6 million in the second quarter, “mainly due to the increase in wafer shipments in 3Q26”, the release says. Shipments were 3,033,683 standard logic 8-inch equivalent wafers, up 21.4% from a year earlier.
Gross margin rose from 25.3% in the second quarter “due to the increase in utilization rate and the product mix change in 3Q26”. Utilization was 97.3%, against 93.7% in the second quarter and 95.8% a year earlier, and monthly capacity rose to 1,116,750 standard logic 8-inch equivalent wafers from 1,096,500.
Profit from operations rose 102.3% to $710.1 million. Profit attributable to owners fell 10.6% from the second quarter’s $479.2 million, because other income swung from a $275.9 million gain to a $32.1 million loss; the share of profit or loss of associates went from a $193.8 million gain to a $23.0 million loss. The release says certain associates are investment funds whose gains came primarily from fair value changes.
SMIC wafer revenue by application in the third quarter of 2025 and 2026, in US$ million. The values are our arithmetic: revenue times the wafer share of revenue times each application’s share of wafer revenue, as given in SMIC’s release. The release rounds shares to one decimal place, so each value is approximate.SMIC quarterly revenue, US$ million, from the company’s Historical Financials workbook and its third-quarter 2026 release. The third quarter of 2025 was $2,381.8 million.
Which End Markets Grew
The release gives wafer revenue by application as shares. Smartphones were 14.3% of wafer revenue, down from 21.5% a year earlier; computer and tablet rose to 18.3% from 15.2%, and industrial and automotive to 19.3% from 11.9%. Consumer electronics was 40.6%, from 43.4%.
Wafers were 95.9% of revenue, so by our arithmetic wafer revenue was about $3,059 million, against about $2,267 million a year earlier. On those bases, smartphones fell from about $488 million to about $437 million, computer and tablet rose from about $345 million to about $560 million, and industrial and automotive rose from about $270 million to about $590 million.
By geography, China was 90.8% of revenue, up from 86.2%, and America 7.8%, down from 10.8%. By our arithmetic, China revenue rose about 41% to about $2,897 million, while America revenue fell about 3% to about $249 million. 12-inch wafers were 78.9% of wafer revenue.
Guidance, Capex and Cash
For the fourth quarter, SMIC expects revenue to increase 4% to 6% sequentially and gross margin in the range of 26% to 28%. The company says it “expands capacity in response to customer demand”.
Capital expenditure was $1,094.3 million in the third quarter, compared with $1,835.7 million in the second. Net cash generated from operating activities was $1,182.2 million, down from $2,522.1 million, as working capital and others took $756.3 million; trade and other receivables rose to $2,294.8 million from $1,512.8 million and inventories to $4,826.1 million from $4,360.9 million.
SMIC put $1,305.9 million of capital into associates in the quarter, and investments in associates rose to $3,789.9 million from $2,501.5 million. Net debt rose to $1,498.0 million from $162.3 million.
As we read the application split, by our arithmetic computer and tablet plus industrial and automotive added about $535 million of wafer revenue over the year, while smartphones lost about $50 million.
As we read the profit line, the year-on-year doubling came from operations, with profit from operations up 102.3%, while the drop from the second quarter came from other income, where gains on associates turned into a loss.
SMIC, Q3 2026 results announcement, 12 November 2026
“The Company expands capacity in response to customer demand, builds leading advantages through a high-value-added portfolio of premium products, strengthens operational resilience through the cycle, and strives for high-quality, sustainable growth.”
Three Implications
FOR SMIC The company guides fourth-quarter revenue up 4% to 6% sequentially, with gross margin of 26% to 28%, below the third quarter’s 29.9%.
FOR THE CUSTOMER MIX China was 90.8% of revenue, up from 86.2% a year earlier, and America 7.8%, down from 10.8%, according to the release.
FOR THE BALANCE SHEET Net debt rose to $1,498.0 million from $162.3 million in the quarter, as SMIC put $1,305.9 million of capital into associates.
The framework says of the foundries and packaging layer: “Allocation power at the foundry is now more consequential than chip design itself.”
As we read it, a foundry running at 97.3% utilization, with 90.8% of revenue from China, is one quarter’s trace of that allocation question inside one country. The framework names TSMC, Samsung and Intel Foundry for that layer and does not discuss SMIC; the read is ours.
What Is Not Established
The release gives no revenue figure for AI-related products and does not tie the computer and tablet growth to AI; it credits wafer shipments, utilization and product mix. Our dollar figures by application and region are estimates from shares rounded to one decimal place, so each is approximate.
SMIC’s conference call is scheduled for 13 November, after this piece; we did not hear it and did not contact SMIC.
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SMIC’s third-quarter revenue rose 33.9% to $3.19 billion and attributable profit rose 123.4% to $428.4 million, with utilization at 97.3%. By our arithmetic, smartphone wafer revenue fell about 10% over the year while computer and tablet rose about 62%, and China made up 90.8% of revenue.
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A note on sourcing. We read SMIC’s announcement to the Hong Kong Stock Exchange of 12 November 2026, its unaudited results for the three months ended September 30, 2026, in full, and the revenue row of the Historical Financials workbook on SMIC’s website, which runs from the first quarter of 2012. Dollar figures by application and region, the year-on-year changes derived from them and the record comparison are our arithmetic. We did not hear the conference call, which is scheduled for 13 November, and did not contact SMIC.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
