SMIC plans capacity expansion amid surging demand for AI chips

SMIC Considers Expanding Capacity as AI Chip Demand Surges Beyond Forecasts

Semiconductor Manufacturing International Corporation (SMIC), China’s largest chip foundry, is evaluating capacity expansion plans after witnessing an unexpected surge in demand for mature-node chips used in AI-related applications. The company revealed that shortages are now extending to these older-generation chips, with some AI-driven demand projected to persist through the end of 2027.

Mature-Node Chips in High Demand

Speaking during an earnings call, SMIC co-CEO Zhao Haijun disclosed that the company is seeing wafer start volumes—new chip batches entering production—far exceed earlier projections. To address this, SMIC is considering installing additional equipment at existing facilities where space permits. Details on these adjustments will be shared in future announcements, Zhao added.

The heightened demand stems largely from supporting components in AI servers and data centres, including logic chips, power-management products, and optical module components. Zhao specifically noted that orders for BCD (bipolar-CMOS-DMOS) power-management chips are already visible through late 2027, underscoring the sustained nature of this demand.

Why It Matters

The surge in demand highlights the critical role of mature-node chips in the AI ecosystem, particularly as supporting components for advanced AI processors. This trend also signals a shift in market dynamics, where older-generation technologies are becoming indispensable for cutting-edge applications like AI servers and data centres. SMIC’s potential capacity expansion could help alleviate shortages and position the company to better meet the growing needs of the AI sector.

Further updates on SMIC’s expansion plans are expected in the coming months.

Source: South China Morning Post