I. How Far Has the Foundry Recovery Progressed?
The recovery in orders is translating into revenue growth. In the first half of the year, the revenues of SMIC (Semiconductor Manufacturing International Corporation), Hua Hong Grace Semiconductor, Nexchip Semiconductor, and United Nova Technology（UNT） grew by 19.4%, 19.41%, 14.59%, and 30.53%, respectively. The sources of growth vary among these companies: SMIC benefited from improvements in both volume and price, Hua Hong Grace saw a rebound in demand for its specialty platforms, Nexchip continued to expand in CIS and PMIC (Power Management IC), and UNT experienced volume growth in both its power and emerging businesses.
However, profitability has diverged: SMIC and Hua Hong Grace saw growth in net profit excluding non-recurring gains and losses, UNT's net loss excluding non-recurring gains and losses narrowed significantly, while Nexchip experienced revenue growth without profit growth. Saiwei Electronics saw a substantial increase in net profit attributable to the parent company, but its manufacturing business is still in the ramp-up phase. Following the revenue recovery, the key focus for the next phase will be who can convert new orders into stable profits.
II. Demand and Capacity Expansion: Where is the Incremental Growth Flowing?
Industrial, automotive, and specialty processes have contributed clearer incremental growth. For SMIC, the proportion of revenue from industrial and automotive applications rose from 10.1% to 15.4%, while the smartphone share dropped from 24.6% to 17.8%. For Hua Hong Grace, sales from its PMIC, embedded, and standalone non-volatile memory platforms grew by nearly 40%, over 40%, and nearly 80%, respectively. This round of growth has already extended beyond the mobile phone supply chain.
Opportunities brought by AI (Artificial Intelligence) are extending to PMIC, silicon photonics, and sensors. UNT's revenue related to AI infrastructure and terminals grew by 84.31%, and its silicon photonics business has entered mass production. Nexchip has increased the proportion of its CIS and PMIC products. Customer qualification and volume ramp-up paces still vary across different process platforms. Whether new products can continuously contribute revenue is more noteworthy than the sheer number of technology deployments.
The supply side is still expanding. As of the end of June, all equipment required for the planned 83K capacity of Hua Hong Grace's Wuxi Phase II Fab 9 has been moved in, followed by installation and debugging. UNT plans to invest approximately CNY 20 billion to build a 12-inch mixed-signal production line with a monthly capacity of 50,000 wafers. The new capacity is expected to expand business space, but will also bring depreciation and ramp-up pressures.
III. Competitive Landscape and Half-Year Tracking of the Five Companies
3.1 Corporate Performance from Six Dimensions
3.2 Half-Year Tracking of Core Domestic Foundries
SMIC: Volume and Price Improvement, Profit Elasticity Released
In the first half of the year, revenue reached CNY 38.635 billion, net profit attributable to the parent company was CNY 4.467 billion, and net profit excluding non-recurring gains and losses was CNY 2.994 billion, representing growth of 19.4%, 94.2%, and 57.2%, respectively; the gross margin rose to 23.2%. Wafer sales volume increased by 14.9%, and the average selling price rose from CNY 6,482 to CNY 6,667, with both volume and price driving growth. The decrease in administrative expenses also supported profit recovery. The increased proportion of industrial and automotive applications, multi-platform capabilities, and scale advantages provide support. Future focus will be on the sustainability of price increases and the depreciation of new capacity.
Hua Hong Grace: Specialty Platforms Rebound, Capacity Expansion Enters Harvest Phase
In the first half of the year, revenue reached CNY 9.574 billion, an increase of 19.41%; net profit attributable to the parent company was CNY 399 million, and net profit excluding non-recurring gains and losses was CNY 316 million. The rebound in demand for PMIC and non-volatile memory drove a 17.9% increase in total shipments. 40nm eFlash achieved risk production, and the 55nm eFlash automotive-grade platform achieved product introduction. As Fab 9 continues to advance, Hua Hong Grace's focus will shift from equipment move-in to customer introduction, yield rate, and capacity expansion returns.
Nexchip: Structural Upgrade, Profit Still Under Pressure
In the first half of the year, revenue reached CNY 5.957 billion, an increase of 14.59%; net profit attributable to the parent company was CNY 245 million, and net profit excluding non-recurring gains and losses was CNY 131 million, decreasing by 26.12% and 35.91%, respectively. Product price fluctuations, new depreciation, and share-based payments affected performance. DDIC (Display Driver IC) accounted for 53.24% of main business revenue, while the proportions of CIS and PMIC increased to 25.34% and 12.82%, respectively. The product structure is improving, but some price increases have not yet been fully reflected. Future progress requires waiting for price transmission and the volume ramp-up of new products.
UNT: Scale Growth, Non-Recurring Deducted Loss Narrows
In the first half of the year, revenue reached CNY 4.562 billion, an increase of 30.53%; net profit attributable to the parent company was CNY 278 million, and net loss excluding non-recurring gains and losses was CNY 65 million, a year-on-year loss reduction of 87.84%. The gross margin rose from 3.54% to 12.71%, and scale effects are gradually emerging. AI-related demand, silicon photonics, and power businesses have opened up incremental space, but depreciation and amortization still account for 41.13% of revenue. Whether it can cross the break-even point for net profit excluding non-recurring gains and losses and achieve sustainable profitability is the key focus going forward.
Saiwei Electronics: Bright Investment Returns, Manufacturing Business Still Awaits Ramp-Up
In the first half of the year, revenue reached CNY 178 million, a decrease of 68.71%; net profit attributable to the parent company was CNY 2.702 billion, and net loss excluding non-recurring gains and losses was CNY 379 million. Investment-related gains significantly boosted net profit, and Sweden's Silex was deconsolidated in July 2025. The Beijing MEMS production line has a monthly capacity of 15,000 wafers, with a capacity utilization rate of 29.74% and a yield rate of 81.88%. The core focus for the next phase is order conversion, utilization rate improvement, and loss narrowing. The performance of the manufacturing business will still determine the foundation for long-term growth.
IV. What to Watch in the Second Half of the Year?
First, whether price increases can truly translate into profits. Increased orders and fully loaded production lines are only the starting point for profitability improvement; whether product price hikes and structural upgrades can cover new depreciation will determine the profit elasticity in the second half of the year.
Second, whether new capacity can be ramped up smoothly. The production progress of Hua Hong Grace's Fab 9, Nexchip's product transition, and the utilization rate of Saiwei Electronics' Beijing production line will all affect the quality of revenue growth.
Third, whether emerging demand can continue to see volume growth. Industrial, automotive, AI PMIC, and silicon photonics are worth continuous tracking, but advance stocking by customers may still disrupt quarterly rhythms. The competition among China's foundries is shifting from capacity expansion to a comprehensive contest of process platforms, customer introduction, and profit realization.
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