China's Mature-Node Fabs See Profitability Improvement, but Self-Sufficiency Gap Remains at the Equipment Level
Nashnova编辑部
In H1 2026 China's major contract fabs hit full utilization, raised prices, and posted strong profits — nearly all driven by domestic demand. Yet equipment localization sits at just 23.2%, and the broader self-sufficiency target remains unmet.
How much did these fabs actually earn?
SMIC (中芯国际) posted Q2 revenue of $3.101 bn, up 36.1% YoY, with net profit of $479 mn and gross margin rising from 20.1% to 25.3%. It guided Q3 margin to 26%–28%.
Hua Hong Semi (华虹半导体) reported Q2 revenue of $718 mn, up 26.8% YoY. Both its 8-inch and 12-inch lines ran at utilization rates above 100% for the full year.
Nexchip (晶合集成) booked H1 revenue of RMB 5.96 bn, with operating cash flow up 64.10% YoY. LXIC (联芯集成) swung to a RMB 278 mn net profit from a RMB 170 mn loss a year earlier.
This means → mature-node fabs have collectively crossed into sustained profitability — not on subsidies, but on real orders.
Where are the orders coming from?
SMIC's China-customer revenue share rose from 84.3% a year ago to 88.9%; U.S. customer share fell from 12.6% to 9.3%.
In plain terms = growth is driven almost entirely by domestic demand. Overseas revenue is actually shrinking.
Management attributes the pull to two forces: AI-adjacent peripheral demand — not AI chips themselves, but the supporting chips around AI systems — and order reshoring, where volumes previously placed at overseas fabs are being moved back onshore.
Wasn't the worry overcapacity — so why are prices rising?
For three years the market feared a glut of Chinese mature-node capacity. In early 2026 the narrative flipped: TrendForce data show mainland fabs raised 8-inch foundry prices by ~10% in January, with some orders up 20%.
Nexchip added another 10% hike in June; SMIC and Hua Hong had already moved first.
This means → pricing power — the ability to raise prices and have customers accept it — has shifted from buyers to sellers. Put simply = the problem is not too much capacity going unsold, but not enough capacity to meet demand.
Per TrendForce Q1 data, SMIC, Hua Hong, and Nexchip together hold about 8.4% global foundry market share.
They're profitable — does that mean self-sufficiency?
No. The "Made in China 2025" target of 70% semiconductor self-sufficiency has not been met, according to a June report by ITIF (Information Technology and Innovation Foundation).
China is now shifting the goal upstream: it aims to source over 70% of the silicon wafers used in its fabs domestically by year-end.
This reflects a gap between narrative and reality: the product layer (chips) is generating profit, but the materials and equipment layer is far from self-reliant — forcing the target to retreat from finished chips to upstream inputs.
Where is the biggest bottleneck — equipment?
Per Yole Group, China's semiconductor-equipment localization rate was 23.2% in 2025 (up from 8% in 2021), projected to reach 39% by 2030.
Etch, deposition, and CMP — chemical-mechanical planarization, the process that polishes wafer surfaces flat — are in a rapid import-substitution phase.
But lithography — the core tool that prints circuit patterns onto wafers with light — remains a "long-term challenge" in Yole's framing. Advanced metrology tools (precision instruments that inspect chip quality) are likewise unresolved.
In plain terms = a fab can be Chinese-owned, Chinese-staffed, and serving Chinese customers, yet its most critical machines still have to be imported.
Any breakthroughs in advanced nodes?
Nexchip's 28 nm logic platform is in customer-sample qualification; 22 nm is under development. Its 150 nm and 40 nm nodes are already in mass production.
Reuters reported in March, citing four sources, that Hua Hong has developed advanced manufacturing technology capable of producing AI chips. If confirmed, this would break SMIC's position as the mainland's sole advanced-node fab — but neither company has publicly disclosed yield or shipment data.
This means → the advanced-node story is still at the "rumors, no hard numbers" stage. Mature-node profitability is confirmed by earnings; advanced-node breakthroughs still await verifiable evidence.
市场有风险，内容仅供研究参考，不构成投资建议。