China's semiconductor industry has reported an extraordinary profit surge, with industry-wide profits rising 18.5-fold year-on-year in the first seven months of 2026, according to official data cited by Global Times. The growth is driven by booming AI chip demand and a national push to localize semiconductor production amid ongoing US export controls on advanced chipmaking equipment.

SMIC, China's largest contract chipmaker, reported second-quarter 2026 net profit of $479.2 million — more than tripling year-on-year and nearly double the $253.4 million analyst consensus estimate compiled by LSEG. Revenue rose 36% to $3.01 billion, driven by mature-node chip demand for automotive, IoT, and AI inference applications. Gross profit reached $760.6 million.

JCET, China's largest chip packaging and testing firm, saw net profit surge 79.4% year-on-year to 845 million yuan in its latest reporting period. Hua Hong Semiconductor also contributed to the broad-based industry growth.

The surge comes despite — and in some ways because of — US export controls that have restricted China's access to advanced EUV lithography equipment from ASML and other suppliers. The restrictions have redirected Chinese investment toward mature-process-node manufacturing (28nm and above), where domestic capacity is expanding rapidly and global demand for AI inference chips, automotive semiconductors, and IoT components remains strong.

Golem reports that the industry's momentum continued into September 2026, with analysts projecting the full-year profit trajectory to set new records. The data underscores how China's semiconductor self-sufficiency drive, initially motivated by sanctions, has evolved into a commercially significant industrial expansion.

Sources