SMIC posts record $9.3 billion revenue despite thin 7nm chip yields

China's top chipmaker just booked its best year ever, but the margins tell a different story about what it costs to build advanced chips without the equipment Washington won't sell.

Semiconductor Manufacturing International Corporation closed 2025 with revenue of $9.33 billion, a record for the company and a 16.2% jump from the year before, according to a TrendForce report on the company's results. Net profit climbed 39% to roughly $685 million. Those are the numbers SMIC wants printed in the headlines. The ones it would rather you skip past are the margins: gross margin fell to 19.2% in the fourth quarter, down from 22.6% a year earlier and from 22.0% in the third quarter, as TrendForce reported, with the company pointing to rising depreciation on new capacity.

SMIC has been on the US Entity List since December 2020, barred from buying ASML's extreme ultraviolet lithography machines that TSMC and Samsung use to print 7-nanometer and smaller chips in a single pass. Without EUV, SMIC builds the same geometries using older deep ultraviolet tools run through multiple exposure passes, a technique called multi-patterning. It works. It's just slow, expensive, and prone to defects piling up with every extra pass a wafer has to survive.

Here's where the brief's own numbers get complicated. Goldman Sachs' model, cited by SCMP and TechTimes, puts SMIC's advanced-node yield at roughly 23% in 2026, climbing to 50% by 2030 and 75% by 2035 if the bank's capacity assumptions hold. TSMC, for comparison, has run 7nm yields above 90% since shortly after it launched the node in 2018. Morgan Stanley reportedly cut its own SMIC AI chip projections this year, pegging yields on the Huawei-bound Ascend accelerator chiplets at around 30% by the end of 2025. Those are not small gaps to a company trying to convince Huawei and domestic customers that its chips are worth a premium price.

SemiAnalysis takes the opposite side. In a widely discussed newsletter piece, the firm argued that claims SMIC's yield sits near 10% are, in its words, nonsense meant to downplay what China has actually built, and that the company's multi-patterning process is in reasonably good shape. Samsung, by SemiAnalysis's account, has struggled more at comparable nodes than SMIC has. Nobody in this fight is publishing an audited yield number. SMIC doesn't disclose it, and every figure floating around, 23%, 30%, whatever the real one turns out to be, is somebody's estimate built from wafer starts, die counts and guesswork about defect rates on a process the company has every incentive to keep opaque.

What isn't in dispute is the bill. SMIC spent $8.1 billion on capital expenditure in 2025 and plans to hold that roughly flat in 2026, a huge outlay for a company whose full-year profit doesn't clear a billion dollars. Multi-patterning adds exposure steps, mask costs and tool-hours per wafer that EUV would eliminate in one shot, and that cost shows up directly in the margin line. Nineteen percent gross margin on record revenue is not what a company running an efficient advanced node looks like. It's what a company running an expensive workaround at scale looks like.

Washington's export controls were built on a specific bet: that cutting China off from EUV would make sub-10-nanometer chips commercially unworkable for SMIC, not just difficult. Four years in, SMIC is shipping 7nm-class chips into Huawei's Ascend AI accelerators and its own smartphone silicon in real volume, and booking record revenue doing it. The bet wasn't wrong about the cost. It was wrong about whether China would pay it anyway. On the evidence of 2025, Beijing and SMIC decided a 19% margin was an acceptable price for chips the US didn't want them to have at all.

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