SMIC's profit soared 60.7% in Q4, but shares dropped as it warned of higher costs from a major factory expansion.

SMIC, China’s top contract chipmaker, reported a 60.7% surge in fourth-quarter profit and 12.8% revenue growth to $2.49 billion, beating estimates, but warned of a 30% rise in depreciation costs in 2026 due to a major capacity expansion. The company plans to add 40,000 12-inch equivalent wafers monthly by year-end, following a 50,000-wafer increase in 2025, with capital spending at $8.1 billion in 2025. Despite strong demand from Chinese chip designers and a shift toward domestic production, SMIC’s shares fell nearly 4%. Shanghai expanded its semiconductor investment fund by 11-fold in 2026 to boost self-reliance, part of a national push amid U.S. tech restrictions.