Semiconductor Manufacturing International Corp, China's largest contract chipmaker, believes the artificial intelligence boom has plenty of room left to run. The company's leadership said on Friday that AI remains an early-stage industry and that demand for the chips powering it is still strong.
The remarks came from SMIC Co-CEO Zhao Haijun, who was responding to a question about whether the AI sector is forming a bubble, according to a Reuters report carried by KELO-AM.
Pushing Back on AI Bubble Concerns
Investors and analysts have increasingly debated whether spending on AI infrastructure has outpaced real-world demand. Zhao took the opposing view, arguing that the industry has not yet matured.
He pointed to the fact that many customers who need computing resources are still unable to get enough of them. In his assessment, that persistent shortage is a sign of genuine demand rather than speculative excess.
Supply Expected to Remain Constrained Through 2027
Zhao said the semiconductor supply chain serving AI applications will stay tight through 2027. He attributed the pressure to demand from data centres and private cloud deployments.
For memory chips specifically, he expects supply and demand to come into balance toward the middle to end of 2028. That timeline suggests buyers of memory, a critical component in AI servers, may face constrained availability for some time.
Revenue Outlook and Rising Utilization
SMIC said it expects full-year revenue to exceed $1.2 billion, supported by a continued increase in its capacity utilization rate. Higher utilization typically means a foundry's production lines are running closer to full capacity, which tends to improve efficiency.
The comments indicate that SMIC is benefiting from the same demand wave it described, with customers keeping its fabrication facilities busy.
Equipment Delays Weigh on Spending Plans
Not every part of the picture is smooth. Zhao said the company is dealing with longer lead times for manufacturing equipment, with some orders taking more than 24 months to arrive.
Those delays will affect SMIC's capital spending this year, since the company cannot deploy money on tools that have not yet been delivered. Zhao also said SMIC's depreciation expense will rise by about 30% year-on-year in 2026, reflecting the cost of equipment already brought into service.
What It Means for the Chip Industry
SMIC's outlook adds a prominent voice to the view that AI hardware demand is durable, at least through the next few years. For companies building AI products, the forecast signals that access to compute and memory may remain a bottleneck rather than a commodity.
For the broader semiconductor sector, the combination of strong demand and slow equipment delivery highlights how supply chain constraints, not just customer appetite, are shaping how quickly chipmakers can grow.
Source: KELO-AM
