In the second quarter of 2026, SMIC revenue passed US$3bn for the first time, up 20 percent on the quarter. Its share of the global foundry market reached 5.4 percent. Samsung, in second place, took 5.9 percent on US$3.26bn. The gap between second and third is now half a percentage point, the closest SMIC has ever come to the number two spot (TrendForce top ten foundry ranking, Q2 2026). It is also the least important number in the foundry business, because the firm in first place took 72.5 percent.
The race for second
TrendForce puts combined top ten foundry revenue at US$53.49bn in the quarter, up 11.5 percent on the first quarter and another record. TSMC took nearly US$40.2bn of it, up 12.1 percent, with 5/4nm and 3nm capacity fully booked on AI server demand and its 2nm node contributing revenue for the first time. Samsung grew only 1.8 percent on the quarter, to US$3.26bn, and its share fell even as new advanced-process orders, including HBM base dies, ramped up. SMIC grew 20 percent, to more than US$3bn, on advance procurement across consumer supply chains, rising orders for AI peripheral chips and server networking products, and memory shortages that lifted demand and pricing for NAND and NOR flash. Behind SMIC the pack is a long way back: UMC fourth at 3.9 percent, GlobalFoundries fifth at 3.2 percent.
The arithmetic of catching Samsung is simple. At second-quarter revenue, SMIC needs about 8 percent more relative growth than Samsung to pass it. One more quarter like the second would do it. But SMIC's own guidance points the other way: it guided third-quarter revenue up only 2 to 4 percent sequentially, with a 26 to 28 percent gross margin (SMIC Q2 2026 results announcement). Second place is not arriving on the current run rate, and the second quarter was flattered by advance buying and a memory shortage, neither of which is a run rate.
What the two Chinese foundries actually sell
Neither Chinese foundry competes with TSMC where the money is. SMIC's second quarter was 78.2 percent 12-inch wafers by revenue, and by application consumer electronics were 44.2 percent, smartphones 16.9 percent, industrial and automotive 16.5 percent, and computers and tablets 15.6 percent. Mainland China was 90.2 percent of revenue. Utilisation was 93.7 percent, monthly capacity 1,096,500 8-inch equivalent wafers, and capital expenditure about US$3.4bn for the half (SMIC Q2 announcement).
Hua Hong Grace is the specialty end of the same story. It sells mature-node processes for microcontrollers, flash, power and logic chips, and has now grown revenue sequentially for ten straight quarters. The second quarter was a record US$717.5m, up 26.8 percent year on year, at a 16.5 percent gross margin. Its Wuxi Fab 9, planned for 83,000 wafers a month, was fully moved in by the end of June 2026 (Hua Hong 2026 interim report). For the half its margin was 14.8 percent against SMIC's 22.9 percent. The gap is the business model, not execution: specialty mature nodes sell at lower prices, and new 12-inch capacity adds depreciation before it adds profit.
TrendForce expects mature-process capacity to stay constrained in the third quarter, with wafer prices possibly rising. That is the near-term test: utilisation is high and prices are firm today, while both firms are adding capacity into the same domestic market at the same time.
The ceiling at the top
SMIC's advanced nodes are real, and they stop well short of the leading edge. TechInsights' teardown of Huawei's Mate 80 Pro Max confirmed the Kirin 9030 inside is built on SMIC's N+3 process, a scaled evolution of its 7nm-class technology, and its measurements confirm it remains significantly less scaled than the commercial 5nm nodes from TSMC and Samsung (TechInsights, December 2025). The process is built without EUV lithography, using DUV-only manufacturing, which TechInsights flags as the limit to watch. The previous step, the Kirin 9000S in the Mate 60 Pro, was the first 7nm-class chip SMIC shipped, confirmed by TechInsights in September 2023.
Two things follow. First, the advanced-node business is narrow: SMIC itself does not disclose advanced-node revenue, so every public confirmation of its advanced nodes has come through a Huawei phone teardown. Second, the distance to the leader is widening at the top even as SMIC closes on second place: TSMC's 2nm node contributed revenue for the first time in the same quarter SMIC was celebrating 7nm-class scale.
Consolidation is the other lever
Scale in the mature market can also be bought. Hua Hong's interim report says it is progressing a proposed acquisition of a 97.5 percent equity interest in Huali Micro, a fellow Shanghai foundry. TrendForce already counts the wider HuaHong Group, including Huali, as the world's sixth foundry at more than US$1.27bn in the quarter, against US$717.5m for the listed Hua Hong Grace alone. A completed deal would make China's second foundry materially larger in the same mature-node market, but the report calls it a proposal, not a done deal.
Our view
The second-place race is a good headline and a bad investment thesis. SMIC passing Samsung would change a ranking, not the structure: TSMC earns more than thirteen times SMIC's revenue, and its 2nm node is already contributing revenue while SMIC's best public node is a stretched 7nm. The real question for China's foundries is narrower and harder: whether mature-node pricing holds while both firms add capacity into the same domestic market, and whether the DUV-only route to advanced nodes can ever pay for itself beyond one customer. Hua Hong's answer is consolidation. SMIC's answer, so far, is volume. Both answers are still being tested.
What to watch
- Whether SMIC's third-quarter revenue lands inside its 2 to 4 percent guidance, and whether Samsung's slower growth lets the gap close further.
- Whether mature-node wafer prices rise in the third quarter as TrendForce expects, or the new capacity from SMIC and Fab 9 starts to weigh on pricing.
- Whether Hua Hong completes the Huali Micro acquisition, and on what terms.
- Whether SMIC's N+3 process moves beyond Huawei phones into a second customer, which would be the first sign the advanced-node business can stand on its own.
- Utilisation: SMIC at 93.7 percent leaves little slack, so any demand wobble shows up fast.
The full picture is on our semiconductors industry map, with each stage's companies, volumes and margins.