SMIC's net profit last year increased by 39% year-on-year, and the semiconductor sector remained active in the afternoon.

Ask AI · Xiangshan processor breakthrough—how will China’s chip ecosystem evolve?

On March 27, the semiconductor sector opened sharply lower, turned green during the session, and after midday the sector’s gains once reached 1.5%, remaining active throughout. Among them, Dinglong Shares touched a “20cm” limit-up intraday, Shengjian Technology hit limit-up, and Jiangfeng Electronics, Pioneer Precision, and Jiehuaqite all rose more than 8%.

SMIC released its earnings: for full-year 2025 revenue was $9.327 billion, up 16.2% year over year; profit attributable to the company’s owners for the year was $685 million, up 39.0% year over year.

Regarding the reasons for the growth in performance, the announcement said it was mainly due to an increase in 2025 wafer sales. The number of wafers sold increased 20.9% from 8.021 million units in the previous year to 9.697 million units last year. The average selling price (wafer sales revenue divided by the total number of wafers sold) was $907 in the prior year and $933 in the year before that.

In addition, the Chinese Academy of Sciences has launched R&D for the next-generation open-source chips and systems. According to Xinhua News Agency, at the Zhongguancun Forum annual conference—RISC-V Ecosystem Science and Technology Forum, the Chinese Academy of Sciences formally released a series of key achievements in areas including breakthroughs in RISC-V core technologies, industry collaborative innovation, and talent cultivation. It also announced two major outcomes—the “Xiangshan” open-source processor and the “Ruyi” native operating system—and formally kicked off joint R&D for the next-generation chips and operating system. Experts said that RISC-V is a globally free and open-chip instruction-set architecture, equivalent to a “universal standard” in the chip industry. It does not require paying patent fees, can be independently modified, and is one of the important routes for China to break through in the chip ecosystem and develop controllable computing power. The “Xiangshan” open-source high-performance RISC-V processor released at the event achieved an internationally advanced level. At the same time, the world’s first open-source on-chip interconnect network IP was launched, making it an internationally leading open-source high-performance RISC-V processor system. The “Ruyi” RISC-V native operating system was the first to fully support international standards, further strengthening the foundation of open-source software led by China. Joint R&D for the next-generation “Kunming Lake” architecture and joint development of the “Ruyi” operating system were launched simultaneously. Dozens of organizations—including China Mobile, China Telecom, ZTE, Alibaba, Tencent, and ByteDance—will coordinate to tackle key challenges, covering the entire chain from chips, operating systems, and terminals to applications, accelerating the formation of an innovation ecosystem closely integrating industry, academia, research, and application.

CITIC Securities Shanxi stated, domestic computing power drives innovation and accelerates implementation. Strong demand for computing power is being released from domestic AI large-model inference and AIDC construction. In 2029, the market size of China’s accelerated server sector will exceed $140 billion. Combined with overseas export controls, it will force breakthroughs in domestic chips and manufacturing links. In advanced process technology, the self-sufficiency rate for high-end chips is relatively low. Local wafer fabs are stepping up advanced process capacity planning, and SMIC’s 7nm and below advanced process capacity is accelerating its ramp-up. Advanced packaging has become the key to boosting computing power. Chiplet and HBM technologies are driving an upgrade in demand for assembly, testing, and packaging. Domestic manufacturers such as JCET and Tongfu are capturing spillover orders. By 2030, the global advanced packaging market size will exceed $79.4 billion. Semiconductor equipment is seeing a resonance between “demand expansion” and “domestic innovation,” and will fully benefit from capacity expansion at wafer fabs such as SMIC and HuaHong, as well as memory makers such as CXMT and Yangtze Memory.

GF Securities stated, in 2025 Q4, fund institutions’ key focus is AI computing power and semiconductor self-containment and controllability: based on the market value of holdings, the top ten stocks in which funds held the most in the SW Electronics industry in 2025 Q4 are Cambrian, Hygon Information, SMIC, Luxshare Precision, Microchip Technology, Lianqi Technology, North Huachuang, Dongshan Precision, Foxconn Industrial Internet, and Zhaoyi Innovation. From the direction of institutional focus: 1) focusing on AI computing and storage, Cambrian is one of the leading domestic AI chip manufacturers; Dongshan Precision is a leading PCB and optical module manufacturer; Shengyi Technology is a top upstream copper-clad laminate supplier in the PCB supply chain; Yuanjie Technology is a leading domestic optical chip manufacturer; and BOWE Storage is a major domestic storage chip producer. All benefit from the accelerated development of AI computing and storage industries; 2) semiconductor self-containment and controllability: TuoJing Technology and Zhongke Feice are leading domestic semiconductor equipment companies; Hidi Silicon is China’s leading large silicon wafer manufacturer, benefiting from the trend of domestic wafer fabs accelerating the adoption of domestic equipment and materials.