.png){kind=logo}
China's biggest contract chipmaker, Semiconductor Manufacturing International Corp (SMIC), expects strong demand from the artificial intelligence (AI) industry to keep the semiconductor supply chain under pressure through 2027.
The company said customers needing computing resources continue to face shortages, highlighting the industry's challenges as investment in AI infrastructure expands.
SMIC Co-CEO Zhao Haijun shared the outlook on Friday, November 13, while responding to a question about whether the rapid growth of the AI industry was creating a market bubble. He said the industry was still in its early stages and demand remained strong.
According to Zhao, demand from data centers and private clouds will keep the semiconductor supply chain for AI-related applications tight through 2027.
He also expects the supply and demand for memory chips to reach balance between the middle and end of 2028. The forecast suggests that shortages across parts of the semiconductor industry could continue even as manufacturers work to expand production capacity.
The comments come as technology companies continue to invest in computing infrastructure to support AI development and deployment. Persistent demand has pressured chipmakers and their suppliers, while customers seeking computing resources continue to face shortages.
SMIC expects its full-year revenue to exceed USD 1.2 billion as its capacity utilization rate continues to rise. However, the company is also dealing with longer equipment delivery timelines, which could affect its capital spending this year.
Zhao said some equipment orders now take more than 24 months to arrive. Such extended lead times make it harder for chipmakers to expand manufacturing capacity quickly enough to meet customer demand.
The company also expects depreciation expense to rise about 30% year-on-year in 2026, Zhao said. The rise reflects the financial impact of its manufacturing operations and investment in production capacity.
Also Read: Malaysia Probes SpeedMatrix Over Possible Re-Export of US AI Chips
Zhao's assessment pushes back against concerns that AI's rapid expansion could be creating a bubble. His comments indicate that SMIC expects demand for AI-related semiconductors to remain robust over the coming years.
The outlook also points to a prolonged period of supply constraints for companies developing data centers, private cloud infrastructure and AI computing systems.
For the semiconductor industry, the challenge will be matching demand growth with equipment availability and manufacturing capacity. With some orders taking more than two years to fulfill, the supply chain is unlikely to ease quickly.