In the second quarter of 2026, the financial reports of major global wafer foundries were released one after another. Overall performance is on the rise, with numerous highlights.
TSMC (Taiwan Semiconductor Manufacturing Company) achieved a gross margin of 67.7%, hitting a new high; SMIC (Semiconductor Manufacturing International Corporation) saw its single-quarter revenue exceed $3 billion for the first time; Hua Hong Semiconductor's capacity utilization rate surpassed 100%, and its profit turned positive again; UMC (United Microelectronics Corporation) also reached a high gross margin not seen in over a year; even GlobalFoundries, which had relatively flat overall growth in the past two years, saw its data center business surge by 62% year-over-year. More impressively, Tower Semiconductor's silicon photonics business grew by over 270% year-over-year, with quarterly revenue setting a historical record.
In this round of performance improvement, who exactly saw the most drastic growth? Which specific business segments are driving the performance? And for chip distributors, what opportunities can be seized?
01 Wafer Foundry Performance Showdown
Overall, in the second quarter, the overall performance of several wafer foundries is moving in a positive direction, but their individual performances vary.
TSMC remains the strongest. Its second-quarter revenue reached $40.2 billion, a year-over-year increase of 33.7%, with a gross margin of 67.7%. Advanced processes at 7nm and below contributed 77% of wafer revenue, with 2nm contributing 3% for the first time, and the HPC (High-Performance Computing) share reaching 66%. The third-quarter revenue guidance is again set at $44.6 billion to $45.8 billion, and the full-year growth rate has been raised to "slightly above 40%."
However, TSMC's primary clients are still somewhat distant from chip distribution. It grinds the highest-grade "flour"—NVIDIA's GPUs, Apple's A-series chips, and AMD's server chips—with very few chip distributors involved. Those directly linked to the MCUs, power devices, PMICs (Power Management ICs), and driver chips that we can handle are the following foundries.
SMIC's second-quarter revenue was $3.006 billion, a year-over-year increase of 36.1% and a quarter-over-quarter increase of 20%; its gross margin improved from 20.1% in the first quarter to 25.3%, with a capacity utilization rate reaching 93.7%. The third-quarter guidance indicates a quarter-over-quarter revenue increase of 2% to 4%, and a gross margin of 26% to 28%, both continuing to trend upward.
Hua Hong's signals this quarter are more direct. Revenue reached $718 million, setting a historical high for quarterly revenue, with a year-over-year increase of 26.8% and a quarter-over-quarter increase of 8.6%; the gross margin was 16.5%, compared to only 10.9% in the same period last year. The capacity utilization rate hit 102.8%, already operating at a very high load.
GlobalFoundries' performance this quarter is somewhat divided. Total revenue was $1.786 billion, with a mere 6% year-over-year increase, which is not particularly striking on its own. However, a breakdown reveals significant differences: the communication infrastructure and data center business reached $277 million, up 62% year-over-year; automotive was $333 million, down 10% year-over-year; and mobile was $644 million, down 6% year-over-year. Traditional businesses with larger shares remain relatively weak, but the data center segment has clearly taken off.
Tower Semiconductor's data this quarter is quite bright. Second-quarter revenue was $460 million, up 24% year-over-year, setting a historical high; net profit excluding non-recurring items was approximately $91 million, with a net profit margin of 20%. The truly impressive part is silicon photonics, with the SiPho business growing by over 270% year-over-year, and the fourth-quarter target aiming to exceed $1 billion.
The others are not detailed individually. Samsung Foundry does not disclose revenue separately, but the overall revenue of its Semiconductor DS division increased by 56% quarter-over-quarter, foundry utilization improved, and demand for advanced processes strengthened. UMC's revenue was $2.18 billion, with a gross margin of 32.5%. VIS (Vanguard International Semiconductor) had a gross margin of 32.3%, with Q3 guidance further raised to 32.5% to 34.5%. PSMC (Powerchip Semiconductor Manufacturing Corporation) reported a second-quarter revenue of approximately $546 million, up 53% year-over-year, with its gross margin rising from 10% in the first quarter to 28%, and a utilization rate of 87%.
02 Who Grew the Most and Why?
Looking at revenue growth rates, the gap among the companies is already very obvious. The approximate year-over-year growth rates for the second quarter are: PSMC +53%, SMIC +36.1%, TSMC +33.7%, Hua Hong +26.8%, Tower +24%, VIS +21.8%, UMC +17%, and GlobalFoundries is the slowest at only +6%.
Looking solely at the growth rate, PSMC actually saw the most drastic increase this quarter, with a 53% year-over-year growth. The company stated at its earnings call that the second-quarter revenue growth primarily came from ASP (Average Selling Price) increases, with limited contribution from shipment volumes. During the same period, wafer shipments only increased by 5% year-over-year, and the capacity utilization rate recovered from 75% to 87%; the revenue share of DRAM rose to 46%, and with Flash included, the memory business accounts for over half. Overall, the more obvious driver this quarter is still price increases, especially for DRAM.
Both achieved over a 30% year-over-year increase, but SMIC and TSMC are grinding different types of "flour." TSMC grinds the highest-grade flour, with advanced processes at 7nm and below accounting for 77% of wafer revenue and HPC accounting for 66%, primarily capturing the demand for AI/HPC and the concentration of high-end chips into advanced processes.
SMIC, on the other hand, is more like a comprehensive foundry that handles all types of "flour." In its earnings release, SMIC stated that the second-quarter growth came from increased wafer shipments, higher average selling prices, and changes in product mix, meaning both volume and price are moving upward. The application structure is also more diversified: consumer electronics accounts for 44.2%, mobile 16.9%, industrial and automotive 16.5%, computer and tablet 15.6%, and connectivity and IoT (Internet of Things) another 6.8%. What it captures is not just a single type of high-end chip, but a broader range of demand.
There is another change worth noting here. The revenue share of industrial and automotive wafers rose from 10.6% in the same period last year to 16.5%, while mobile dropped from 25.2% to 16.9%. How long SMIC can sustain a 93.7% utilization rate is something to keep an eye on going forward.
Like SMIC, Hua Hong's growth this quarter also comes from "increases in both volume and price." In its financial report, Hua Hong stated that revenue growth primarily stems from increased wafer shipments and ASP improvements, while gross margin expansion results from ASP improvements and cost reductions.
It is also a typical specialty technology foundry, producing embedded NVM, standalone NVM, power devices, analog, and power management. Behind these are the MCUs, memory, MOSFETs, and PMICs—the most common components in the distribution market. In the financial report, the embedded NVM platform grew by 41.8% year-over-year, and the standalone NVM platform grew by 149.3%.
The utilization rates of 93.7% for SMIC and 102.8% for Hua Hong indicate that mature and specialty processes are already very busy. Management from both companies mentioned AI spillover. SMIC noted that AI is expanding IC (Integrated Circuit) manufacturing demand, while Hua Hong stated that AI demand is spreading from memory to specialty processes like logic and analog, leading to stronger demand for products such as MCUs, memory, and PMICs.
AI seems to have already impacted mature processes. Zhao Haijun from SMIC mentioned at the earnings call that an AI server rack, besides GPUs, includes DRAM, SSDs, cooling systems, optical modules, and a large number of supporting PMICs. In other words, AI consumes not only the advanced processes used for GPUs but also requires a massive amount of mature and specialty processes for peripheral power, analog, control, and connectivity. AI is not just taking away the high-grade flour; the ordinary flour is also affected.
Looking one layer further out, GlobalFoundries' overall growth in the second quarter was only 6%, but its communication infrastructure and data center business surged by 62% year-over-year. The company's recent areas of increased investment basically revolve around silicon photonics, optical connectivity, and power. In August, it received a letter of intent for an additional $300 million in support from the U.S. Department of Commerce for silicon photonics R&D and capital expenditures, with the direction similarly pointing to the optical interconnects required for AI data centers.
Tower is even more obvious. Its second-quarter revenue hit a historical high, with silicon photonics being the most outstanding. The annualized revenue run rate for the silicon photonics (SiPho) business has risen from $180 million in the same period last year to $680 million, with a fourth-quarter target of exceeding $1 billion. It can be speculated that the business opportunity Tower has captured is not the GPU itself, but the high-speed optical communication demand surrounding the GPU.
Therefore, looking at these companies together, TSMC, SMIC, Hua Hong, GlobalFoundries, and Tower actually represent several different growth paths: the most advanced computing chips are growing, mature and specialty processes are getting busier, and peripheral AI segments like optical communication are also scaling up.
03 What Are the Impacts?
From the information on this round of price increases, before and after the wafer foundry price adjustments, downstream chips such as power, analog, MCU, and driver ICs are also adjusting their prices sequentially.
Let's look at the wafer segment first. Entering 2026, mature processes have also begun to see more frequent price increases. In July, PSMC raised its DRAM wafer start prices by approximately 40% to 45% again, and the foundry prices for 8-inch and 12-inch mature processes were also raised by about 10% to 15%; UMC announced adjustments to wafer prices in the second half of the year, and SMIC has also raised its pricing. In addition, Nuvoton's wafer foundry prices increased by about 20%, and quotes for some 8-inch wafer foundry services were adjusted by 5% to 20%.
Looking at downstream chips again. From the second half of 2025 to now, we have cumulatively tracked price adjustment announcements from over 140 companies, including both domestic and international enterprises, covering multiple segments such as memory, passive components, power semiconductors, analog, MCU, driver ICs, and connectors. In the power segment, there are CR Micro, Silan, Yangjie, and Basic Semiconductor; in the analog segment, there are TI, ADI, MPS, and Silergy, among others. Some companies have already seen a second or even third round of price adjustments this year. Early price increase letters from most companies only mentioned rising upstream costs, but starting this year, some companies have explicitly pointed to rising wafer costs.
With some foundries seeing higher utilization rates and starting to adjust prices, some downstream categories are also rising. How far this round will go remains to be seen in the coming quarters. For distribution and procurement, it may be more important to pay attention to production line utilization rates, lead times, and original manufacturers' price adjustment actions, and then map these to the BOMs (Bill of Materials) on hand.