China's biggest contract chipmaker expects the artificial intelligence chip shortage to last through 2027, as strong demand from data centres and private clouds keeps supply tight.

Semiconductor Manufacturing International Corp (SMIC) co-chief executive Zhao Haijun told analysts on the company's third-quarter earnings call that the AI industry was still in its early stages and demand remained strong, Reuters reported. He said many customers that need computing resources still face shortages.

$12 billion year in sight

Zhao expects full-year revenue to top $12 billion, up nearly 30% on last year, with gross margin of around 26%, according to InvestingLive. Third-quarter revenue rose 34% to a record $3.19 billion, while net profit more than doubled to about $428 million, beating forecasts of near $397 million. The company guided fourth-quarter revenue growth of 4% to 6% from the third quarter, with gross margin of 26% to 28%.

Zhao also warned that tight global supplies of chipmaking equipment could disrupt the timing of SMIC's capital spending, with some orders taking more than 24 months to deliver. Depreciation expense will rise about 30% year on year in 2026.

Memory chip supply and demand should reach balance only towards the middle to end of 2028, Zhao added. SMIC's Hong Kong-listed shares have fallen about 20% so far this quarter after dropping 32% in the third quarter, even as the results beat expectations, a sign investors remain cautious about margins and equipment constraints despite the AI boom.