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October 30, 2009

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SMIC expects profit despite Q3 loss

SEMICONDUCTOR Manufacturing International Corp's third-quarter loss was more than double the same period last year, but the Shanghai-based firm expects to make an annual profit in 2010, because of upgraded technology and a recovering market, it announced yesterday.

The expected profitability of the Chinese mainland's biggest made-to-order chip maker, the first time in more than two years, would indicate the domestic semiconductor market has recovered from the hit of global financial crisis, analysts said.

"The third-quarter result displayed a continued foundry market recovery," said Richard Chang, SMIC's chief executive.

In the third quarter, SMIC lost US$69.3 million compared with a loss of US$30.3 million a year ago. Revenue was US$323.4 million, 14 percent less than a year ago.

The company forecast fourth-quarter revenue to increase 2 to 5 percent from the third quarter.

China's semiconductor industry expects higher fourth-quarter growth than last year, which would make it the first quarterly year-on-year growth since the global financial crisis started last year, analysts said.

"China is relatively immune to the influence of the financial crisis compared with the world," said Jeremy Wang, Global Semiconductor Alliance Asia Pacific executive director.

China's integrated circuit market revenue has remained flat this year while the global industry revenue is expected to drop about 15 percent annually, Wang said, fueled by the recovery in demand for computers, mobile phones and autos.

SMIC will focus on increasing production of slim 65-nanometer chips through advanced technologies, which may account for 15 percent of sales in 2010, Chang said.



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