SHANGHAI, Oct.28(AP) -- China's biggest producer of made-to-order computer chips, Semiconductor Manufacturing International Corp., said Friday that its third-quarter net loss narrowed to US$26 million (€21 million) from US$40 million in the previous quarter, helped by rising prices.

In the third quarter of 2004, Shanghai-based SMIC posted a net profit of US$39.3 million. SMIC dipped into losses late last year amid industrywide oversupply and lackluster demand.

The company's revenue for the nine months ended Sept. 30 was US$310 million (€256 million), up from US$274.9 million in third-quarter 2004. Sales were lifted by an increase in average price prices to US$841 (€693) per eight-inch wafer by the end of September from US$807 at the end of June, as well as a shift toward advanced products with bigger margins.

"We increased the contribution from our high-end processes, deriving more than 90 percent of our revenues from 0.18 micron and below technology for the first time," said Richard Chang, the company's chief executive.

Wafers are thin, round slices of semiconductor material from which microchips are made. The spaces between transistors on a chip are measured in microns. The smaller and more closely transistors can be packed together, the more powerful, and profitable, the chip.

SMIC recently began cutting back on the proportion of "filler DRAM" chips that are sold at a loss-making price but are used to fill up capacity, Chang said. Output of such chips is to be phased out by next March, he said.