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SMIC posts 2Q loss of US$2m as chips fall
2007-07-28 03:15:04 Shanghai Daily

SHANGHAI, July 28 -- SEMICONDUCTOR Manufacturing International Corp yesterday posted a loss of US$2.05 million in the second quarter after a profitable previous quarter.

SMIC, the biggest made-to-order chip maker on the Chinese mainland, attributed the loss mainly to the sluggish memory-chip market which led to lower prices for its DRAM (dynamic random-access memory) chips.

SMIC's second-quarter net loss compared to a profit of US$1.36 million a year earlier and US$8.76 million in the first quarter.

The revenue was US$374.8 million in the period, 3.7 percent growth year-on-year.

"The global DRAM market price was unstable, and it has influenced SMIC's overseas business," said Li Ke, an analyst at Beijing-based CCID Consulting, a research firm under the Ministry of Information Industry.

Overseas memory chip firms like Powerchip and Nanya haven't been deterred by poor second quarter margins, and they have invested heavily to upgrade or expand production lines, according to Merrill Lynch.

"DRAM has recently seen a rebound after the poor second quarter but Taiwan's data (on future expanded capacity) suggests bigger competition, especially post third quarter," Merrill Lynch said in a recent note.

DRAM prices are expected to be flat in the third quarter, with most of the forecast two to five percent rise in the company's revenue in the period to come from improving prices for logic chips, according to Richard Chang, SMIC's chief executive.

Meanwhile, SMIC said mobile phones were showing growth in both demand and variety. The company also sees strong demand for power-management chips and consumer devices such as personal multimedia players.

The 90-nm (nanometer) products contributed 22.0 percent of SMIC's wafer revenue in the second quarter, compared with 14.4 percent in the first quarter.

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