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SMIC suspends 2009 expansion, seeking strategic investors

(Agencies)
Updated: 2008-10-30 17:18

Semiconductor Manufacturing International Corp (SMIC) said it will not be boosting capacity next year until it has a better picture of market conditions.

CEO Richard Chang made the comments in a teleconference this morning following the company's results announcement late yesterday.

The company reported a third quarter net loss of $30.3 million, widening from a 25.55 million loss a year earlier.

"In 2009 we will hold back on all capacity expansion until we have clearer visibility," he said.

Chang added that the firm's collaboration with IBM on 45 nanometer processes is "on schedule, and according to plan."

"We also plan to continue to expand in China through collaboration with local design houses, and we are still involved in active discussions with potential strategic investors."

The company said compared to the second quarter, the third quarter loss narrowed significantly.

In the three months to June the chipmaker posted a loss of $45.6 million.

Revenue increased to 9.6 percent quarter-on-quarter to $375.9 million in the third quarter, but was down 3.9 percent year-on-year.

Sales from advanced logic circuits involving 0.13 micron and 90 nanometer processes increased by 23.3 percent quarter-on-quarter.

"Our higher sequential revenue was due to higher logic demand and higher average selling prices. Logic sales accounted for 86.4 percent of revenue in the quarter, and DRAM contribution continues to decline," Chang said.

"Our conversion from DRAM to logic remains on track," he added.

Average selling prices rose 2.1 percent in the third quarter to $871 from the second quarter, SMIC said.

The gross margin improved to 7.2 percent in the third quarter from 6.1 percent in the second quarter, but was down from 10.8 percent a year earlier.