Semiconductor Manufacturing International Corp expects to break even in the fourth quarter despite the Chinese mainland's biggest made-to-order chip maker yesterday reporting a loss of US$45.6 million in the second quarter.

Shanghai-based SMIC said its April-to-June loss widened to US$45.6 million from US$2.1 million a year ago.

Revenue decreased to US$342.9 million in the second quarter, down 8.5 percent year on year, because of reduced memory chip shipments following the decision in the first quarter to exit the commodity memory chip business.

"The losses in the second quarter were primarily due to the fact that we are still in transition from majority DRAM production to pure logic production in our Beijing facility," Chief Executive Richard Chang said in a statement.

SMIC stopped production of loss-making dynamic random access memory, or DRAM, chips in April to focus on making customized chips used in electronics such as music players and network equipment.

The company forecast it will post net profit in the fourth quarter because of the demand for chips in consumer electronics.

"We witnessed rather strong customer demand, despite the severe macroeconomics situation in the United States," Chang said.

SMIC predicted increased customer demand throughout the remainder of 2008, particularly in communications and consumer applications, such as DTV, mobile TV, and wireless networking IC (integrated circuit).

Revenue from the Asia Pacific region, including the Chinese mainland and Taiwan, had seen the highest growth, Chang said.

In 2008, the Chinese mainland capital spending on semiconductors is expected to reach US$2.1 billion, a 3-percent growth year on year, despite the global level's 16 percent drop, according to SEMI, a US-based research firm.

SMIC has cooperated with local governments to build facilities in Wuhan, Chengdu and Shenzhen, which helped the Chinese mainland's biggest semiconductor manufacturer to establish itself nationwide, which in turn fuels increased investment in China, SEMI said.

Meanwhile, SMIC said it expected to expand solar capacity some five to six times their current production output in the first half of next year.

(Shanghai Daily July 30, 2008)