Semiconductor
Manufacturing International Corp (SMIC), the biggest chipmaker
in the Chinese mainland, saw its first quarterly losses
in the fourth quarter last year, after becoming profitable
a year ago, mainly due to compensation payments made to
its competitor Taiwan Semiconductor Manufacturing Corp (TSMC).
Shanghai-based
SMIC said yesterday its revenues in the fourth quarter rose
by 6.2 per cent to US$291.8 million quarter-on-quarter.
Its annual
revenues hit US$975 million in 2004 with US$70.91 million
in profits.
It recorded
losses of US$11.2 million in the fourth quarter, after paying
US$23.2 million in compensation to Taiwan-based semiconductor
giant TSMC.
SMIC was accused
of infringing on TSMC's patents and stealing trade secrets
by the Taiwanese semiconductor firm in December 2003.
The mainland
company said on January 30 it had reached a settlement with
TSMC, and revealed it would be paying TSMC US$175 million
over six years and would therefore postpone the announcement
of its annual results.
SMIC's shares
on the Hong Kong stock exchange fell to HK$1.51 (19 US cents)
yesterday, down 3.23 per cent, while its American depository
shares on the New York Stock Exchange shed 0.71 per cent
to US$9.81.
"This
may change investors' confidence in SMIC," said Paul
Chan, an analyst with CSC Securities in Hong Kong.
He pointed
out that the losses, the impacts of the settlement with
TSMC, and increasing competition will pose a series of challenges
to SMIC.
Richard Chang,
chairman and CEO of SMIC, also said the situation this quarter
and the whole year will remain very challenging, but there
will be some improvement from the second quarter.
SMIC said its
capital expenditure will be about US$1 billion this year
depending on market conditions and will be mainly used to
expand production capacity in its wafer plants in Beijing,
Shanghai and Tianjin.
Its production
is expected to reach 147,000 pieces equivalent to 8-inch
wafers by the end of the year, a 22 per cent rise over 2004.
The company
predicted its wafer shipments are likely to decrease by
5 to 7 per cent year-on-year and utilization will be about
85 per cent.
Source: China Daily
