SMIC Expands Output in Shenzhen

SHENZHEN, Jun 25, 2008 (SinoCast China IT Watch via COMTEX) -- IBM | Quote | Chart | News | PowerRating -- China's Semiconductor Manufacturing International Corp. (SMIC), one of the leading semiconductor makers in China, lately kicked off construction of new and separate 200mm and 300mm fabs in Shenzhen in cooperation with the Shenzhen municipal government.

The 300mm fab will use 45nm technology, which was recently licensed from IBM Corp. SMIC has also forged similar arrangements in China. In 2005, SMIC set up a 200mm wafer fab, Cension Semiconductor Manufacturing Corp. Based in Chengdu, that venture is managed by SMIC and backed by investors.

In 2006, Shanghai-based foundry chipmaker SMIC begun construction of a 300mm wafer fab in Wuhan East Lake New Technology Development Zone, Hubei Province, but not for itself.

Although SMIC already owns a 300mm wafer fab in Beijing, this fab, the first in Central China, is being paid for by the local authorities with SMIC being asked to manage the facility.

The facility will be financed by an investment company associated with the Hubei provincial government, Wuhan City government and Wuhan East Lake New Technology Development Zone, SMIC said.

SMIC has another game plan: It expects to boost capacity about 31 per cent by year's end, to 267,000 wafers per month from last year's monthly capability for 185,000 wafers.

Since its founding in 2000, SMIC's penchant for going against the grain has fueled its meteoric rise. In the first half of 2007, the company was the world's third largest pure- play foundry in terms of sales, behind only TSMC and UMC.

SMIC has built China's most-advanced fabs and is the prized pillar of the nation's effort to get its semiconductor industry off the ground. But market watchers say the foundry's eye- popping ascendancy has come at the expense of its bottom line.

Analysts note that the company has never made a profit on a fiscal-year basis and that it reported losses in three quarters last year.

The first-phase construction of the 8-inch production line is slated to be completed at the end of 2009 with an initial monthly output of 30,000 to 50,000 wafers, and at that time the second phase of the 12-inch wafers production line, which will use IBM's technology, will commence.

SMIC has been successful in gaining significant financial support and services from Chinese regional governments in establishing semiconductor manufacturing facilities in specific regions in the last 18 months.

SMIC has a business arrangement with Wuxi municipal government for the running of a 300mm fab without controls, while the local government owns the building and equipment.

From www.hexun.com, Page 1, Tuesday, June 24, 2008 info@SinoCast.com

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