Semiconductor Manufacturing International (SMIC) saw revenues drop on year in third-quarter 2009, with the quarter's net loss widening from a loss of US$33.38 million in third-quarter 2008. On a sequential basis, the China-based pure-play foundry managed a revenue growth of 20.9% and improved net losses.

SMIC posted net sales of US$323.4 million in the third quarter of 2009, showing an increase from US$267.4 million in the second quarter but a 14% decrease from levels one year ago. Net loss amounted to US$69.1 million in the third quarter, compared to losses of US$97.9 million in the second quarter and US$33.4 million in third-quarter 2008.

"The third quarter displayed a continued foundry market recovery. SMIC exceeded its original guidance in the quarter. We expect revenues for the fourth quarter to grow 2-5% sequentially," said company CEO Richard Chang.

SMIC said its utilization rate rose to 87.3% in the third quarter from 75.4% in the second, which SMIC attributed to demand from the consumer segment. Revenues generated from the consumer sector grew 40.6% on quarter in the third quarter.

In terms of geographic reach, SMIC saw revenues from Greater China rise by 33.5% sequentially in the third quarter, followed by North America with 16.7% and Europe with 3%. Although North America remained the largest contributor to SMIC's third-quarter revenues, the sales proportion from Greater China increased 3.4pp on quarter and 4.4pp on year to 36.6% in the third quarter, according to the company.

SMIC said 80% of its new customers in the third quarter were from the Greater China region.

For advanced technology development, SMIC said its 65nm production ramp is on schedule. The foundry expects further increases in 65nm shipments in the fourth quarter and into 2010. In addition, SMIC noted it is on track to begin tape-out of 45nm production at the end of 2009.

Revenues from 65nm accounted for 1% of SMIC's third-quarter revenues, while 90nm and 0.13-micron segments took a combined 53% share compared with 44% in third-quarter 2008, the company revealed.

SMIC estimated its gross margin to improve sequentially in the fourth quarter, thanks to contribution from advanced nodes. Gross margin for the third quarter edged up to 0.8% from the previous quarter's negative 4.8%, buoyed by shipment and utilization increases.

The Wall Street Journal quoted an analyst as saying that SMIC is unlikely to break even before 2011. Chang said the company is striving to turn profitable in the third quarter of 2010.

SMIC swung to a loss in the second quarter of 2007, and has remained unprofitable since.

By: DocMemory
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