Semiconductor Manufacturing International Corporation (SMIC) has reported net profits of US$96 million for the quarter ended June 30, 2010 following net losses over the past 12 quarters.

SMIC attributed its return to profitability in the second quarter to a US$105.9 million gain of commitment to grant shares and warrants. The China-based foundry earlier agreed to give rival Taiwan Semiconductor Manufacturing Company (TSMC) a payment and share offer under the terms of a settlement for their trade secrets lawsuit.

Meanwhile, SMIC saw second-quarter revenues grow 8.4% sequentially to US$381.1 million, topping its guidance of US$362.3-369.3 million with 3-5% growth.

"We've witnessed overall improvement this quarter, and believe we are on course to profitability," SMIC CEO David NK Wang said. "As China's fabless companies continue to grow stronger and stronger, SMIC has positioned itself to become the preferred foundry."

In terms of sales breakdown by region, North America continued to account for more than half of SMIC's total revenues in the second quarter followed by China with 28.7%. The foundry noted that sales from China rose 27.4% sequentially in the second quarter, buoyed by growing demand from the local fabless IC suppliers.

As to sales breakdown by technology, 90nm and below processes accounted for 23.6% of SMIC's second-quarter revenues compared to 20.3% in the first quarter and 16.7% a year earlier. "Our 65nm process is solid and ramping up, with shipments more than doubling on-quarter. Our 45/40nm development is well underway, and the technology will be ready by the end of 2010," Wang indicated.

SMIC's gross margin climbed to 15.6% in the second quarter from 14.6% in the first, according to the company.

SMIC ran at 94.3% utilization rate in the second quarter, compared to 92.1% in the prior quarter and 75.4% in the second quarter of 2009. Wafer shipments totaled 496,766 8-inch equivalent wafers in the second quarter, compared with 455,010 units in the first quarter and 341,261 a year ago.

Looking into the third quarter, SMIC now expects revenues to increase 4-6% from the second with a 20-22% gross margin.

In addition, SMIC has upwardly adjust its capex for 2010 to US$700-750 million, compared to US$330 million set previously.

By: DocMemory
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