Sales totaled $186.9 million at SMIC, which churned out wafers at near capacity (99 percent.) The company will spend $800 million this quarter to expand wafer lines that it said will also run at full steam through the end of June.

Communications chips are fueling the bulk of SMIC's revenues, at 56 percent, followed by computing chips, at 25 percent. The company has also continued to wean itself from memory chips, which were an early driver of its ramp-up phase. Logic trumped memory sales by a 3-1 ratio and helped raise its ASP per wafer to $1008.

Meanwhile, the 0.18-micron technology node remained the most popular, at 44 percent of sales, followed by 0.35 micron, at 21 percent of sales. The company reported no logic production at 0.13 micron; 0.15 micron tallied 4 percent of logic production.

SMIC said Monday (April 26) it raised $1 billion during its March initial public offering, and plans to spend a total of $1.9 billion on expanding capacity this year.

The company also projected into its third quarter, offering a conservative ASP estimate that it said would be flat. In the second quarter, wafer shipments will increase by 14 percent to 16 percent, its ASP will remain stable as will the mix of process technology at 0.18 micron and below. The logic and memory mix will also remain roughly the same.

Gross margins, however, will decline to the mid-20s on a percentage basis because of depreciation associated with the ramp up of its Fab 7. SMIC bought the fab from Motorola Inc. last year. It also blamed higher R&D costs of $16.5 million, up 77 percent from the previous quarter, on folding the Tianjin-based fab into its operations. Capacity at that fab will remain relatively flat in the second quarter at 5,000 to 6,000 wafers per month.

In Beijing, the company's 12-inch wafer fab will be delayed because of longer equipment lead times, said President and CEO Richard Chang. "The facility is on schedule, the clean room is on schedule, but the manufacturing equipment is . . . a little bit delayed ¡ª probably four to six weeks. We will do our best to catch up," Chang said.

He noted that the fab, which is a joint venture with Infineon Technology AG, will still ramp up on memory and then introduce logic products by the second quarter of 2005.

Chang said the sudden resignation of Infineon's CEO, Ulrich Schumacher, would have no impact on the ramp up. Infineon recently said it would spend $1 billion to push a U.S.-based fab into production, but Chang did not indicate that would have any material impact on the joint venture. "Nothing is going to change. Their plan is still ongoing and we still work closely with them," Chang said.

Chang also defended SMIC's revenue growth in the previous quarter, saying it was not due solely to capacity increases credited to the Motorola acquisition. Analysts seemed skeptical. Still, Chang said the company was seeing pricing power and attributed some of the revenue increase to stronger demand, rising ASPs and a more favorable product mix.

Communications will continue to be strong this quarter, Chang said, followed by an increase in consumer products ICs.

By: DocMemory
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