In its fourth quarter 2004 financial results it could seen that SMIC had felt the beginning of a slow down that has also affected other foundries in Taiwan and Singapore. After hitting a peak of 99 percent utilization in the third quarter, the company's rate hit 95 percent in the fourth quarter even as it started to run more DRAM wafers to keep its lines busy. Even so, SMIC has boosted its logic output to about 75 percent of revenues.

Because of expanding capacity, the company said sales increased 6 percent to $291.8 million from $274.9 million in the prior quarter. However, it did not offer a profit and loss breakdown because it is still assessing the operational impact of a settlement, announced Sunday (Jan. 30), with Taiwan Semiconductor Manufacturing Co. regarding a patent infringement lawsuit.

SMIC has agreed to pay TSMC $175 million, payable in installments over six years. The foundries have also agreed to cross license each other's patent portfolio through December 2010. The deal concludes a battle between the two, in which TSMC asserted that there was no way SMIC could have advanced so quickly on the technology front without stealing some of its trade secrets and infringing patents. SMIC has several former senior engineering staff from TSMC working in its fabs.

SMIC said it would be able to provide full operational results for the fourth quarter of 2004 and any guidance relating to the first quarter of 2005 within four to six weeks.

Nor did SMIC provide details of its capital spending plans for 2005, but its chairman, Richard Chang, was quoted in media last week as saying that the company would adjust downward its previous capacity expansion goals. Wafer shipments are expected to decrease between 5 percent and 7 percent this quarter.

The company also said it began new relationships with 19 companies during the fourth quarter, including 12 Chinese fabless firms.

"While the global semiconductor industry has softened, the Greater China region continues to demonstrate strength accounting for more than 10 percent of total revenues indicating that China's domestic demand for semiconductors is still growing," said Richard Chang, SMIC's president and chief executive officer.

Chang also said the company would push ahead with 300-mm wafer expansion at its fab in Beijing, and begin pilot runs for 90-nanometer manufacturing process technology in the second half of the year.

By: DocMemory
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