Tuesday, February 7, 2006
Richard Chang, president and chief executive officer of Chinese foundry Semiconductor Manufacturing International Corp., said the company would pursue “strategic alliances” in order to raise manufacturing capacity as well as spending up to $1.1 billion on capital expenditure in 2006.
The disclosure was made in a statement issued to present SMIC’s fourth quarter financial results.
As a foundry company SMIC already works with fabless chip companies and in alliances with some integrated device manufacturers (IDMs), such as Infineon Technologies AG. Chang’s latest announcement suggests the company is prepared to deals either to buy or gain access to more wafer fabs or wafer fab shells.
The move is not without precedent. SMIC swapped $260 million in shares to buy a stake in Motorola Inc.'s MOS-17 fab in Tianjin, China, in July 2003. Motorola subsequently let go of its semiconductor division, which floated off as Freescale Semiconductor Inc.
With a number of western companies pursuing “fab-lite” strategies or looking for strategic options for semiconductor operations or parts thereof in 2006, SMIC may have numerous opportunities to consider.
Despite making a loss in the fourth quarter of 2005, SMIC said that it generated $174 million in cash during the fourth quarter and $648 million during 2005. As a result the company has $600 million of available cash on hand. When this is added to $600 million in available credit facilities, the company said it had set a budget of $1.1 billion for capital expenditure in 2006.
“Our 2006 capital expenditure budget will be approximately $1.1 billion, which will be scalable depending on market conditions. In addition, we will pursue alternative opportunities to expand our capacity through the use of strategic alliances,” Chang said in a statement presenting the company’s fourth quarter financial results.
By: DocMemory
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