SMIC to Expand With Two Fabs in Shenzhen
David Lammers, News Editor -- Semiconductor International, 1/30/2008 6:55:00 AM
Semiconductor Manufacturing International Corp. (SMIC, Shanghai, China) will launch a semiconductor manufacturing complex in Shenzhen in cooperation with the Shenzhen municipal government, CEO Richard Chang said Wednesday.
In a conference call after the release of the company's fourth quarter financial results, Chang said that the Shenzhen campus will include an R&D center, a 200 mm production line, and a 300 mm line that will use licensed 45 nm process technology from IBM Corp. (Yorktown Heights, N.Y.).
“The 300 mm fab will introduce advanced process technology licensed from IBM. With the support of the Shenzhen municipal government in financing, incentive policies and ways of operations, we expect this project to break ground in the first half of 2008,” Chang said.
SMIC will register an independent legal entity, the Semiconductor Manufacturing International (Shenzhen) Corp. Ltd., to complete the project.
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| SMIC, with support from the Shenzhen municipal government, will build a manufacturing and research complex beginning this year. |
IBM announced in late December that it would license its 45 nm bulk CMOS technology to SMIC. Chang said the IBM technology will “allow SMIC to accelerate its technology advancement in logic process technology. With the roadmap extended to 45 nm technologies, we see a trend of more customers seeking our foundry services in the 90 nm and 65 nm technology nodes as well.”
SMIC has a 300 mm fab in Shanghai that is in the pilot production stage, three 200 mm lines in Shanghai, two 300 mm lines in Beijing, a 200 mm wafer fab in Tianjin, and an in-house assembly and testing facility in Chengdu. In addition, SMIC manages and operates a 200 mm wafer fab in Chengdu owned by Cension Semiconductor Manufacturing Corp. A 300 mm wafer fab is under construction in Wuhan, owned by Wuhan Xinxin Semiconductor Manufacturing Corp., supported by the Wuhan municipal government.
Chang said SMIC’s production capacity increased to 185,250 200-mm-equivalent wpm, with a utilization rate of 94%. Capital expenditures in the fourth quarter increased to $260M, caused, in part, to investment in the 45 nm project, he said. Capital expenditures will be ~$700M in 2008 as the company expands production at advanced technology nodes “and continues the planned conversion of DRAM capacity to logic in our Beijing fabrication facility,” Chang said.
DRAM realignment
SMIC’s 2007 bottom line was hurt by the sharp decline in DRAM prices in the fourth quarter, but revenues from logic increased. Revenue for the full year 2007 increased 5.8% to $1.55B, “despite unprecedentedly difficult conditions in the DRAM market,” he said. The gross profit increased by 20% to $152.7M for the year, with a net loss of $40M in 2007, compared with a net loss of $44.1M in 2006.
"As part of our plan to mitigate the continuing DRAM pricing erosion, we reduced our DRAM foundry services in the fourth quarter. We have successfully reduced our DRAM shipments by about 22% since the first quarter of 2007, excluding a single large shipment in the fourth quarter to clear inventory of discontinued DRAM product lines,” Chang said.
DRAM revenue as a portion of total revenue will decrease to <20% in the first quarter of 2008, “with further reductions throughout the remainder of the year,” Chang said.
Revenue from the non-DRAM business increased by 13.5% to $1.121B in 2007, compared with $988M in 2006, and gross profit from the non-DRAM business saw a 104% year-on-year increase for the year. Logic sales from 0.13 µm and 90 nm technology nodes increased by 42% over 2006, the company said.
"As the overall semiconductor market continues to expand rapidly in China, SMIC has captured this significant growth trend, demonstrated by a 56% growth in our China sales in 2007,” Chang said. Demand for cell phone chipsets, power management ICs and consumer chips was strong in 2007, he said, with 77 new customers added over the year, representing a 23.3% increase in the customer base. Many of them are based in China, he added.
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