Shanghai Huahong NEC Electronics Co., a semiconductor venture between NEC Corp and Shanghai Huahong Group (上海華虹), said sales will rise by half this year after it focused on making chips used in identity cards and consumer products.
Revenue will "substantially exceed" 2 billion yuan (US$242 million) this year, helping the Shanghai-based company end six years of losses, president Fang Peng said in an interview.
Sales increased more than 50 percent on an annual basis in each of the past four months.
Huahong NEC, unseated by Shanghai-based Semiconductor Manufacturing International Corp (
"We haven't been aggressive enough," Fang said. "We spent much of last year repositioning ourselves to focus on our foundry business and adding value to chips."
Huahong NEC, China's largest supplier of made-to-order chips until last year, plans to boost capacity at a factory in Jinqiao, in Shanghai's Pudong district, by about a third this year to 40,000 8-inch silicon wafers a month, Fang said.
A second factory, under construction in Zhangjiang, will be able to produce an additional 25,000 wafers a month, bringing total monthly capacity to more than 60,000 wafers by 2006, he said.
The company stopped making memory chips last year, which were unprofitable as global prices fell.
"Huahong NEC must expand to maintain its position as one of China's top three chipmakers," said Tina Tang, a Beijing-based analyst at researcher Gartner Inc.
"Aggressive expansion by SMIC means they're under the threat of losing market share," she said.
Semiconductor Manufacturing boosted chip sales sevenfold to US$366 million last year, becoming the world's fifth-largest supplier of made-to-order chips and China's largest, according to Gartner. It may have had as much as 5 percent market share last year, Gartner said.
Huahong NEC's ranking probably fell one spot to seven.
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