Wed, Mar 30, 2005 - Page 11 News List

SMIC racks up rare losses

DOWNTURN A big cause of the loss was SMIC's lawsuit settlement with TSMC to the tune of US$175 million, but the company also said shipments and prices will be flat

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Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路), China's biggest made-to-order chip supplier, had its first loss in five quarters as it made provisions to settle a lawsuit with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).

The company's shares declined as much as 4.5 percent in Hong Kong. Chief Executive Officer Richard Chang (張汝京) said today that chip shipments and prices will fall this quarter.

Net loss in the quarter ended Dec. 31 was US$11.2 million, or 3.1 US cents per American depositary receipt, compared with net income of US$10.9 million, or 2.7 US cents, a year earlier, the company said on its Web site today.

For last year, the company posted a profit of US$89.7 million, or 3.9 cents a share, from a loss of US$66.1 million, or 1.13 cents, a year earlier.

Shanghai-based SMIC had delayed announcing earnings since January while auditors reviewed the effect of a US$175 million settlement payment to TSMC, the world's biggest made-to-order chip supplier.

Chang said on a conference call today that shipments will decline this quarter as much as 7 percent and the average selling price will probably drop 13 percent.

Fourth-quarter sales, reported in January, doubled to US$292 million from US$145 million a year earlier.

"The company is likely to see losses in the first half and for the full year as average selling prices are falling," said Pranab Kumar Sarmah, head of information technology and electronics research at Daiwa Securities Group Inc in Hong Kong.

He expects a loss of US$40 million in the first quarter, and about US$20 million in the second.

For the fourth quarter, SMIC reported a US$23.2 million expense for the payment to TSMC.

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