05 years in the core chip industry will encounter a major cyclical downturn

With personal computer manufacturers and mobile phone manufacturers to clear inventory, chip production will slow, therefore, China micro chip top foundry SMIC lowered the yield target in 2005, and this month, Morgan Stanley will also be on the international of the core in 2004 and 2005 earnings forecasts by 39% and 17%, the means that 2005 will be the first major industry cycle in the low tide core experience.

The growth of the global semiconductor industry's revenue slowed slightly in 2005, in part because of the industry's excessive new plants in 2004. Although it is expected that this year will be a slowdown, but SMIC CEO Zhang Rujing said that the global semiconductor industry will be improved in March, the industry is expected from March onwards has improved, the Christmas sales situation is not very bad, manufacturers have reduced inventory, these manufacturers will start to replenish stocks from the first quarter.

Zhang Rujing revealed that SMIC's goal is to the end of 2005 the monthly production capacity increased to 140 thousand to 155 thousand chips. In December, he had predicted that by mid 2005, the monthly production capacity will reach 150 thousand to 170 thousand equivalent to a chip of 8 inches. The company is unable to account for the expected changes in output. Zhang Rujing hopes for a $30 billion chip market in China, which is growing rapidly at a rate of two digits, thanks to strong consumer demand for computers and devices.

Zhang Rujing believes that the global chip industry, the first quarter may be some difficulties, he expects this year's chip industry performance will be flat. He said the chip industry growth slowed from the fourth quarter of 2004, the company adjusted the production plan accordingly. However, the Chinese market continues to grow, increasing domestic demand.

SMIC announced fiscal third quarter ended September 30th net profit of $39 million 300 thousand, revenue of $274 million 900 thousand, while a loss of $8 million 500 thousand for the same period last year, Revenue $107 million 100 thousand. The company has not yet announced 2004 full year results. IDC's statistics, the third quarter of the fiscal year, SMIC's revenue exceeded the Chartered Semiconductor in Singapore to become the world's third largest wafer manufacturing company.