SMIC to enhance the capacity of strategic alliance invested $1 billion 100 million

SMIC CEO Zhang Rujing said recently, will seek a "strategic alliance" to improve the production capacity, at the same time in 2006 will invest up to $1 billion 100 million of capital expenditures.

As a foundry manufacturer, SMIC has been working with the non factory chip company, and with Infineon IDM manufacturers such alliances. Zhang Rujing's latest statement, indicating that the company is ready to buy more wafers and wafer fab, or access to its right to use.

Such a strategy is not without precedent. July 2003, SMIC through the exchange of $260 million in shares, the purchase of Motorola's stake in the MOS-17 plant in Tianjin. Motorola then split its semiconductor division, and the Department to Free scale Semiconductor Inc name listed. Many Western companies are more likely to follow such a "fab-lite" strategy or to find strategic options for its semiconductor business, which may also have a number of options.

From SMIC's fourth quarter 2005 earnings report, the company's fourth quarter sales of $333 million 100 thousand, an increase of 7.5% over the previous quarter, a net loss of $15 million, a net loss of $26 million 100 thousand in the previous quarter. Nevertheless, Zhang Rujing said: our 2006 capital expenditure budget will reach about $1 billion 100 million, and in accordance with market conditions. In addition, we will look for other opportunities to expand capacity through strategic alliances."

In addition, according to SMIC data released in the fourth quarter of 2005 converted into a monthly production capacity of up to 8 inches wafer to more than 152000, capacity utilization of up to 93%. Compared with the third quarter of 2005, wafer shipments increased from 5.8% to 376227 (converted into a 8 inch wafer). The first quarter of 2006 and is expected to wafer sales growth of 2% to 4%; capacity utilization rate of 94% to 92%; the wafer mixed average price and the previous quarter; gross interest rate unchanged from the previous quarter; operating expenses in revenue in the proportion of 16% to 18%; non operating interest expenditures of approximately $14 million of capital expenditures of approximately; for $250 million to $300 million; depreciation and amortization expenses of approximately $225 million.

Zhang Rujing introduced to mainland manufacturers of products mainly include TD-SCDMA, WCDMA and CDMA2000 standard for using 0.13 micron technology, the production of the first batch of 3G baseband chip for a digital satellite receiver chip set-top box, and a video processor chip HDTV.