Memory chip woes hit China fab

One of China's leading chip makers suffered further losses in the second quarter as it struggled to exit from the highly competitive memory chip business.

Semiconductor Manufacturing International Corporation is a contract chip maker which makes chips for designers without their own fabrication facilities.

SMIC's quarterly loss surged to $45.6m, compared to a loss of $2m in the same quarter last year. During the same period, revenue slid 8.4 per cent to $342.9m.

The company is converting DRam production lines at its Beijing factory to make logic chips.

Ignoring the ailing DRam business presented a brighter picture, the company said, with non-DRam revenue increasing 3.8 per cent quarter-on-quarter and 24 per cent year-on-year to $330.7m.

"Overall, as expected, our revenue for the second quarter of 2008 declined slightly to $342.9m. Due to our gain in logic foundry services, we were able to significantly narrow our quarterly losses to $45.6m," said SMIC chief executive Richard Chang.

"The losses in the second quarter were primarily due to the fact that we are still transitioning from majority DRam production to pure logic production in our Beijing facility."

Revised first-quarter figures now include a $202.7m loss for the period, due to the higher than expected cost of refitting memory chip production lines. SMIC has reduced its DRam revenue from 12 per cent of the total to 3.6 per cent.

"On a regional basis, revenue from North America remains solid, while revenue from the Asia Pacific region, including Mainland China and Taiwan, has seen the highest growth," the company said in a statement.