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SMIC reduces Q4 guidance, cites industry slowdown

Posted: 29 Dec 2004 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor manufacturing international? foundry? dram?

Chinese foundry Semiconductor Mfg Int. Corp. has updated its fourth quarter outlook saying that while its shipments are still expected to increase, average selling prices (ASPs) are expected to be below the low-end of previous guidance.

The company attributed the softening prices to a worldwide slowdown in semiconductor business activities in the fourth quarter of 2004.

SMIC said in a statement Wednesday (Dec. 22) that its wafer shipment is expected to increase approximately 15 percent quarter-on-quarter, which is at the bottom end of the 15 percent to 20 percent range of the original guidance. The blended ASP in the fourth quarter is now expected to be 1 percent to 2 percent below the low end of the original guidance.

The original fourth quarter outlook was published in SMIC's third quarter 2004 earnings release on October 28.

Based on the latest assessment, gross margin for the fourth quarter is now expected to be approximately 6 percent lower than the previous quarter, rather than flat with it, mainly due to lower DRAM ASP and an inventory charge as a result of declining estimated market values.

Operating expenses as percentage of sales, excluding foreign exchange gain or loss, in the fourth quarter will be approximately 18 percent, in line with original guidance of the mid to high teens of percent. The increase of operating expenses as a percentage of sales over the previous quarter is mainly driven by an expected increase in R&D expenditure related to SMIC's 300mm wafer fab in Beijing development 90nm manufacturing process technology, SMIC said.

The company did not comment on manufacturing capacity utilization rates, which had previously been forecast to be in the mid-to-high 90 percent range for the period.

- Peter Clarke

Silicon Strategies

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