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SMIC considers IPO in Beijing

Posted: 06 Feb 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Semiconductor Manufacturing International Corp.? foundry? IPO? 300mm? wafer?

Semiconductor Manufacturing International Corp. (SMIC) is mulling the possibility of spinning off its 300mm wafer operations in Beijing for a domestic initial public offering, according to sources.

To date, the government has favored state-owned enterprises for domestic listings, in part because the government directly benefits. More recently, however, the government has hinted that it's interested in seeing SMIC list in China. Currently, the company trades its shares in Hong Kong and New York.

The Shanghai-based foundry is not directly commenting, only noting that it is open to opportunities that will help drive it toward profitability.

During a recent quarterly earnings conference call, SMIC executive Richard Chang said the company's Beijing operations are profitable, as are its 200mm wafer operations in Shanghai. That leaves only its Tianjin facility, a fab bought from Motorola, as the main drag on earnings.

SMIC eked out a profit last quarter, but failed to remain in the black for the entire year. Overall, SMIC's 2006 revenue hit $1.46 billion but its loss totaled $40.4 million. SMIC said sales hit $383.8 million last quarter, an increase of 4 percent from the previous quarter. The foundry managed a quarterly profit of $1.2 million, compared to a loss of $15 million in Q4 of 2005 and a loss of $35.1 million in the Q3 of 2006.

In hopes of reaching consistent profitability, SMIC said it will lengthen the time period for equipment depreciation and cap its capex budget to $720 million annually for 2007 and 2008.

- Richard Goering
EE Times

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