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Profitability of SMIC's 28nm tech still unclear

Posted: 12 May 2015 ?? ?Print Version ?Bookmark and Share

Keywords:SMIC? 28nm? Qualcomm? TSMC? UMC?

During its latest conference call, Semiconductor Manufacturing International Corp. (SMIC) failed to disclose as to whether it will make money from 28nm products this year as it ramps up its most advanced process technology. According to SMIC EVP Gareth Kung when he announced the company's 1Q15 financial results, "It's a bit too early to say in terms of revenue contribution about 28nm by the end of the year. We're going to report to investors as we make more progress."

SMIC and Qualcomm, the world's largest cellphone chip designer, said in July last year that they were collaborating on 28nm production. Qualcomm said it would help accelerate SMIC's 28nm process while SMIC said it would make Qualcomm's Snapdragon processors on that technology node.

SMIC may be lagging behind leading foundry rivals such as Samsung and Taiwan Semiconductor Manufacturing Co. (TSMC), which are ramping up 14nm and 16nm technology this year. TSMC has dominated the 28nm node for nearly five years without any challengers. United Microelectronics Corp. (UMC), has become the second company to offer 28nm products, accounting for nine per cent of its Q1 revenue this year, up from seven per cent in 4Q14.

SMIC's 12in fab in Beijing is qualifying 40nm and 28nm as it enters initial production, SMIC CEO Tzu-Yin Chiu stated. Another SMIC 12in fab in Shanghai has a 14,000 wafer-per-month capacity mainly for 40nm, 45nm and R&D, with a 6,000 wafer-per-month capacity capable of 28nm production, he added. The company is also expanding production at fabs in Shenzhen, to the north of Hong Kong, and Tianjin, on China's northeast coast.

Utilisation, capacity rise

Strong demand from customers in China helped boost SMIC's capacity utilisation to 99.7 per cent in 1Q15, the highest level in more than a year. SMIC's Q1 capacity in 8in wafer equivalents edged up to 251,500 units from 243,500 units in the same period a year ago.

"We are witnessing a relatively strong first half with very high utilisation and a broad range of applications," CEO Chiu said. "Growth in H1 is being driven from a diversified base of 65nm and 40nm products. We are cautious about the second half given the industry's inventory situation."

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