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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?

By geography, about 47 per cent of SMIC's Q1 revenue came from customers in China, followed by 41 per cent from North America and 12 per cent from Eurasia. Consumer products accounted for 46 per cent of SMIC's Q1 sales, followed by 44 per cent from communications and the remainder from computer and other applications.

As the company ramps up its new fabs in Beijing and Shenzhen, SMIC expects to see depreciation costs rise by about three per cent later this year, creating some downward pressure on margins. The company said it is counting on a high level of utilisation in the new fabs to shore up profitability.

SMIC said it had its twelfth straight quarter of profit in 1Q15, when it made $55.5 million in net income on $509.8 million in revenue. The company said it expects Q2 revenue to increase by as much as five per cent from Q1.

Capital expenditure

SMIC said planned capital expenditure for 2015 will be about $1.5 billion, part of which will come from the Chinese government.

SMIC said it will invest $450 million of a total $800 million for the expansion of its new fab in Beijing that's 55 per cent owned by SMIC. As a result, the amount that SMIC will spend for capex this year will be closer to $1 billion, Kung said. Last year, SMIC's capex was about $1 billion.

After the Chinese government created an IC investment fund last year, SMIC said that it would receive about $400 million from the government. The company said today that it will use that money for various investments this year.

SMIC's planned capex is about a tenth that of the world's largest foundry, TSMC, which in April cut its 2015 capex budget by $1 billion to fall within a range of $10.5 billion and $11 billion.

- Alan Patterson
??EE Times

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