Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
EE Times-Asia > Manufacturing/Packaging

Strong performance allows SMIC to defy chip downturn

Posted: 13 Nov 2015 ?? ?Print Version ?Bookmark and Share

Keywords:SMIC? TSMC? UMC? RF? Samsung?

Semiconductor Manufacturing International Corp. (SMIC), China's largest foundry, has announced that its capacity is fully utilised, countering a business slump that's hurt its larger competitors. The company attributed its strong performance to product diversification. SMIC said it aims to develop a range of specialised versions of its most advanced 28nm process technology for such applications as RF. The company also said it has nine customers engaged in 28nm products.

"SMIC has achieved another quarter of record revenue and earnings in Q3, undeterred by the industry correction," CEO Tzu-Yin Chiu stated. "Our utilisation remains high, and we're guiding for additional growth in Q4."

The 28nm node has been a key driver for sales and profit at Taiwan Semiconductor Manufacturing Co. (TSMC) for nearly five years. As the industry grapples with an inventory correction in the latter half of this year, the world's largest foundry said last month that it aims to protect its nearly unchallenged position in 28nm while maintaining profitability.

Regarding SMIC, "28nm is the one area that has been slow to ramp up this year," said Randy Abrams, an analyst with Credit Suisse.

"The ramp-up is not as strong as expected," Chiu responded. By the end of 4Q16, 28nm will account for a "double digit" portion of company revenue, Chiu said.

Competition in 28nm

Competition is building in 28nm. United Microelectronics Corp. (UMC), the world's second-largest foundry, last month said it aims to grab a 15-20 per cent market share in 28nm by 2Q16. UMC's efforts to grab a bigger piece of the 28nm business stalled during Q3.

In line with SMIC's earlier expectations, the company said it booked its first revenue from sales of 28nm chips during Q3. While SMIC didn't quantify its 28nm sales, the company said revenue from 45nm-and-below products came in at about $80 million, compared with about $75 million in Q2. That chunk accounted for about 15 per cent of the company's total sales in both quarters.

Specialty products such as CMOS sensors, fingerprint sensors and specialty memory represented about 40 per cent of SMIC's sales during Q3, the company said. About 43 per cent of the company's Q3 sales came from products made with 0.15?m and 0.18?m technology.

While SMIC has shored up profit and utilisation by focusing on lagging-lagging edge products, foundry leaders TSMC and Samsung are pushing ahead toward the high end. Samsung started making 14nm FinFET chips earlier this year while TSMC entered commercial production of 16nm FinFET products in 3Q15.

Standing pat on capex

SMIC reiterated that its capital expenditure for 2015 foundry operations will be $1.5 billion, part of which will come from the Chinese government. TSMC last month cut its capex to about $8 billion.

SMIC said its strength is in part due to customers among the nearly 600 design houses in China and growth from international customers that have become more interested in manufacturing in China. During Q3, nearly 48 per cent of the company's sales came from customers in China, followed by North America at 34 per cent. The company said its 2015 sales will probably grow more than 10 per cent from a year ago.

SMIC said its capacity utilisation exceeded 100 per cent during Q3 on strong demand for communications products, and its fabs will probably remain fully utilised during Q4 and through the early part of next year.

- Alan Patterson
??EE Times

Article Comments - Strong performance allows SMIC to de...
*? You can enter [0] more charecters.
*Verify code:


Visit Asia Webinars to learn about the latest in technology and get practical design tips.

Back to Top