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Semiconductor Manufacturing Posts a Profit for First Time in Three Years
Semiconductor Manufacturing International Corp., China’s biggest chipmaker, forecast profit margins will rise this quarter as sales increase, after the company posted its first profit in more than three years.
Third-quarter revenue may climb as much as six percent from $381.1 million in the previous three months, the Shanghai-based company said in a statement to the Hong Kong stock exchange yesterday. Gross profit margin, the percentage of sales left after deducting production costs, will probably widen to 22 percent from last quarter’s 15.6 percent, according to Semiconductor Manufacturing.
Increased sales of more advanced chips and a one-time gain from the revaluation of company securities helped Semiconductor Manufacturing return to profit last quarter. The chipmaker, unprofitable since 2007, said it’s boosting capital spending to as much as $750 million this year to meet rising demand.
Second-quarter net income was $96 million, or 20 cents per American depositary receipt, compared with a loss of $98.2 million, or 22 cents, a year earlier, Semiconductor Manufacturing said.
Earnings included a $105.9 million one-time gain from the company securities Semiconductor Manufacturing issued to rival Taiwan Semiconductor Manufacturing Co. as part of a settlement of a trade-disputes lawsuit last year.
The Chinese company increased sales of higher-specification chips with finer dimensions, which lifted average selling prices, Steven Pelayo, a semiconductor analyst at HSBC Holding Plc, wrote in a July 23 report.
Chief Executive Officer David Wang said in the statement that sales of chips made by the 65-nanometer process more than doubled in the second quarter from the previous three months and will probably rise again in the third quarter. The company’s 45/40 nanometer technology will be ready by the end of the year, he said.
Shares Rise
The chipmaker’s shares rose 3.6 percent to 57 Hong Kong cents in Hong Kong yesterday, before the earnings announcement. The stock has advanced 14 percent this year, compared with the 1.8 percent drop in the city’s benchmark Hang Seng Index this year.
Taiwan Semiconductor, the world’s biggest contract chipmaker, in November dropped its dispute with Semiconductor Manufacturing in return for $200 million, plus stock and share warrants.
Semiconductor Manufacturing last reported a profit in the first quarter of 2007.
To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net
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