China’s SMIC Lands Qualcomm Snapdragon Chip Orders

Semiconductor Manufacturing International Corp. (981) secured orders from Qualcomm Inc. (QCOM) to make chips for the world’s largest supplier of smartphone processors.

SMIC, based in Shanghai, will work with the San Diego, California-based chip designer to make its Snapdragon processors, the companies said in a press release yesterday.

Using SMIC’s 28-nanometer technology, Qualcomm will have its marquee smartphone chip made in China as it seeks to tap into the world’s largest mobile market. The move could be a blow to Taiwan Semiconductor Manufacturing Co., the biggest made-to-order chip foundry, which previously struggled to fill orders, causing a shortage, and has Qualcomm as its biggest customer.

SMIC rose 7.3 percent to close at 74 Hong Kong cents, the highest since Feb. 17. TSMC added 0.4 percent to NT$135 in Taipei.

SMIC, which posted its second consecutive year-on-year drop in profit in the first quarter, currently makes simpler chips for Qualcomm that help regulate power and wireless connections.

In 2012, Qualcomm forecast sales that missed some analyst estimates after TSMC couldn’t produce enough. That shortage forced some mobile phone makers to postpone product releases.

As well as being the world’s largest chip foundry, TSMC became a minority shareholder in SMIC after settling a trade-secrets lawsuit it brought against the Chinese company in 2009.

TSMC gets about 22 percent of its sales from Qualcomm, according to data compiled by Bloomberg.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Aaron Clark, Robert Fenner

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