Chinese Chipmaker SMIC: Profitability Ahead

China's factories are working nonstop to churn out smartphones, digital cameras, and other silicon-based gadgets, but that hasn't translated into profits for China's biggest chipmaker. Since its first plant opened in 2002, Shanghai-based Semiconductor Manufacturing International (SMI) has lost $1.66 billion. Even in 2010, as the foundry industry (which makes semiconductors on a contract basis for chip-design clients) was on the upswing and rivals had to turn away customers, SMIC fared poorly. It is expected to lose $67.5 million for the year, according to a Bloomberg survey of analyst estimates.

That's changing, says David N.K. Wang, the company's chief executive officer. SMIC reported earnings of $30.4 million for the third quarter, its second consecutive quarterly profit. "We are almost boiling," says Wang. "We just need a little bit [more] heat."