THE biggest chipmaker in China, Semiconductor Manufacturing International Corp. (SMIC), said Tuesday that it would start a new integrated circuit production project in Shenzhen.
        The company will invest US$1.58 billion in the project register an independent legal entity called the Semiconductor Manufacturing International (Shenzhen) Corp. Ltd., which will build an integrated-circuit technology research and development center. The entity will also set up an 8-inch wafer production line and a 12-inch chip fabricating plant.
        SMIC said the 12-inch chip fabricating plant will have an advanced process technology licensed from International Business Machines Corp.
        SMIC expects work on the the first phase of the project will begin in the first half of 2008 and complete in the end of 2009.
        The Shanghai-based firm also owns or manages plants in Shanghai, Beijing, Tianjin and other mainland cities, the source said.
        Meanwhile, the company has swung to a quarterly loss amid punishing price declines in the global computer memory chip market.
        The firm posted a loss of US$21.2 million for the three months ended Dec. 31, compared with net income of US$1.2 million a year earlier. That loss, however, shrunk from US$25.6 million in 2007's third quarter.
        Its fourth-quarter result just beat an average of forecasts for a net loss of US$21.3 million.
        Margins dwindled further to 8.9 percent in the fourth quarter versus 10.8 percent in the previous three-month period, squeezed by sliding memory chip prices.
        SMIC had revenue of US$395.3 million in the fourth quarter of 2007.
        For the whole of 2007, SMIC posted a net loss of US$40 million, compared to a net loss of US$44.1 million in 2006, missing a previous target to get back into the black for all of 2007.
        SMIC, which has made a net loss for much of the past three years, expects to spend US$700 million in 2008 enhancing technology and converting some production from plain-vanilla memory chips to higher-end logic microchips in Beijing.
        SMIC expects dynamic random access memory (DRAM) chips to decrease as a proportion of its total revenue as it ramps up production of higher-end logic and flash memory chips, used in gadgets such as digital cameras and portable music players.
        It's pondering whether to float shares in its manufacturing plants on mainland exchanges.
        SMIC said yesterday it expects revenue to remain flat or slightly decline in the first quarter of 2008 from the previous quarter, amid falling memory chip prices.
        "2007 was a challenging year for SMIC, as we faced a difficult DRAM environment and increasing global competition," SMIC Chief Executive Richard Chang said during a conference call with analysts.
        SMIC expects dynamic random access memory (DRAM) chips to decrease as a proportion of its total revenue as it ramps up production of higher-end logic and flash memory chips, used in gadgets such as digital cameras and portable music players.
        "We expect DRAM revenue as a portion of total revenue to decrease to below 20 percent in the first quarter of 2008, with further reduction throughout the remainder of the year," Chang said.