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SMIC to enter volume production of 28nm HKMG chips in 2H18

Feb. 12, 2018 – 

China-based pure-play foundry Semiconductor Manufacturing International (SMIC) is scheduled to enter volume production of chips fabricated using 28nm HKMG and HKMG+ processes in the second half of 2018, according to company co-CEO Liang Mong Song.

SMIC is also planning the availability of more-advanced 3D FinFET technology designed for high-performance computing and low-power chip applications, said Liang, adding that the process development is progressing on schedule.

Market observers identify Liang as a key figure in assisting SMIC to accelerate the development of the China-based foundry's advanced process technology.

SMIC reported revenues increased 6.4% on year to US$3.1 billion for 2017, with a 23.9% gross margin. Revenues generated from the automotive and industrial sectors doubled in 2017 compared to 2016, as a result of its acquisition of LFoundry.

In the fourth quarter of 2017, sales of 28nm chips grew as a proportion of company revenues to exceed 10%, SMIC disclosed. Revenues generated from the process climbed over 28% sequentially to account for 11.3% of SMIC's total wafer revenues in the fourth quarter, compared to 8.8% in the third quarter of 2017 and 3.5% in the fourth quarter of 2016.

SMIC posted revenues of US$787 million in the fourth quarter of 2017, up 2.3% sequentially but down 3.4% on year. In addition to 28nm process sales growth, sales generated from 40/45nm processes also increased as a proportion of company revenues to 23.6% from 20.6% in the prior quarter.

SMIC's gross margin slid to 18.9% in the fourth quarter of 2017 from 23% in the prior quarter and 30.2% a year ago. The company attributed the negative performance to a substantial rise in R&D costs for mainly its advanced-node development.

SMIC expects its gross margin to rebound to between 25% and 27% in the first quarter of 2018, while revenues will increase 7-9% on quarter.

SMIC's 2017 capex for foundry operations reached US$2.46 billion, of which US$948 million and US$510.5 million were spent on 12-inch fab expansions at its plants in Beijing and Shenzhen, respectively.

SMIC expects its 2018 capex for foundry operations to be approximately US$1.9 billion, of which US$500 million and US$400 million will be for its majority-owned 12-inch fab in Beijing and for a new project at its Tianjin fab, respectively.

SMIC also disclosed subsidiary Semiconductor Manufacturing South China (SMSC) will be responsible for the development of its 14m process technology. SMSC will launch the first-phase investment estimated at US$5 billion into the process development, and will draw investments from third parties during 2018-2019.

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