The Wall Street Journal-20080130-Chip Maker SMIC Reports Net Loss

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Chip Maker SMIC Reports Net Loss

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HONG KONG -- Semiconductor Manufacturing International Corp. said it swung to a net loss in the fourth quarter as chip prices fell, and it forecast flat revenue in the current first quarter.

China's largest chip foundry by capacity posted a net loss of $21.2 million, compared with a restated net profit of $143,000 a year earlier. Revenue rose 3% to $395.3 million from $383.8 million a year earlier.

SMIC's earnings have suffered from a slump in prices of dynamic random-access memory chips. Chip makers boosted output anticipating strong demand with the launch of Microsoft Corp.'s Windows Vista, but demand failed to meet expectations, while industry supply ballooned.

The average spot price of the mainstream DRAM chip fell about 50% in the fourth quarter from the third quarter, and has fallen about 85% since the beginning of 2007, according to DRAMeXchange, an online chip clearinghouse. SMIC expects DRAM revenue as a portion of total revenue to fall to below 20% in the first quarter of 2008.