Semiconductor Manufacturing International Corp (SMIC), China's biggest made-to-order chipmaker, said it expects revenue this year to rise more than 10 percent from 2004 as orders increase. The company's shares gained.

The stock rose as much as 3.2 percent to HK$1.28 as of 12.22 PM Thursday in Hong Kong. The shares on September 23 plunged to their lowest level since the listing in March last year, after the company revised its third-quarter forecast.

The Shanghai-based company last week lowered its third quarter guidance from the forecast it gave in July, saying the installation and qualification of new equipment had been delayed to the fourth quarter.

The chipmaker expects the third quarter to be stronger than the previous three-month period and that it will meet its target of continued growth for the rest of the year, Chief Executive Officer Richard Chang said in a telephone conference Thursday.

"We received a lot of orders in the third quarter, but couldn't deliver as much as we expected," Chang said. The company faced a shortage of production capacity of 7,000 wafers per month in the current quarter, he said. The company expects to meet the shortfall of monthly production of 4,000 wafers in Shanghai by the next quarter.

The company is installing new equipment to meet the shortage and expected orders in the first two quarters of next year.

"The market is very strong and our orders are very strong," Chang said.

Semiconductor Manufacturing, which attributed the delay to paperwork required for tax-free imports, said the new equipment would be installed in the next quarter.

Semiconductor Manufacturing expects to start producing logic chips at its 200 millimetre wafer plants in Tianjin and Shanghai, Chang said, without giving a timeframe. The company expects to meet its target to start commercial production of 90-nanometer logic chips at its 300 millimetre wafer plant in Beijing by the end of 2005, he said.

So-called advanced technology manufactures chips with 90- nanometre spaces between transistors on 300 millimetre wafers. The technology allows more transistors to be packed on a chip by shrinking the spaces between them.

Semiconductor Manufacturing on September 23 said the company's gross margins would be cut because average selling prices for dynamic random access memory, or DRAM, will rise less than earlier forecast. The company said this quarter's average prices would rise between 3 percent to 5 percent from the previous quarter, compared with its earlier guidance of an 8 percent to 10 percent rise.

(China Daily September 30, 2005)