smic_logo.jpgThere's finally a light at the end of the tunnel, claims SMIC, China's largest contract chip maker, as China's electronics sector starts to buy more chips.

Six months ago, its immediate future looked cloudy and SMIC postponed investment plans. Today, SMIC is in more bullish mood and CEO Richard Chang told Reuters that it has recently seen a clear rise in orders while its first-quarter capacity utilisation rate is likely to substantially exceed its original expectations.

Chang's comments followed last week's upward revision in sales and margin forecasts from Taiwan's TSMC, with which SMIC likes to be compared. TSMC said the boom was due to rush orders from China, indicating that the trend of falling sales that began six months ago had turned.

Chang added that the start of production at SMIC's new fab in Shenzhen, which will use 300-mm wafers, was likely to be delayed until the first quarter of 2010 from the fourth quarter of 2009 due to problems at the construction site.

SMIC has been searching for outside investors to shore up its cash position and has been in recent talks to sell a strategic stake to Intel Corp

Last month, the company posted a Q4 net loss of $124m, double that of a year earlier, and a 31% drop in revenue.

After a decade of investment, the jury is still out on whether the Chinese government's ambitious dream of building SMIC into a world-class chip maker is any closer to being realised.

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