July 31, 2006 – Chinese flagship foundry Semiconductor Manufacturing International Corp. (SMIC) reported a net profit of $2.2 million in 2Q06, vs. a net loss of $8.7 million a year ago, on 2.9% higher sales of $361.4 billion. The results include an income tax benefit of $18.9 million. Revenues from 0.13-micron logic products increased to 22.5% of revenues, vs. 13.3% in 1Q06.

During the quarter SMIC ramped production of 90nm logic at its 300mm facility in Beijing, qualified both Elpida’s 90nm-based 512M-bit DDR2 SDRAM, and qualified Saifun’s 90nm NROM flash for projected production in 4Q06. Capital expenditures rose 41% during the quarter to about $317.3 million.

SMIC says it’s maintaining a “cautiously optimistic” outlook for 2H06, as some customers have pushed out wafer orders due to an inventory correction, but this is being offset by growing business from global customers seeking domestic inroads, as well as an increase in activity from Mainland China customers. The foundry sees a slight slowdown in sales vs. 2Q06 (0%-2% growth), with gross margins decreasing to 8%-12%, from 12.4% in 1Q. Capital expenditures are seen increasing to $325-$360 million, although the company’s FY06 capex budget remains unchanged at $1.1 billion.