March 19, 2004 – China’s chipmaking capacity is still well short of demand, and is not contributing to overcapacity in capital investment, according to SMIC president and CEO Richard Chang.

Speaking at SEMICON China, Chang said that China’s capital spending was only 5.8% of sales in 2003, compared with about 25% globally; this year it’s estimated at $3.4 billion, only one-third of global foundries’ projected capital spending. Therefore, “China’s capital spending plans are not the cause of possible oversupply,” he explained.

Chang added SMIC’s capacity by year’s end will be 125,000 wafer starts/month, only 5%-6% of overall domestic capacity; also, 40% of SMIC’s output goes to overseas-based customers. “This creates a lot of opportunity for Taiwan foundries and foundries in Singapore to come to China to supply the domestic demand,” he said.