SMIC Corp, the top contract chip maker on the Chinese mainland, has recently seen a clear rise in orders while its first-quarter capacity utilization rate is likely to substantially exceed its original expectations, Chief Executive Richard Chang said on Tuesday.

 

The capacity utilization rate is expected to show further improvement in the second quarter from the first, he said.

 

Chang's comments followed last week's news from Taiwan's TSMC, the world's largest contract chip maker, that it had sharply raised its first-quarter sales and margin forecasts due to rush orders from Chinese mainland, indicating that a trend of falling sales that began six months ago had hit bottom.

 

Chang added that the start of production at SMIC's new fabrication plant in Shenzhen, which will use 8-inch 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.

 

He added that the company's planned $190 million in capital expenditure this year would be used primarily for R&D and expansion at its 12-inch wafer facilities.

 

Last month, the company posted a surprisingly large quarterly loss of $124.5 million, double what analysts had expected, as recession-wary consumers cut back spending on PCs, cellphones and flat-screen TVs.

 

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, sources familiar with the talks told reporters last month.