SHANGHAI – Semiconductor Manufacturing International Corp. (SMIC), for the first time in a long time, has a good story to tell.
The company hopes to put to bed the industry’s collective memory of SMIC as a huge Chinese foundry hip-deep in red ink, pursued by its Taiwanese rival in litigation, and paralyzed by internal management turmoil.
In contrast, the new SMIC comes with record-high revenue—$1.7 billion for the full year of 2012—positive income of $15.9 million (the company’s highest in seven years), and a smiling, personable CEO, Tzu-Yin Chiu, who took the company’s helm in August, 2011.
In the first one-on-one interview given to the Western media since he became SMIC’s CEO, Chiu carefully chose his words as he laid out his company’s short, medium and long-term strategies Thursday (March 21). In an exclusive conversation with EE Times at SMIC headquarters here, he touched on everything from the company’s sub 40-nm strategy to his view on fully depleted silicon on insulator (FDSOI) technology. He also covered SMIC’s relationship with IBM and financing for its Beijing fab expansion.
The most telling sign of the new SMIC is found in Chiu’s focus on “utilization, differentiation and advanced technology”– with priority in that order, not the reverse.
SMIC's CEO Tzu-Yin Chiu
Instead of speaking with bravado of how he plans to compete with the world’s biggest foundry—Taiwan Semiconductor Manufacturing Co. (TSMC)—the low-key CEO spoke more about execution. In Chiu’s mind, the pressing issue for SMIC is to demonstrate to the world that SMIC can “continue to grow and thrive in a foundry environment,” as he put it.
If the last several quarters are any indications, the new plan is going well. But the obvious question is whether the good news keeps coming. How long can SMIC sustain its current quarter-after-quarter growth?
As the chip industry knows, the foundry business is not for the faint-hearted. The semiconductor market regularly revolves in cycles of shortage and overcapacity, with sometimes dramatic fluctuations in end-market demands, while everyone sweats the future of next-node process technology.
Cautiously, Chiu’s interview rarely strayed from SMIC’s message. But he proudly cited a survey published by the Ministry of Industry and Information Technology's China Software and Integrated Circuit Promotion Center (CSIP) in November 2012, which noted that 75 percent of Chinese fabless companies chose SMIC as their preferred foundry partner. That number in the same survey a year before was only 59 percent.
“Our customers are recognizing the quality of our service, and especially speed,” said Chiu.
Speed is critical for customers whose survival depends on product turn-around time. For that, “we need to offer them a reasonably complete IP portfolio and characterization,” he said. “And we must get it right the first time.” For some products, SMIC’s turn-around time these days is as short as four months. For other products, it’s six to seven months.
One SMIC advantage today is the big success of some emerging China fabless companies. As Spreadtrum’s CEO Leo Li noted and SMIC’s Chiu confirmed, Spreadtrum, for example, is one of the “the biggest” and “most important customers” of SMIC. But, once Spreadtrum, which currently gets its chips made at TSMC, SMIC and UMC, moves to a 28-nm node for the company’s SoCs in the fourth quarter of this year, Li said that Spreadtrum is going to TSMC. “But of course, SMIC is also moving to 28-nm. We’ll work with them, if not next year, then in 2015,” said Li.
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