Tag Archives: TSMC

RETAIL: Shanghai Wins Big With Wanda Group Relocation

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Wanda to relocate HQ to Shanghai

Shanghai may be famous for its entrepreneurial spirit, but its track record isn’t quite so stellar when it comes to nurturing top entrepreneurs. That could be starting to change, however, with word that Dalian Wanda Group, one of China’s most dynamic companies, plans to move its headquarters to Shanghai from its current location in Beijing.

As a longtime foreigner living in Shanghai, I’ve always been surprised by the relatively small number of major private companies for a city of our size. We should certainly be proud of some of our city’s most outstanding entrepreneurs, with names like Guo Guangchang of Fosun Group and Spring Airlines (Shenzhen: 601021) Chairman Wang Zhenghua as 2 outstanding examples. Read Full Post…

COMPUTERS: SMIC Joins Group Buying Stats ChipPac

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Bottom line: A new alliance between SMIC and a leading Chinese chip tester in the buyout of Singapore’s Stats ChipPac could be the latest signal of a Beijing-led drive to consolidate China’s chip sector.

SMIC joins group buying Stats ChipPac

The semiconductor world is buzzing today on news that a Jiangsu-based company will buy Singaporean semiconductor chip maker Stats ChipPac (Singapore: STAT), but what caught my attention was the name of leading Chinese chip maker SMIC (HKEx: 981; NYSE: SMI) as a member of the buyer group. I’ve been saying for many years now that China’s semiconductor sector is sorely in need of consolidation, but that such an overhaul is often blocked by the local stakeholders who often eschew mergers as they look after their own interests. Read Full Post…

SMIC Issues Bonds Amid Rising Confidence

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SMIC in $200 mln bond issue

Leading Chinese chip maker SMIC (HKEx: 981; NYSE: SMI) has just announced a relatively modest $200 million bond offer, hinting that investor interest may finally be returning to this perennial underperformer after years of disappointment. Not very many people even follow SMIC these days, and I’ll admit that I personally still watch the company because I hope that someday it can realize some of the potential that many once held for it. This latest bond offer looks positive because it’s being underwritten by 2 big foreign investment banks, JPMorgan and Deutsche Bank, meaning demand for the notes is coming from market-driven international investors rather than state-run Chinese buyers. Read Full Post…

Lenovo, SMIC in China-Style Divorces 联想和中芯国际同遭“中国式离婚”

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Their relatively low costs and access to the fast-growing China market often make major Chinese tech firms look like attractive business partners to their foreign peers. But big hopes for new partnerships often end in disappointment, resulting in the kinds of divorce we are now witnessing in the new slow-motion break-ups between PC giant Lenovo (HKEx: 992) and Japan’s NEC (Tokyo: 6701); and between global contract chip-making leader TSMC (Taipei: 2330; NYSE: TSM) and Chinese counterpart SMIC (HKEx: 981; NYSE: SMI). In both cases, the foreign companies have just started selling down previous strategic stakes in their Chinese partners, in what’s likely to end in an outright divorce for each pairing.

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SMIC: Respectable Earnings, But No Respect 中芯国际：收益可观，但不被追捧

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Investors once held out big hopes for China’s biggest chip maker SMIC (HKEx: 981; NYSE: SMI) when it went public back in 2004, but reaction to its latest earnings continue their more recent indifference to this giant that seems unable to earn respect from anyone. That’s my main conclusion after SMIC released second-quarter results that showed an encouraging return to profitability, as well as third-quarter guidance that looked stable despite the weaker Chinese and global economies. SMIC’s US-traded shares were largely unchanged after the report came out, dipping 1.6 percent and reflecting to me what looks like investor indifference over this disappointing giant that once held so much potential.

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Advice to SMIC: Stay Away From Elpida 中芯国际应远离尔必达

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I’ll admit that I secretly am cheering for a successful turnaround at SMIC (HKEx: 981; NYSE: SMI), a perennial underdog to its better-run Taiwanese rivals, which is why I’m a bit disappointed at the latest reports that say that China’s top chipmaker is considering a bid to buy some operations from bankrupt Japanese DRAM maker Elpida. Of course there’s a chance that the news, which was reported in Japanese media, isn’t true, which would be a relief as this purchase makes little or no sense in my view. But I suspect there may be some truth to the news, which would be a big mistake for SMIC if it succeeded in such a purchase. Let’s take a look at the actual news, which says that Hony Capital, a major Chinese high-tech private equity firm, wants to buy the bankrupt Elpida, and then would sell one of Elpida’s DRAM plants in Hisroshima to SMIC. (English article; Chinese article) The report also says one other plan being discussed would have SMIC come in and simply operate the plant, while Hony would presumably remain the owner. This latest report follows another one last month, when Japanese media first broke the news that Hony and US private equity firm TPG were teaming up to make a bid for Elpida, which declared bankruptcy earlier this year following years of losses in the ultra competitive global memory chip market. (previous post) What’s new in this latest report is the inclusion of SMIC in this potential buyout plan. For those who don’t follow SMIC that closely, the company was launched more than a decade ago with big hopes for challenging Taiwanese leaders TSMC (Taipei: 2330; NYSE: TSM) and UMC (Taipei: 2303; NYSE: UMC) for a share of the lucrative global market for made-to-order microchips that power everything from LCD televisions to cellphones. Those hopes were never quite realized, largely due to poor management that led SMIC to report a steady stream of losses for most of its life as a publicly traded company. Things finally appeared to be improving after a change in top management nearly 2 years ago, but then the company stumbled again following an internal power struggle last summer. (previous post) That struggle was finally resolved and the company again seemed to be making progress on a turnaround, which, in my view, could now seriously be jeopardized if SMIC buys or tries to operate some of Elpida’s assets. Such assets would be a huge distraction for SMIC, which has no experience operating outside its home China market. Furthermore, the DRAM sector is already super competitive, which is what drove Elpida into bankruptcy in the first place, and I have little confidence that SMIC could succeed in turning around this company, which probably suffered from high costs due to its location in Japan. Obviously no deal has been reached yet, but I still fear that SMIC may be pursuing such a purchase as new CEO Tzu-Yin Chiu, who assumed his position last August, tries to chart a new course for the company. But an Elpida purchase is not the correct route back to profits, and in fact could actually prolong SMIC’s turnaround, leaving it in the red for many years to come.

Bottom line: SMIC should stay away from Elpida, or risk prolonging its losses for years to come if it actually buys or takes over some operations from the bankrupt Japanese firm.

Related postings 相关文章:

◙ SMIC: Still Tethered to the State 中芯国际：仍然依赖国家

◙ SMIC Puts Turmoil Behind It — Again 中芯国际又走出内讧

◙ Chip Merger Near, More Consolidation Ahead? 华虹NEC和宏力半导体合并预示未来或有更多整合

SMIC Puts Turmoil Behind It — Again 中芯国际又走出内讧

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SMIC (HKEx: 981; NYSE: SMI), China’s largest semiconductor chip maker that seems to hop from one internal crisis to the next, seems to be telling the world with its latest earnings that the days of trouble will soon be behind it. (Earnings announcement) The only problem is, we’ve heard this story before after previous crises, only to see the company sink yet again when the latest crisis emerges. For the moment, at least, investors seem to be giving the company the benefit of the doubt, bidding up SMIC’s New York-listed shares by nearly 5 percent after the results were announced on New York time. The results from the latest report tell a relatively straightforward story: the fourth quarter of 2011 was one that SMIC would probably rather forget, with both profit and margins falling squarely into the negative column, as revenue also fell both on a quarter-to-quarter and year-over-year basis. Clearly things weren’t moving in the right direction during the quarter, which was one of the first after SMIC named a new CEO after a bruising power struggle during the summer that saw first its previous capable CEO ousted, followed by the departure of the man who was angling to take his spot. (previous post) The turmoil took a toll on SMIC’s performance and stock, but the company did indeed look relatively well positioned to return to focusing on its turnaround after a new CEO was named. Of course, SMIC wants people to focus on its first quarter guidance for now rather than its poor fourth-quarter results, and investors seem to be doing that. It forecast its gross margins will return to positive territory in the current quarter, while revenue is expected to return to a growth track as well. Equally important, the company’s report shows several trends that look promising for its future. In one, its customer base is becoming increasingly China-based, with China now accounting for 34 percent of its sales versus just 31 percent the previous quarter. This shift is something that SMIC should have been doing all along, as its China base is obviously a strong point, unlike the competitive US and European markets where it has to compete with much stronger rivals in TSMC (Taipei: 2330; NYSE: TSM) and UMC (Taipei: 2303; NYSE: UMC). The other trend that looks good is the growth of business from fabless chip makers, which are usuallly the most profitable customers. All of this looks good, and I have to admit I’m cautiously optimistic that SMIC has finally learned its lesson from all its internal issues and may finally be able to focus on becoming a profitable company again. Then again, the company has shown positive signs in the past, only to sink back into the red due to internal turmoil. Let’s hope this time it can finally escape that cycle.

Bottom line: SMIC’s latest earnings show encouraging first-quarter guidance, but the company will need to avoid more internal strife to complete its turnaround.

Related postings 相关文章:

◙ Chip Merger Near, More Consolidation Ahead? 华虹NEC和宏力半导体合并预示未来或有更多整合

◙ SMIC: Under Fire From All Directions 中芯国际亏损显示其内外交困

◙ SMIC Makes the Right Move With New CEO 中芯国际终於明智换帅

Chip Merger Near, More Consolidation Ahead? 华虹NEC和宏力半导体合并预示未来或有更多整合

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As a longtime tech reporter, I was intrigued to see that one of China’s longest running M&A deals that never quite seems to happen has once again popped  into the headlines, perhaps paving the way for an even bigger and sorely needed consolidation in the foundering microchip sector. Industry followers will know that of course I’m talking about a merger between Hua Hong NEC and Grace Semiconductor, both midsized players that hoped to become major forces in the contract chip-making business but never achieved the scale necessary to do that. The 2 sides, and more importantly their impatient investors, have been talking for years about a merger, but this time foreign media are reporting they have actually reached a deal, which should close by year-end. (English article) The new company will have total assets of about $1 billion, according to the report, or roughly equivalent to China’s biggest contract chipmaker, SMIC (HKEx: 981; NYSE: SMI). But considering that SMIC’s market cap now stands at about $1.4 billion and the new company would have a similar profile, this newly merged company will still be a tiny player compared with industry leader TSMC (Taipei: 2330; NYSE: TSM), with a market cap of $63 billion, and even compared to number two player UMC (Taipei: 2303; NYSE: UMC), with a market cap of $5.8 billion. A more interesting proposition would be to see this newly created company merge with SMIC to create a player that  could seriously challenge UMC, at least in terms of scale. SMIC is suffering from its own issues, including a power struggle earlier this year that saw its reputable CEO get ousted (previous post), and an industry downturn that saw it slip back into the red after reporting a year of profits. (previous post) But if the Hua Hong NEC-Grace merger finally does go through, I wouldn’t be surprised to see talks begin within a year for another merger of that company with SMIC as the two companies’ backers look to create a serious new global competitor. I would still have my doubts about whether such a new company could really compete with TSMC and UMC, but at least it would have the size and customer base to make a serious attempt at putting China on the global microchip map.

Bottom line: The merger of Hua Hong NEC and Grace Semi signals consolidation in China’s chip sector may finally be underway, paving the way for a potentially even bigger merger with SMIC.

Related postings 相关文章:

◙ SMIC: Under Fire From All Directions 中芯国际亏损显示其内外交困

◙ SMIC Makes the Right Move With New CEO 中芯国际终於明智换帅

◙ SMIC: Consolidation Ahead 中芯国际任命新高管 或有助於业内合并

 

SMIC: Under Fire From All Directions 中芯国际亏损显示其内外交困

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After a year and a half of strong performance that saw it shed its laggard image to become a profitable company under the leadership of a strong new CEO, SMIC (HKEx: 981; NYSE: SMI), China’s top microchip maker, is suddenly returning to its old ways as it comes under assault from forces both inside and outside the company. The sharp turnaround is painfully clear in SMIC’s latest results, which saw it drop sharply into the loss column — territory it was well familiar with for most of its life until CEO David Wang led it into profitability following his arrival at the struggling firm in late 2009. (English article) But perhaps more worrisome than its swing into the loss column was its sharp drop in revenues, which fell 24 percent as gross margins also plunged to near zero. The company has been in a near constant state of turmoil since the spring of the year, when internal politics led to Wang’s sudden ouster despite his stellar performance at turning SMIC around. (previous post) The situation finally settled down, but not after wreaking havoc on both SMIC’s operations and its share price, which has lost half its value since April and fell another 6 percent after the latest results were announced earlier this week. To be fair, SMIC has been the victim of forces outside the company as well, as the highly cyclical microchip sector heads into a new downturn following more than a year of strong growth — a factor that tends to hit weaker players more than the stronger ones. Industry leader TSMC (Taipei: 2330; NYSE: TSM) recently reported its own third-quarter profit tumbled 35 percent as the industry showed signs of slowing. (English article) Adding to SMIC’s woes, TSMC has also announced $1 billion in new capital spending for the year ahead, and Chinese media are reporting that nearly all of that will go to expanding the company’s capacity in China, most likely in its facility near Shanghai not far from SMIC’s own headquarters. (Chinese article) With so many factors working against it, SMIC may indeed be looking at a long winter ahead and I would expect it to report at least another year of losses and most likely more before it can struggle back into the profit column.

Bottom line: A combination of internal and external forces working against SMIC will keep it in the loss column for at least the next year, and most likely much longer.

Related postings 相关文章:

◙ SMIC Makes the Right Move With New CEO 中芯国际终於明智换帅

◙ SMIC: Consolidation Ahead 中芯国际任命新高管 或有助於业内合并

◙ SMIC Transition Begins, Instability Ahead 中芯国际高层大动荡 公司或将陷入混乱

SMIC Makes the Right Move With New CEO 中芯国际终於明智换帅

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After a tumultuous few months that saw its shares lose half their value amid an internal power struggle, leading Chinese microchip maker SMIC (HKEx: 981; NYSE: SMI) has finally made a smart move by naming an apparently capable outsider as its new CEO (company announcement). The appointment was followed just days later by another announcement of the resignation of a troublesome COO who started the chaos by using Cultural Revolution-style tactics to force out a perfectly capable CEO as he tried to pursue the top position for himself. I have to congratulate SMIC’s major shareholder Datang for finally doing the right thing by getting rid of the former COO, Simon Yang (Yang Shining), who earlier convinced Datang to oust previous CEO David Wang, whose only “fault” was managing to return SMIC to profitability after four years of continuous losses. Datang was probably irked when it realized its mistake in ousting Wang, and was also probably upset when its investment lost half of its market value due to the ill conceived decision. New CEO Tzu-Yin Chiu’s arrival at SMIC from the top position at crosstown rival Huahong NEC means a possible merger between these two companies — rumored for years — could finally move forward as their stakeholders seek to create the world’s a new major chip maker that can compete more effectively with Taiwanese leaders TSMC (Taipei: 2330) and UMC (Taipei: 2303). I would look for a rebound in SMIC’s battered shares in the weeks ahead as markets grow more confident that the power struggle is truly over, and then wouldn’t be surprised to see SMIC continue its slow but steady rise that began under Wang’s leadership more than a year ago. We could even see the long-awaited merger with Huahong NEC in the next year, as both Chiu and SMIC’s recently named new Chairman Zhang Wenyi both have strong ties to the company.

Bottom line: The naming of a competent new CEO and departure of a troublesome COO will help to gradually restore investor confidence in SMIC.

中芯国际<0981.HK><SMI.N>近几个月因内部权力之争导致其股票缩水一半，该公司最终作出明智决定，任命邱慈云为其首席执行官（CEO）。几天后，中芯国际首席运营官（COO）杨士宁辞职。杨士宁曾使用计谋迫使前CEO王宁国辞职，试图自己夺得这一职位，中芯国际管理层随後陷入混乱。我要祝贺中芯国际大股东大唐终於做出正确决策，令杨士宁出局。杨士宁此前曾说服大唐赶走王宁国，而王宁国的唯一“错误”是，在中芯国际连续四年亏损後，设法使公司扭亏为盈。当大唐意识到不应辞掉王宁国後，可能会感到懊恼，而因为这个考虑欠妥的决定，导致其投资市值损失一半时，大唐或许还感到很沮丧。邱慈云从华虹NEC来到中芯国际，意味着两家公司合并或最终有望推进，这一传言已持续多年。其股东希望借此创建全球新的大型芯片制造商，从而更有效地与台积电<2330.TW>和台湾联华电子<UMC.N>竞争。我预计，由於中芯国际权力之争最终尘埃落定，市场信心将逐渐恢复，未来几周公司股价有望反弹，届时，中芯国际继续缓慢稳步增长将不足为奇。华虹NEC和中芯国际甚至有望明年合并，因邱慈云和中芯国际近期任命的主席张文义均与华虹NEC渊源颇深。

一句话：中芯国际COO杨士宁离职，邱慈云出任CEO，将有助於逐步恢复投资者信心。

Related postings 相关文章:

◙ SMIC: Consolidation Ahead 中芯国际任命新高管 或有助於业内合并

◙ SMIC Transition Begins, Instability Ahead 中芯国际高层大动荡 公司或将陷入混乱

◙ SMIC Top Management in Throes of Power Struggle 中芯国际管理层陷入权力之争