Business

Thu Aug 28 18:01:21 PDT 2008

* Expects double-digit annual revenue growth in coming years

* Will consider lifting stake in parent’s joint venture

(Adds details, executive’s comments)

By Joanne Chiu

HONG KONG, Aug 28 (Reuters) – Contract chip maker China Resources Microelectronics Ltd sees double-digit revenue growth in coming years as robust domestic demand outweighs weakness elsewhere.

China is the largest assembly base for the global electronics industry but its own semiconductor output accounts for only 10-20 percent of domestic market needs.

The firm, formerly known as CSMC Technologies, will also consider lifting its stake in a manufacturing venture with its parent when appropriate, a senior executive told Reuters on Thursday.

The listed semiconductor flagship of the China Resources conglomerate is building an 8-inch chip manufacturing plant with its parent in the eastern city of Wuxi, Chief Executive Officer Wang Guoping told Reuters on Thursday.

The plant, in which China Resources Micro has a 19 percent stake, will have a total investment of $850 million and start full production in mid-2009 with a capacity for 60,000 units a month.

It is expected to break even in two-and-a-half to three years, Wang said.

"The global semiconductor market is relatively weak this year, but China has become the driver of the industry," he said in an interview.

Rival Chinese chip makers are struggling amid sharp price declines in the global computer memory chip market.

Semiconductor Manufacturing International Corp, China’s top contract chip maker, saw its net loss widen to $45.6 million in the second quarter from $2.05 million a year earlier.

But the chief executive believes the gap between domestic supply and demand can be exploited.

"That means there’s plenty of room to grow in the Chinese market," Wang said.

The firm plans to use $100 million in annual capital expenditure for the next few years to expand its semiconductor business.

The company, focused on less-cyclical analog chips used in electronic and home appliance products, posted an 11 percent drop in first half net profit to HK$96.35 million ($12.34 million). ($1=HK$7.807)

(Reporting by Joanne Chiu; Editing by Chris Wickham)

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