Chip Maker Is Nearing Profitability Despite Loss
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Advanced Micro Devices inched closer to profitability despite posting a huge loss as it struggled to absorb the huge cost of its acquisition of ATI Technologies.
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Semiconductor Manufacturing International (SMIC), China&#39;s largest chip maker, fell short of its bid to turn a profit in 2007, ending the year with a $40 million loss. But that&#160;won&#39;t stop the company from expanding in 2008.SMIC saw revenue of $1.5 billion during 2007, an increase of 5.8 percent over the previous year. But higher sales weren&#39;t enough to offset a slide in DRAM prices and the company ended the year with a loss, albeit one that was slightly narrower than the $44.1 million loss recorded by the company in 2006.SMIC turned in a fourth-quarter loss of $22.2 million on revenue of $395.3 million. By comparison, the company reported a profit of $143,000 for the fourth quarter of 2006, thanks to an exceptional one-time gain from the sale of used equipment.Once seen as a potential rival to Taiwan Semiconductor Manufacturing Co. (TSMC), the world&#39;s largest contract chip maker,&#160;SMIC has struggled to turn a profit. Part of the problem is that, as the company built a series of new chip plants in China, it turned to DRAM companies for orders in a bid to fill these production lines. But DRAM is a brutal business with razor-thin margins and&#160;recent declines in memory prices&#160;have hurt SMIC&#39;s bottom line.SMIC is trying to wean itself off DRAM as a source of revenue, but the switch to production of more logic chips, which generally command higher prices and have better margins, hasn&#39;t happened fast enough to pull the chip maker out of the red.DRAM represented 23.6 percent of SMIC&#39;s revenue during the fourth quarter, compared to 38.6 percent during the same period last year. By comparison, logic chips represented a greater percentage of SMIC&#39;s fourth-quarter revenue, rising from 57.4 percent in 2006 to 67.4 percent last year.Despite reporting another annual loss, SMIC continues to expand. The company announced plans to build a 200-millimeter production line and a 300-millimeter fabrication plant in Shenzhen, a southern Chinese city that lies next to Hong Kong. Construction will begin during the first half of 2008, the company said.
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The chip maker now expects revenue of between $8.3 billion and $8.6 billion due to lower-than-expected worldwide demand for its processors as well as "customer reductions in component inventory levels."
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Analysts expect continued growth despite a tough environment.
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The deep discounter still sports a high valuation despite reporting profit in line with expectations.
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Worldwide&#160;lawsuits against Intel&#160;and&#160;four straight quarterly losses&#160;have distracted AMD during its integration of ATI Technologies, but the merger remains on track, according to industry analysts.
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The chipmaker posts record revenue, but profits go lower. You're not really surprised, are you?
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The software company's investments are showing some promise.
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The latest losses at chipmaker AMD are not as bad as  expected, thanks to surging sales of laptops.
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Despite lower quarterly profits, financial services company's prospects look good.
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Although computer memory chip prices are expected to slide by midyear as chip makers plow money back into new production lines, analysts expect prices to stabilize later this year.
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The chipmaker has raised its 2007 capital spending plans, despite falling DRAM prices.
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Despite the beatings chip stocks have endured during the past few months, some analysts on Thursday hinted a bounce might lurk behind a sector whose shares have been punished on concerns customer demand has withered.
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The consumer electronics retailer continues to produce strong results.
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Company remains on track to ship desktop and server chips in 2005.
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Still carrying the weight of costs related to last year&#39;s&#160;acquisition of graphics vendor ATI, AMD recorded its fourth straight quarter of net losses Thursday.The company reported a net loss of $396 million, or $0.71 per share, for the third quarter, compared to net income of $136 million for the year-earlier quarter. Analysts polled by Thomson Financial had estimated a loss of $0.62 per share. The loss included a $120 million charge related to its acquisition of ATI last year.AMD recorded third-quarter revenue of $1.632 billion for the quarter ending Sept. 29, an 18 percent year-over-year increase.The company sold a record number of microprocessors during the quarter, AMD said in a news release. Microprocessor unit shipments increased 19 percent year-over-year and mobile processor shipments increased 68 percent, AMD said.After months of delays,&#160;AMD finally released its latest quad-core Barcelona processor in September.&#160;AMD is locked in a quad-core chip battle with Intel, which shipped more than 2 million quad-core processors during the quarter, Intel said in its earnings call on Tuesday.AMD has already lost ground in the market for server chips to Intel in recent quarters. AMD&#39;s quad-core Opteron processor, also called Barcelona, opened up a revenue stream for company during the quarter, the company said.
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Despite another money-losing quarter, the future of the video game publisher looks bright.