Chipmaker SMIC posts first profit in 3 years

China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC, SMI.NYSE, 0981.HK), reported a net profit in the second quarter of this year, its first in 13 quarters, Bloomberg reported. Mainland chipmakers have struggled against a global decline in demand and against Taiwan-based manufacturers defending their market share, but rebounding sales have lifted the industry’s profitability. SMIC’s net profit in Q2 was US$96.03 million, compared to a net loss of US$98.2 during the same period last year. Revenue increased 42.5% to US$381.1 million. Part of the profit is attributable to a change in the value of warrants and shares it has to pay Taiwan Semiconductor Manufacturing (TSM.NYSE) in settlement for an intellectual property and industrial espionage lawsuit last year. SMIC still reported an operating loss of US$12.1 million in Q2, which is less than the US$28 million operating loss in absorbed in Q1. The company is optimistic about revenue growth, predicting it will rise 6% in Q3 and that gross profit margin will expand up to 22%. It is also expecting capital expenditures to double to as much as US$750 million as it expands production capacity.