Recovery manna for China's chipmakers

BANGALORE, INDIA: A 4-trillion yuan ($585 billion) stimulus package announced in China last November is bearing fruit, going by the recovery story of the chipmaker industry. It is being seen that the stimulus has helped boost domestic demand for chips used in televisions, mobile phones and other electronics.

A major beneficiary is the Semiconductor Manufacturing International Corp, China’s largest chipmaker, which has said that demand for its products inside the nation is on a recovery path. It has been made public that orders in the third-quarter are set to outdo the second.

Increased sales in China may help the Shanghai-based chipmaker post annual profit next year, according to a Bloomberg report. This may come in as good news considering the fact that Semiconductor Manufacturing International Corp had reported losses for each of the past four years.

The company had been on a good path since January this year, with every month showing better growth than the previous one. According to chief executive officer Richard Chang the trend has continued for five months.

“From the forecasts we’ve received for the third quarter, we can see that, yes, it is very clearly a recovery trend,” he has been quoted as saying.

The positive aspect is that increased consumer demand has led the chipmaker’s clients to restock, fueling orders for Semiconductor Manufacturing International Corp. Clients have reduced their stockpiles to two weeks in December and inventory has now increased to about four weeks of production.

It is a known fact that China had become the world’s biggest buyer of chips in 2005, with companies like Nokia Oyj and Sony Corp rolling out more handsets, gaming consoles and other electronics in the nation, according to research firm IC Insights Inc.