SMIC denies it will get Government handouts

Semiconductor Manufacturing International Corporation (SMIC) has rebutted reports that it’s close to receiving tens of millions of dollars from the Chinese governments budget or the country’s 11th five-year plan (2006-2010).

SMIC’s CEO David Wang stepped in to deny the claims, which were reported in Reuters earlier this week, telling Digitimes that the company had only received small subsidies from the government.

He admitted that a subsidy of US$1.5 million was granted in the second quarter, but said  subsidies for the third and fourth quarters were estimated at only several million dollars.

However he was adamant that SMIC did not rely on government subsidies to enhance its operations and financial structure.

The denials pour water over a Reuters report, which quoted a source close to SMIC as claiming that “If nothing goes wrong, the money should appear on the balance sheet of the third or fourth quarter,” which would improve the company’s earnings in 2010.

Wang said that the company was on target to “generate a higher gross margin” in the third quarter as a result of 65nm process capacity, which he claimed would account to seven percent of the company’s total revenues in this quarter.

He added that SMIC would also begin volume production using a 45nm process in the second half of 2011.