Meanwhile, the company’s gross margins increased to 9.5 percent in the first quarter, from 5.1 percent in the fourth quarter of 2006. Its sales grew by 1.2 percent to 388.3 million dollars in the first quarter of 2007 from 383.8 million dollars in the fourth quarter of 2006.

The decrease of depreciation is the main factor behind the profit and sales increase. In recent years, SMIC has been haunted by high depreciation that led to losses, but the situation turned for better in the first quarter of 2007. The depreciation dropped to 185.7 million dollars in Q1, from 210 million dollars in the previous quarter.

By March 31 2007, SMIC had total cash and cash equivalents of 342 million dollars, lower than the 364 million dollars on December 31 2006.

The company predicted sales revenue in Q2 will equal that of Q1 and depreciation and amortization will be 185 million-190 million dollars in Q2. (Edited by Yang Liu, )