Semiconductor Manufacturing International Corp (SMIC), the mainland's largest chipmaker, says it will probably turn a profit in the fourth quarter of this year after retreating from its unprofitable computer memory chip business. The Shanghai-based company said its agreement with a new strategic investor, which is expected to bring the firm cash and technology, would be completed this quarter. The company has not yet disclosed the investor's identity or the size of the deal. 'We will retreat from the dynamic random access memory [dram] business, where prices had fallen drastically from US$4 to US$1 per unit at the end of last year,' said Anne Chen, the Hong Kong representative of SMIC's chief executive office. Ms Chen said about 70 per cent of the machinery previously used to make dram chips could be diverted to more lucrative logic chips immediately while the rest would migrate over the next two quarters. She said previously tough export restrictions on logic chip equipment had eased, making it simpler to import the technology. Drams are mainly used as memory chips in personal computers while logic chips are used for handsets and digital cameras. The company said its net loss widened to US$119.1 million for the three months to March, including an additional loss provision for dram inventory of about US$44.5 million. That compares with a net loss of US$621,614 a year earlier. First-quarter sales fell 6.7 per cent to US$362.4 million due to declining revenue from dram chips, which accounted for about 12.1 per cent of the company's total sales compared with 34.7 per cent a year ago. The company stopped supplying dram chips to Elpida Memory of Japan and Qimonda of Germany at the end of March and will now focus on logic chip customers such as Broadcom of the United States. Phillip Securities research director Louis Wong Wai-kit said the share sale to a strategic investor would improve SMIC's cash position. 'But whether SMIC's shares will surge in the future mainly depends on the company's profitability,' he said. The company had about US$506 million cash and cash equivalents at the end of March, compared with US$469 million in the previous quarter. It is planning a US$700 million capital expenditure this year. SMIC's shares fell 3.28 per cent to close at 59 HK cents yesterday.