HONG KONG (AP) -- Semiconductor Manufacturing International Corp. said Wednesday it stopped making dynamic random access memory, or DRAM, chips in March.

 

The company plans to convert its production capacity for DRAM -- widely used in personal computers -- to more profitable logic chips used in mobile phones and digital cameras, said Chief Executive Richard Chang.

 

The DRAM market has been suffering its worst downturn since 2001, with the average spot price of mainstream DRAM chips plunging nearly 60 percent in the past year amid a supply glut.

 

SMIC is China's biggest contract chip manufacturer by capacity and makes DRAM chips based on other manufacturers' designs.

 

Chang's comments came after SMIC reported Tuesday it swung to a first-quarter net loss of US$119.1 million, reversing a net profit of US$8.8 million a year earlier. The earnings were bogged down by a US$44.5 million loss provision taken against its remaining DRAM inventories, SMIC said.

 

Revenue for the three months ended March 31 fell 6.7 percent to US$362.4 million from US$388.3 million. SMIC said it expects revenue to fall another 3-6 percent in the second quarter compared with the first quarter.

 

BNP Paribas Securities analyst Eric Chen said it was unclear whether SMIC might be able to turn a profit by the fourth quarter.

 

''The conversion of production capacity will lead to an increase in depreciation expenses. Another key question is whether SMIC can get enough new customers for its expanding logic business,'' said Chen.

 

SMIC said last month it was in talks with a strategic investor to sell a ''significant'' stake in itself.

 

Chang said Wednesday the company will make a final decision on a strategic investor ''soon'' and is evaluating proposals from interested parties.

 

He said the strategic investor would bring both cash and technology to the company.

 

Last month, SMIC said it was in ''relatively advanced'' negotiations to sell a chunk of shares to an unidentified strategic investor and the investor may be represented on its board if talks are successful.

 

The Shanghai-based company didn't name the potential investor or give an indication on the size of the deal.

 

Shares of SMIC were 1.6 percent lower at midday at HK$0.60.