SEMICONDUCTOR Manufacturing International yesterday fell to a record low, leading Asian made-to-order chip-maker shares down, on concern Advanced Micro Devices Inc's entry into the foundry industry will drive up competition.

Semiconductor Manufacturing, China's largest chip maker, plunged 15 percent to close at 19.5 Hong Kong cents (2.5 US cents), the lowest since the shares were listed in March 2004. Taiwan Semiconductor Manufacturing, United Microelectronics Corp and Chartered Semiconductor Manufacturing, the world's biggest foundry chip makers, also fell.

Advanced Micro, the world's second-largest maker of computer processors, said yesterday it plans to spin off factories to form Foundry Co, which will seek contracts from other companies.

This will create a direct competitor to Asian made-to-order chip producers at a time when the industry faces falling demand and prices, Macquarie Group analyst Patrick Yau said.

"AMD's plans are negative for the industry," Yau, who is based in Singapore, told Bloomberg News yesterday.

"There should be less capacity now, not more."

Yau yesterday cut his investment rating on Chartered, the third-largest maker of customized chips, to "underperform" from "neutral" and reduced his share-price estimate by 35 percent to 28 Singapore cents (19 US cents).

Blanket falls

Chartered, which counted AMD as its second-largest client in 2007, declined 9.7 percent to 28 Singapore cents in trading, the lowest since its initial share sale in 1999.

Taiwan Semiconductor, which makes graphic chips for AMD, lost 6.9 percent to NT$46.25 (US$1.42) in Taipei trading, the lowest since April 2005. United Micro dropped 7 percent to NT$9.91.

"The foundry industry is already too crowded for comfort," Donald Lu and Matthew Chuang, analysts at Goldman Sachs, wrote in a report yesterday. "The formation of this new foundry would likely be long-term negative to the foundry industry and particularly TSMC and Chartered."

Chartered spokeswoman Lim Li Chuen said the company sees "minimal impact" from AMD's reorganization. Alex Hinnawi, a spokesman for Taiwan-based United Micro, declined to comment.