Semiconductor Manufacturing International Corporation (SMIC) CEO David Wang has denied that the company is close to receiving tens of millions of dollars from the China government's budget for the country's 11th five-year plan (2006-2010), as reported by Reuters.

The Reuters report, citing unspecified sources, said the money for SMIC should appear on the company's balance sheet of the third or fourth quarter, helping the foundry chipmaker improve its earnings in 2010.

Speaking at a company conference call on August 11, Wang indicated that the China-based foundry has only obtained small subsidies from the government. A subsidy of US$1.5 million was granted in the second quarter, said Wang, adding that subsidies for the third and fourth quarters are estimated at only several million dollars.

Wang claimed that SMIC does not rely on government subsidies to enhance its operations and financial structure.

SMIC returned to profitability in the second quarter of 2010 after 12 consecutive quarterly losses. The company will generate a higher gross margin in the third quarter thanks to a ramp-up of 65nm process capacity, according to Wang.

SMIC moved 65nm to mass production in early August, said Wang, adding that the node is expected to account for 7% of the company's total revenues in the third quarter. In addition, SMIC plans to kick off volume production using a 45nm process in the second half of 2011, and has stepped into the development phase of its 32nm process, Wang indicated.