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Please also be reminded of the Safe Harbor Statement which provides as follows. SMIC's statements of its current expectations are forward-looking statements subject to significant risks and uncertainties. The actual results may differ materially from those contained in such forward-looking statements. Information as to those factors that could cause actual results to vary can be found in SMIC's Form 20-F filed with the United States Securities and Exchange Commission on April 27, 2012.I will now turn the call over to our CEO, T.Y. Chiu, for the opening remarks. T.Y. Chiu Thank you, En-Ling. Greetings to everyone. Thank you for joining us for our earning webcast. I'm very pleased to report a solid second quarter results with revenue $421 million. This is a new sales record for SMIC, with a quarter-to-quarter increase of 26.8% and a growth of 19.7% over the same period last year. We have a positive operating profit and a net profit of $7.1 million. SMIC has benefited from strong customer demand across the board, and in particular, an 87% quarter-to-quarter increase in our 65nm/55nm revenue. Also we are experiencing a strong demand increase for our specialty processes including power management IC, EEPROM, and others. As a result, the overall revenue growth exceeded our original guidance. I would also like to point out that -- our significantly higher gross margin of 24% compared to 12% in the first quarter. This is primarily due to increased utilization as well as enhanced efficiency in all of our fabs. We are pleased with our progress in improving efficiency. As such, we are making progress in lowering our breakeven utilization. We are enjoying good overall fab utilization as a result of industry demand improvement and our own emphasis and effort. The second quarter overall utilization was 95% as compared to 74% in the first quarter.
Our Shanghai 8-inch fab is heavily utilized, mainly driven by power management IC and other specialty ICs. We continue to allocate more capacity for this increasing power management IC demand. In the meantime, through efficiency improvement, we have been able to augment capacity by about 11,000 wafers per month, a 15% increase, with virtually no CapEx.Our Beijing 12-inch fab achieved record-high utilization and revenue level, of which the revenue in the second quarter grew 45% quarter over quarter. Beijing's growth driver were mainly smartphone networking, tablet and connectivity applications. Also in the second quarter we have aligned the equipment in our Beijing fab for greater flexibility in order to handle the strong 65nm orders. We currently foresee that our Beijing fab's 65nm/55nm shipment will continue to increase into the third quarter, primarily driven by demand from our mobile phone and other consumer customers. At our Tianjin fab, we transferred a significant amount of loading from our Shanghai 8-inch fab with excellent results. Tianjin fab has significantly increased loading in the second quarter and we expect the Tianjin fab to continue to be heavily loaded in the third quarter. Apart from macro reasons, the increase in demand and utilization is also driven by fundamental performance improvement which include our customer service, product mix, yield improvement, cycle time and defect density level. These enhancements effectively helped us in gaining customer confidence and recognition. For example, with our precision execution on 65nm products for one of the leading customers, we are now considered by them as a top-tier foundry based on our control of excursions, yield and cycle time performance. This results in accomplishing a stronger partnership with these leading customers and more advanced technology business. Regarding the overall demand for our advanced technology, we are currently expecting that the number of new tape-out for 65nm and below will grow 30% from the second quarter into the third quarter. A large part of the expected growth was driven by our consistent track record and delivery quality -- delivering quality products for our customers, and thus they are expanding their product portfolios to be sourced from SMIC. Read the rest of this transcript for free on seekingalpha.com