SMIC Reports 2015 Second Quarter Results

About SMIC

Semiconductor Manufacturing International Corporation ("SMIC"; NYSE: SMI; SEHK: 981) is one of the leading semiconductor foundries in the world and the largest and most advanced foundry in mainland China. SMIC provides integrated circuit (IC) foundry and technology services at 0.35-micron to 28-nanometer. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) and a 200mm mega-fab in Shanghai; a 300mm mega-fab and a second majority owned 300mm fab under development for advance nodes in Beijing; and 200mm fabs in Tianjin and Shenzhen. SMIC also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan, and a representative office in Hong Kong.

For more information, please visit www.smics.com.

Safe Harbor Statements

(Under the Private Securities Litigation Reform Act of 1995)

This press release contains, in addition to historical information, "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements under "Third Quarter 2015 Guidance", "CapEx Summary" and the statements contained in the quotes of our CEO regarding our expectations for our growth and opportunities in China are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project," "target" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements involve significant risks, both known and unknown, uncertainties and other factors that may cause SMIC's actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements including, among others, risks associated with the cyclical nature of the semiconductor industry, changes in demand for our products, competition in our markets, our reliance on a small number of customers, orders or judgments from pending litigation, intensive intellectual property lawsuits in semiconductor industry and financial stability in end markets.

Investors should consider the information contained in SMIC's filings with the U.S. Securities and Exchange Commission ("SEC"), including its annual report on 20-F filed with the SEC on April 28, 2015, especially the consolidated financial statements, and such other documents that SMIC may file with the SEC or The Hong Kong Stock Exchange Limited ("SEHK") from time to time, including current reports on Form 6-K. Other unknown or unpredictable factors also could have material adverse effects on SMIC's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except as may be required by law, SMIC undertakes no obligation and does not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise.

About Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures

To supplement SMIC's consolidated financial results presented in accordance with IFRS, SMIC uses in this press release non-GAAP operating expenses which consist of total operating expenses as adjusted to exclude the effect of employee bonus accrual, government funding and gain from the disposal of living quarters. This earnings release also includes third quarter 2015 guidance for non-GAAP operating expenses. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS.

SMIC believes that use of these non-GAAP financial measures facilitates investors' and management's comparisons to SMIC's historical performance. The Group's management regularly uses these non-GAAP financial measures to understand, manage and evaluate the Group's business and make financial and operational decisions.

The accompanying table has more information and reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.

Contact:

Investor Relations

+86-21-3861-0000 ext. 12804

ir@smics.com

 

Summary of Second Quarter 2015 Operating Results


 Amounts in US$ thousands, except for EPS and operating data








2Q15

1Q15

QoQ

2Q14

YoY

Revenue

546,615

509,798

7.2%

511,344

6.9%

Cost of sales

(370,210)

(359,871)

2.9%

(368,291)

0.5%

Gross profit

176,405

149,927

17.7%

143,053

23.3%

Operating expenses

(115,728)

(104,423)

10.8%

(84,861)

36.4%

Profit from operations

60,677

45,504

33.3%

58,192

4.3%

Other income (expense), net

11,943

6,125

95.0%

(1,105)

-

Profit before tax

72,620

51,629

40.7%

57,087

27.2%

Income tax (expense) benefit

(924)

(54)

1611.1%

93

-

Profit   for the period

71,696

51,575

39.0%

57,180

25.4%

Other comprehensive income:






Exchange differences on
    translating foreign operations

397

(400)

-

(858)

-

Change in value of available-
   for-sale financial assets

(1,006)

1,451

-

-

-

Total comprehensive income  
   for the period

71,087

52,626

35.1%

56,322

26.2%







Profit for the period attributable to:






SMIC

76,704

55,477

38.3%

56,801

35.0%

Non-controlling interests

(5,008)

(3,902)

28.3%

379

-

Profit   for the period

71,696

51,575

39.0%

57,180

25.4%







Gross margin

32.3%

29.4%

-

28.0%

-







Earnings per ordinary share ( 1 )
Basic

0.00

0.00


0.00


Diluted

0.00

0.00


0.00


Earnings per ADS ( 2 )

Basic

0.10

0.08


0.09


Diluted

0.10

0.07


0.08


 

Wafers shipped (in 8"
equivalent wafers)

731,730

692,131

5.7%

648,764

12.8%







Capacity utilization ( 3 )

102.1%

99.7%

-

94.6%

-





Note:

(1) Based on weighted average ordinary shares of 37,192 million (basic) and 41,572 million (diluted) in 2Q15 , 35,877 million (basic) and 40,181 million (diluted) in 1Q15 , and 32,766 million (basic) and 35,291 million (diluted) in 2Q14 .

(2) Each ADS represents 50 ordinary shares.

(3) B ased on total equivalent wafers out divided by estimated total quarterly capacity .

  • Revenue increased 7.2% QoQ from $509.8 million in 1Q15 to $546.6 million in 2Q15 mainly because of an increase of wafer shipments in 2Q15.
  • Cost of sales was $370.2 million in 2Q15, up 2.9% QoQ from $359.9 million in 1Q15.
  • Gross profit was $176.4 million in 2Q15, an increase of 17.7% QoQ from $149.9 million in 1Q15.
  • Gross margin was 32.3% in 2Q15, up from 29.4% in 1Q15, primarily due to an increase in fab utilization in 2Q15.
  • Operating expenses were $115.7 million in 2Q15, an increase of 10.8% QoQ from $104.4 million in 1Q15, mainly due to the reasons stated in Operating Expenses (Income) Analysis below.

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