SMIC Reports 2015 Second Quarter Results

Operating Expenses (Income) Analysis

Amounts in US$ thousands

2Q15

1Q15

QoQ

2Q14

YoY

Operating expenses

115,728

104,423

10.8%

84,861

36.4%

Research and development, net

55,202

53,453

3.3%

45,080

22.5%

General and administrative

52,051

42,486

22.5%

35,528

46.5%

Selling and marketing

9,159

9,205

-0.5%

9,018

1.6%

Other operating income

(684)

(721)

-5.1%

(4,765)

-85.6%

  • R&D expenses increased to $55.2 million in 2Q15, compared to $53.5 million in 1Q15. Excluding the funding of R&D contracts from the government, R&D expenses increased by $6.8 million QoQ to $65.6 million in 2Q15. Funding of R&D contracts from the government was $10.4 million in 2Q15, compared to $5.3 million in 1Q15.
  • General and administrative expenses increased to $52.1 million in 2Q15, up 22.5% QoQ from $42.5 million in 1Q15, mainly because of 1) the expansion expenses relating to the two new fab projects – the 8-inch fab in Shenzhen and the 12-inch fab in Beijing and 2) accrued employee bonus increased in 2Q15.

Other Income (expense), Net

Amounts in US$ thousands

2Q15

1Q15

QoQ

2Q14

YoY

Other income (expense), net

11,943

6,125

95.0%

(1,105)

-

Interest income

956

1,369

-30.2%

3,021

-68.4%

Finance costs

(2,416)

(5,010)

-51.8%

(8,231)

-70.6%

Foreign exchange gains or losses

4,960

120

4033.3%

(1,860)

-

Other gains or losses, net

8,592

9,621

-10.7%

5,399

59.1%

Share of profits of associates

(149)

25

-

566

-

  • The change in finance costs was due to 1) the Group's repayment of some bank borrowings in 1Q15 and 2) more interest expense was capitalized as part of the costs of assets under construction in 2Q15.
  • The change in foreign exchange gains or losses was mainly due to an appreciation of RMB against USD in 2Q15. Foreign monetary assets mainly consist of cash and cash equivalent and accounts receivables in RMB. And foreign monetary liabilities mainly consist of loans, accounts payables and other payables in RMB. The Group is in net foreign monetary asset position.

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