SMIC Reports 2015 Third Quarter Results

An archived version of the webcast, along with an electronic copy of this news release will be available on the SMIC website for a period of 12 months following the webcast.

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 "Fourth Quarter 2015 Guidance", "CapEx Summary" and the statements contained in the quotes of our CEO regarding our fourth quarter guidance 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, general economic conditions and fluctuations in currency exchange rates.

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 fourth 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.

Summary of Third Quarter 2015 Operating Results


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


3Q15

2Q15

QoQ

3Q14

YoY

Revenue

569,854

546,615

4.3%

521,646

9.2%

Cost of sales

(387,503)

(370,210)

4.7%

(386,704)

0.2%

Gross profit

182,351

176,405

3.4%

134,942

35.1%

Operating expenses

(108,125)

(115,728)

-6.6%

(94,122)

14.9%

Profit from operations

74,226

60,677

22.3%

40,820

81.8%

Other income (expense), net

(3,459)

11,943

-

7,840

-

Profit before tax

70,767

72,620

-2.6%

48,660

45.4%

Income tax (expense) benefit

(1,793)

(924)

94.0%

18

-

Profit   for the period

68,974

71,696

-3.8%

48,678

41.7%

Other comprehensive income:






Exchange differences on
  translating foreign operations

(4,735)

397

-

1,320

-

Change in value of available-
  for-sale financial assets

(23)

(1,006)

-97.7%

-

-

Others

130

-

-

-

-

Total comprehensive income  
  for the period

64,346

71,087

-9.5%

49,998

28.7%







Profit for the period attributable
  to:






SMIC

82,626

76,704

7.7%

47,520

73.9%

Non-controlling interests

(13,652)

(5,008)

172.6%

1,158

-

Profit   for the period

68,974

71,696

-3.8%

48,678

41.7%







Gross margin

32.0%

32.3%

-

25.9%

-







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

0.10


0.07


Diluted

0.10

0.10


0.07


 

Wafers shipped (in 8"
equivalent wafers)

771,201

731,730

5.4%

668,811

15.3%







Capacity utilization ( 3 )

100.5%

102.1%

-

91.9%

-


Note:

(1) Based on weighted average ordinary shares of 40,771 million (basic) and 45,020 million (diluted) in 3Q15 , 37,192 million (basic) and 41,572 million (diluted) in 2Q15 , and 34,846 million (basic) and 38,904 million (diluted) in 3Q14 .

(2) Each ADS represents 50 ordinary shares.

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

  • Revenue increased by 4.3% QoQ from $546.6 million in 2Q15 to $569.9 million in 3Q15 mainly due to an increase of wafer shipments in 3Q15.
  • Cost of sales was $387.5 million in 3Q15, up 4.7% QoQ from $370.2 million in 2Q15. The increase was mainly due to the same reason as the revenue increase.
  • Gross profit was $182.4 million in 3Q15, an increase of 3.4% QoQ from $176.4 million in 2Q15.
  • Gross margin was 32.0 % in 3Q15, as compared to 32.3% in 2Q15.
  • Operating expenses were $108.1 million in 3Q15, a decrease of 6.6% QoQ from $115.7 million in 2Q15, mainly due to the reasons stated in Operating Expenses (Income) Analysis below.

Analysis of Revenue


Revenue Analysis




By Application

3Q15

2Q15

3Q14

Computer

4.4%

4.5%

2.3%

Communications

55.1%

49.4%

44.6%

Consumer

31.9%

37.7%

44.3%

Others

8.6%

8.4%

8.8%

By Service Type

3Q15

2Q15

3Q14

Wafers

94.9%

95.4%

94.6%

Mask making, testing, others

5.1%

4.6%

5.4%

By Geography

3Q15

2Q15

3Q14

North America

33.9%

32.0%

43.7%

China ( 1 )

47.9%

51.1%

42.2%

Eurasia ( 2 )

18.2%

16.9%

14.1%

Wafer Revenue Analysis




By Technology

3Q15

2Q15

3Q14

45 nm and below

15.6%

15.3%

10.4%

55/65 nm

22.2%

25.2%

24.3%

90 nm

4.4%

4.8%

3.5%

0.13 µm

11.1%

10.9%

11.5%

0.15/0.18 µm

43.1%

39.9%

45.7%

0.25/0.35 µm

3.6%

3.9%

4.6%


Note:

( 1 ) Including Hong Kong , but excluding Taiwan

( 2 ) Excluding China and Hong Kong


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