SMIC Reports 2015 Third Quarter Results

 

Capacity*


Fab / (Wafer Size)

3Q15

2Q15

Shanghai Mega Fab (8")

100,000

99,000

Shanghai 12-inch Fab (12")

31,500

31,500

Beijing Mega Fab (12")

83,250

83,250

Tianjin Fab (8")

43,000

42,000

Shenzhen Fab (8")

11,000

-

Total monthly wafer fabrication capacity**

268,750

255,750


Note:

* Wafers per month at the end of the period in 8" equivalent wafers, calculated on a 30-day basis for comparison purposes

**Our new 12-inch fab in Beijing have reached an installed capacity of 3,000 wafers per month but not entered into mass production at the end of 3Q15.

  • Monthly capacity increased to 268,750 8-inch equivalent wafers in 3Q15 from 255,750 8-inch equivalent wafers in 2Q15, primarily because our new 8-inch fab in Shenzhen entered into mass production in 3Q15.

Shipment and Utilization


8" equivalent wafers

3Q15

2Q15

QoQ

3Q14

YoY

Wafer shipments

771,201

731,730

5.4%

668,811

15.3%

Utilization rate(1)

100.5%

102.1%

-

91.9%

-


Note:

(1) Based on total equivalent wafers out divided by estimated total quarterly capacity.

Detailed Financial Analysis

Gross Profit Analysis


Amounts in US$ thousands

3Q15

2Q15

QoQ

3Q14

YoY

Cost of sales

387,503

370,210

4.7%

386,704

0.2%

Depreciation

94,294

95,942

-1.7%

108,623

-13.2%

Other manufacturing costs

291,425

272,552

6.9%

277,278

5.1%

Share-based compensation

1,784

1,716

4.0%

803

122.2%

Gross profit

182,351

176,405

3.4%

134,942

35.1%

Gross margin

32.0%

32.3%

-

25.9%

-

  • Cost of sales was $387.5 million in 3Q15, up 4.7% QoQ from $370.2 million in 2Q15.
  • Depreciation within the cost of sales decreased 1.7% to $94.3 million in 3Q15, compared to $95.9 million in 2Q15.
  • Other manufacturing costs within the cost of sales increased 6.9% to $291.4 million in 3Q15, compared to $272.6 million in 2Q15. The increase was mainly due to an increase of wafer shipments in 3Q15.
  • 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 (Income) Analysis


Amounts in US$ thousands

3Q15

2Q15

QoQ

3Q14

YoY

Operating expenses

108,125

115,728

-6.6%

94,122

14.9%

Research and development, net

62,381

55,202

13.0%

54,887

13.7%

General and administrative

51,387

52,051

-1.3%

34,668

48.2%

Selling and marketing

11,154

9,159

21.8%

10,090

10.5%

Other operating income

(16,797)

(684)

2355.7%

(5,523)

204.1%

  • R&D expenses increased by $7.2 million QoQ to $62.4 million in 3Q15, compared to $55.2 million in 2Q15. Excluding the funding of R&D contracts from the government, R&D expenses increased by $6.4 million QoQ to $72.0 million in 3Q15. The change was mainly due to higher R&D activities in 3Q15. Funding of R&D contracts from the government was $9.6 million in 3Q15, compared to $10.4 million in 2Q15.
  • Other operating income increased from $0.7 million in 2Q15 to $16.8 million in 3Q15, mainly because of the gain realized from the disposal of certain living quarters in 3Q15.

Other Income ( expense ), Net


Amounts in US$ thousands

3Q15

2Q15

QoQ

3Q14

YoY

Other income (expense), net

(3,459)

11,943

-

7,840

-

Interest income

1,378

956

44.1%

2,968

-53.6%

Finance costs

(2,009)

(2,416)

-16.8%

(2,539)

-20.9%

Foreign exchange gains or losses

(25,963)

4,960

-

6,838

-

Other gains or losses, net

3,072

8,592

-64.2%

264

1063.6%

Fair value change

25,455

-

-

-

-

Share of profit (loss) of investment using equity method

(5,392)

(149)

3518.8%

309

-

  • The change in foreign exchange gains or losses was mainly due to a devaluation of RMB against USD in 3Q15. 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.
  • The change in other gains or losses, net was mainly caused by 1) the lower revenue from our schools in 3Q15 due to summer vacation and 2) the lower gains from investment in the financial products sold by banks in 3Q15.
  • The change in fair value change was due to gain arising from the put option, which was granted by Jiangsu Changjiang Electronics Technology Co., Ltd ("JCET"), to sell the shares of Suzhou Changjiang Electric Xinke Investment Co., Ltd ("Changjiang Xinke") to JCET, pursuant to an investment exit agreement entered into by SilTech Shanghai (a subsidiary of SMIC), JCET and Jiangsu Xinchao Technology Group Co., Ltd (a substantial shareholder of JCET).
  • The change in share of profit (loss) of investment using equity method was mainly due to the loss attributable to Changjiang Xinke.

Depreciation and Amortization


Amounts in US$ thousands

3Q15

2Q15

QoQ

3Q14

YoY

Depreciation and amortization

130,460

124,911

4.4%

138,889

-6.1%


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