SMIC Reports 2009 Third Quarter Results
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SMIC Reports 2009 Third Quarter Results

All currency figures stated in this report are in US Dollars unless stated otherwise. The financial statement amounts in this report are determined in accordance with US GAAP.

SHANGHAI, Oct. 28 /PRNewswire-Asia/ -- Semiconductor Manufacturing International Corporation (NYSE: SMI) ("SMIC" or the "Company"), one of the leading semiconductor foundries in the world, today announced its consolidated results of operations for the three months ended September 30, 2009.

    Third Quarter 2009 Highlights:
    -- Revenue up by 20.9% to $323.4 million from $267.4 million in 2Q09 and
       down by 14.0% compared to 3Q08.
    -- 65nm production ramp is on schedule and we expect further increases in
       65nm shipment in 4Q09 and into 2010.
    -- Wafer revenue from Greater China region grew 33.5% QoQ.
    -- Gross margins improved to 0.8% in 3Q09 compared to -4.8% in 2Q09 due to
       an increase in wafer shipments and fab utilization.
    -- Net cash flow from operations has increased substantially to $73.0
       million from $43.2 million in 2Q09.
    -- Loss attributable to holders of ordinary shares of US$69.3 million in
       3Q09, compared to loss of US$98.2 million in 2Q09.
    -- Fully diluted EPS was ($0.1550) per ADS.

Fourth Quarter 2009 Guidance:

The following statements are forward looking statements which are based on current expectations and which involve risks and uncertainties, some of which are set forth under "Safe Harbor Statements" below.

    -- Revenue is expected to increase 2% to 5% QoQ.
    -- Operating expenses excluding foreign exchange differences are expected
       to range from $67 million to $72 million.
    -- Capital expenditures are expected to range from $90 million to $95
       million.
    -- Depreciation and amortization is expected to be approximately $193
       million.

Commenting on the quarterly results, Dr. Richard Chang, Chief Executive Officer of SMIC, remarked, "The third quarter of 2009 displayed a continued foundry market recovery. In the third quarter of 2009, SMIC exceeded its original guidance, achieving about 21% quarter-over-quarter growth in revenue; furthermore, we expect revenue for the fourth quarter of 2009 to continue to grow 2% to 5% quarter-over-quarter. Utilization rose to 87.3% in the third quarter compared to 75.4% in the second quarter. Significant growth was exhibited in consumer sales, which grew 40.6% quarter-over-quarter.

Regionally, Greater China revenue grew by 33.5%, North America sales increased by 16.7%, and European sales increased by 3% quarter-over-quarter. North America maintained the largest contribution to revenue with strong growth in the advanced nodes, while revenue contribution from Greater China increased to 36.6% of total revenue in the third quarter of 2009 compared to 33.2% in the second quarter of 2009 and 31.2% in the third quarter of 2008. In the third quarter of 2009, 80% of our new customers are from the Greater China region.

Our product mix is improving and we are accelerating our advanced node development. We see a shift to higher-end products, as sales from 0.18-um and above are shifting into 0.13-um and below. Our 0.13-um and below wafer revenue reached 52.8% of total wafer revenue in the third quarter of 2009 compared to 46.4% in the second quarter of 2009. In terms of advanced technology development, our 65-nm production ramp is on schedule and with our 65-nm low leakage library and key IPs in place, we expect to continue to ramp up 65-nm shipments in the fourth quarter of 2009 and into 2010. In addition, our 45-nm development is ahead of schedule with multiple customers working with us in various stages of qualification, and we target our first 45-nm product tape-out by the end of this year. We now provide a complete offering for advanced nodes down to 40-nm, and we recently announced the extension of our technology to 55-nm. Moreover, we have started our 32-nm program and have engaged partners and customers in the research and development phase.

Looking into the fourth quarter of 2009, we see improving gross margins on higher revenue with significant growth in the advanced nodes, including 90-nm and 65-nm nodes. Total depreciation and amortization expense is expected to fall considerably in 2010 as most of our Shanghai 8-inch fab equipment fully depreciates. We continue to exercise vigilant cost control and expect our full year capital expenditure to be around $190 million for the current year.

In summary, we continue to strive towards profitability through improving our product mix, advancing our process technology and remaining disciplined in capital expenditure."

    Conference Call / Webcast Announcement

    Date: October 29, 2009
    Time: 8:30 a.m. Shanghai time

Dial-in numbers and pass code: U.S. 1-617-614-3672 / 1-800-260-8140 or HK 852-3002-1672 (Pass code: SMIC).

A live webcast of the 2009 third quarter announcement will be available at http://www.smics.com under the "Investor Relations" section. 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 (NYSE: SMI) is one of the leading semiconductor foundries in the world and the largest and most advanced foundry in Mainland China, providing integrated circuit (IC) foundry and technology services at 0.35um to 45nm. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) and three 200mm wafer fabs in its Shanghai mega-fab, two 300mm wafer fabs in its Beijing mega-fab, a 200mm wafer fab in Tianjin, a 200mm fab under construction in Shenzhen, and an in-house assembly and testing facility in Chengdu. SMIC also has customer service and marketing offices in the U.S., Europe, and Japan, and a representative office in Hong Kong. In addition, SMIC manages and operates a 200mm wafer fab in Chengdu owned by Cension Semiconductor Manufacturing Corporation and a 300mm wafer fab in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation.

    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 concerning our expectation of a shift to higher-end products, our expectation of a continued ramp up of 65 nm shipments in the fourth quarter of 2009 and into 2010, target timing for our first 45-nm product tape-out, our expectations regarding the amount of our capital expenditures in 2009 and our total depreciation and amortization expense for 2009 and 2010, and statements under "Depreciation and Amortization", "Capex Summary" and "Fourth Quarter 2009 Guidance", are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of SMIC's senior management and 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 cyclicality and market conditions in the semiconductor industry, the downturn in the global economy and the impact on China's economy, intense competition, timely wafer acceptance by SMIC's customers, timely introduction of new technologies, SMIC's ability to capture growth opportunities in China, SMIC's ability to strengthen its product portfolio, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, orders or judgments from pending litigation, availability of manufacturing capacity 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 June 22, 2009, especially in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections, and such other documents that SMIC may file with the SEC or SEHK from time to time, including 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 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.

Material Litigation

Recent TSMC Legal Developments:

On August 25, 2006, TSMC filed a lawsuit against the Company and certain subsidiaries, namely SMIC (Shanghai), SMIC (Beijing) and SMIC (Americas) in the Superior Court of the State of California, County of Alameda for alleged breach of a settlement agreement, alleged breach of promissory notes and alleged trade secret misappropriation by the Company. TSMC seeks, among other things, damages, injunctive relief, attorneys' fees, and the acceleration of the remaining payments outstanding under that settlement agreement.

In the present litigation, TSMC alleges that the Company has incorporated TSMC trade secrets in the manufacture of the Company's 0.13 micron or smaller process products. TSMC further alleges that as a result of this claimed breach, TSMC's patent license is terminated and the covenant not to sue is no longer in effect with respect to the Company's larger process products. The Company has vigorously denied all allegations of misappropriation. The Court has made no finding that TSMC's claims are valid. The Court has set a trial date of September 8, 2009.

On September 13, 2006, the Company announced that in addition to filing a response strongly denying the allegations of TSMC in the United States lawsuit, it filed on September 12, 2006, a cross-complaint against TSMC seeking, among other things, damages for TSMC's breach of contract and breach of implied covenant of good faith and fair dealing.

On November 16, 2006, the High Court in Beijing, the People's Republic of China, accepted the filing of a complaint by the Company and its wholly-owned subsidiaries, namely, SMIC (Shanghai) and SMIC (Beijing), regarding the unfair competition arising from the breach of bona fide (i.e. integrity, good faith) principle and commercial defamation by TSMC ("PRC Complaint"). In the PRC Complaint, the Company is seeking, among other things, an injunction to stop TSMC's infringing acts, public apology from TSMC to the Company and compensation from TSMC to the Company, including profits gained by TSMC from their infringing acts.

On August 14, 2007, the Company filed an amended cross-complaint against TSMC seeking, among other things, damages for TSMC's breach of contract and breach of patent license agreement. TSMC thereafter denied the allegations of the Company's amended cross-complaint and subsequently filed additional claims that the Company breached a settlement agreement by filing an action in the Beijing High Court. The Company has denied these additional claims by TSMC.

On August 15-17, 2007, the California Court held a preliminary injunction hearing on TSMC's motion to enjoin use of certain process recipes in certain of the Company's 0.13 micron logic process flows.

On September 7, 2007, the Court denied TSMC's preliminary injunction motion, thereby leaving unaffected the Company's development and sales. However, the court required the Company to provide 10 days' advance notice to TSMC if the Company plans to disclose logic technology to non-SMIC entities under certain circumstances, to allow TSMC to object to the planned disclosure.

In May 2008, TSMC filed a motion in the California Court for summary adjudication against the Company on several of the Company's cross claims. The Company opposed the motion and on August 6, 2008, the Court granted in part and denied in part TSMC's motion.

On June 23, 2008, the Company filed in the California court a cross-complaint against TSMC seeking, among other things, damages for TSMC's unlawful misappropriation of trade secrets from SMIC to improve its competitive position against SMIC.

On July 10, 2008, the California Court held a preliminary injunction hearing on TSMC's motion to enjoin disclosure of information on certain process recipes in the Company's 0.30 micron logic process flows to 3rd parties. On August 8, 2008, the Court granted-in-part TSMC's motion and preliminarily enjoined SMIC from disclosing fourteen 0.30 micron process steps. On October 3, 2008, SMIC filed a notice of appeal of the Court's August 8, 2008 Order with the California Court of Appeal. This appeal is currently pending.

During the pre-trial proceedings in the matter, as noted above under "Overview of TSMC Litigation", questions arose regarding the actual terms of the 2005 Settlement Agreement between SMIC and TSMC. Accordingly, the California Court held a preliminary trial on January 13 to 16, 2009, limited to a determination of the terms of the Settlement Agreement and an interpretation of any requirements to "meet and confer" prior to institution of litigation. On March 10, 2009, the Court issued a Statement of Decision finding, in part, that an agreement between the parties was executed on January 30, 2005, and thereafter amended on February 2, 2005, as urged by TSMC. The Company believes the Court's ruling is erroneous. The ruling may be appealed by SMIC following the filing of a final judgment by the Court in this matter.

On May 1, 2009, the Company filed motions for summary adjudication against TSMC's claims for breach of promissory notes and violation of the California Uniform Trade Secrets Act. On July 20, 2009, the Court denied the Company's motions.

On May 1, 2009, TSMC filed a motion for summary adjudication of various of the Company's affirmative defenses. On July 20, 2009, the Court granted in part and denied in part TSMC's motion. The Company believes the Court's ruling, to the extent it granted in part TSMC's motion, is erroneous. The ruling may be appealed by SMIC following the filing of a final judgment by the Court in this matter.

On August 10, 2009, TSMC moved for sanctions based on the alleged intentional destruction by the Company of certain documentary evidence relevant to the litigation. The Court granted the motion in part, and ruled that as a sanction, the Company's trade secret cross claims will be severed and continued to a separate trial to allow recovery of files from the Company's archival backups. Additionally, the Court has stated it will instruct the jury that it is allowed, but not required, to decide certain issues at trial against the Company on the basis of loss of evidence. The Company believes the order is erroneous. It is appealable only upon the filing of a final judgment in the lawsuit.

On September 8, 2009, jury trial commenced upon all liability issues related to a selected list of TSMC trade secret claims. It is anticipated that the jury will render a verdict in November, 2009. Following the jury's verdict in this trial, the Court is expected to set a trial date for the Company's trade secret misappropriation cross claims against TSMC.

In the Company's action in the Beijing High People's Court, following an unsuccessful challenge to that Court's jurisdiction by TSMC, the Court has held evidentiary hearings on October 15, October 29, and November 25, 2008. The Court rendered its first-instance judgment on June 10, 2009. Claims of SMIC against TSMC were not supported by the Court in the first-instance judgment. SMIC has appealed the first-instance judgment to the PRC Supreme People's Court. The Supreme Court has set a second-instance trial date of November 25, 2009.

Under the provisions of ASC 360-10 (formerly SFAS 144), the Company is required to make a determination as to whether or not this pending litigation represents an event that requires a further analysis of whether the patent license portfolio has been impaired. The Company is still evaluating whether or not the litigation represents such an event. The Company cannot predict the outcome of the litigation. However, an adverse judgment on TSMC's claim for breach of contract could result in a termination of the patent license and an adverse judgment on either TSMC's claim for breach of contract or its trade secret misappropriation claim could have a materially adverse affect on the Company's financial position and results of operations. The outcome of any impairment analysis performed under ASC 360-10 might result in a material impact to our financial position and results of operations.

    For more information, please contact:

    Investor Contacts:
     En-Ling Feng
     Tel:   +86-21-3861 x16275
     Email: Enling_Feng@smics.com

     Anne Wong Chen
     Tel:   +86-21-3861-0000 x12804
     Email: Anne_CAYW@smics.com

     Edith Kwan
     Tel:   +852-2116-2624
     Email: Edith_Kwan@smics.com



               Summary of Third Quarter 2009 Operating Results

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

                              3Q09        2Q09      QoQ      3Q08        YoY
    Revenue                 323,356     267,422    20.9%    375,945    -14.0%
    Cost of sales           320,702     280,319    14.4%    348,720     -8.0%
    Gross profit (loss)       2,654     (12,897)      --     27,224    -90.3%
    Operating expenses       99,184      81,606    21.5%     40,451    145.2%
    Loss from operations    (96,530)    (94,503)    2.1%    (13,227)   629.8%
    Other expenses, net      (3,943)     (5,802)  -32.0%    (15,631)   -74.8%
    Income tax (expenses)
     credit                  31,704       2,880  1000.7%     (4,499)       --
    Net loss after
     income taxes           (68,769)    (97,425)  -29.4%    (33,357)   106.2%
    Loss from equity
     investment                (313)       (482)  -35.0%        (26)  1103.0%

    Net loss                (69,081)    (97,907)  -29.4%    (33,384)   106.9%

    Accretion of interest
     to noncontrolling
     interest                  (265)       (262)    1.2%      3,094        --

    Loss attributable
     to Semiconductor
     Manufacturing
     International
     Corporation            (69,346)    (98,169)  -29.4%    (30,289)   128.9%

    Gross margin               0.8%       -4.8%                7.2%
    Operating margin         -29.9%      -35.3%               -3.5%

    Net loss per
     ordinary share
     (basic)(1)               (0.00)      (0.00)              (0.00)
    Net loss per ADS
     (basic)                  (0.16)      (0.22)              (0.08)
    Net loss per
     ordinary share
     (diluted) (1)            (0.00)      (0.00)              (0.00)
    Net loss per ADS
     (diluted)                (0.16)      (0.22)              (0.08)

    Wafers shipped (in
     8" wafers)(2)          429,843     341,261   26.0 %    431,660     -0.4%

    Capacity
     utilization              87.3%       75.4%               90.5%


    Note:
    (1) Based on weighted average ordinary shares of 22,368 million (basic)
        and 22,368 million (diluted) in 3Q09, 22,352 million (basic) and
        22,352 million (diluted) in 2Q09 and 18,612 million (basic) and
        18,612 million (diluted) in 3Q08
    (2) Including copper interconnects


    -- Revenue increased to $323.4 million in 3Q09, up 20.9% QoQ from $267.4
       million in 2Q09 due to a 26.0% increase in wafer shipments.
    -- Cost of sales increased to $320.7 million in 3Q09, up 14.4% QoQ from
       $280.3 million in 2Q09.
    -- Gross profit of $2.7 million in 3Q09, compared to a gross loss of $12.9
       million in 2Q09 and gross profit of $27.2 million in 3Q08.
    -- Gross margins improved to 0.8% in 3Q09 from -4.8% in 2Q09 primarily due
       to an increase in wafer shipments and fab utilization QoQ.
    -- Total operating expenses increase to $99.2 million from $81.6 million,
       an increase of 21.5% QoQ primarily due to an increase in G&A expenses
       (as explained below).
    -- R&D expenses increased to $50.0 million in 3Q09, up 3.2% QoQ from $48.5
       million due to an increase in 45nm R&D activities.
    -- G&A expenses increased to $31.9 million in 3Q09 from $17.2 million in
       2Q09 due to an increase in legal fees.
    -- Selling & marketing expenses increased to $7.7 million in 3Q09, up
       11.4% QoQ from $6.9 million in 2Q09.
    -- Income tax credit increased significantly to $31.7 million in 3Q09 from
       $2.9 million in 2Q09 due to a substantial increase in the deferred
       income tax asset arising from a change in the income tax rate
       applicable to certain of our subsidiaries.


    Analysis of Revenues


    Sales Analysis
    By Application                                  3Q09     2Q09     3Q08
    Computer                                         5.3%     4.3%    5.4%
    Communications                                  46.7%    53.5%   53.0%
    Consumer                                        41.9%    36.1%   32.8%
    Others                                           6.1%     6.1%    8.8%

    By Service Type                                 3Q09     2Q09    3Q08
    Logic(1)                                        90.1%    90.9%   87.4%
    DRAM                                             4.0%     2.7%    2.3%
    Mask Making, testing, others                     5.9%     6.4%   10.3%

    By Customer Type                                3Q09     2Q09    3Q08
    Fabless semiconductor companies                 67.3%    65.1%   55.1%
    Integrated device manufacturers (IDM)           16.1%    18.2%   26.1%
    System companies and others                     16.6%    16.7%   18.8%

    By Geography                                    3Q09     2Q09    3Q08
    North America                                   59.2%    61.4%   58.6%
    Greater China(2)                                36.6%    33.2%   31.2%
    Asia Pacific(3)                                  2.9%     3.9%    5.5%
    Europe                                           1.3%     1.5%    4.7%
    Wafer Revenue Analysis
    By Technology                                   3Q09     2Q09    3Q08
    0.065um                                          0.5%     0.1%    0.0%
    0.09um                                          15.8%    16.6%   19.4%
    0.13um                                          36.5%    29.7%   25.1%
    0.15um                                           2.6%     1.5%    2.0%
    0.18um                                          27.8%    29.8%   33.9%
    0.25um                                           0.6%     0.5%    0.5%
    0.35um                                          16.2%    21.8%   19.1%

    Note:
    (1) Including 0.13um copper interconnects
    (2) Including Hong Kong and Taiwan
    (3) Excluding Greater China


    -- Wafer revenue from Greater China region grew 33.5% in 3Q09.
    -- We expect further ramp-up of 65nm logic shipment in 4Q09 and into 2010.
    -- Revenue from advanced technology nodes of 0.13um and below made up
       52.8% of overall wafer revenue in 3Q09 as compared to 46.4% in 2Q09.


    Capacity*

    Fab / (Wafer Size)                                3Q09             2Q09
    Shanghai Mega Fab (8")                           88,000           88,000
    Beijing Mega Fab (12")                           42,750           40,500
    Tianjin Fab (8")                                 34,300           34,300
    Total monthly wafer
    fabrication capacity                            165,050          162,800

    Note:
    * Wafers per month at the end of the period in 8" wafers


    Shipment and Utilization


    8" equivalent wafers                   3Q09           2Q09         3Q08
    Wafer shipments including
     copper interconnects                429,843        341,261      431,660

    Utilization rate(1)                    87.3%          75.4%        90.5%

    Note:
    (1) Capacity utilization based on total wafer out divided by estimated
        capacity


    -- Wafer shipments increased 26.0% QoQ to 429,843 units of 8-inch
       equivalent wafers in 3Q09 from 341,261 units of 8-inch equivalent
       wafers in 2Q09, and down 0.4% YoY from 431,660 8-inch equivalent wafers
       in 3Q08.


    Detailed Financial Analysis

    Gross Profit Analysis


    Amounts in US$ thousands
                           3Q09          2Q09      QoQ      3Q08       YoY
    Cost of sales        320,702       280,319    14.4%   348,721     -8.0%
       Depreciation      155,949       146,763     6.3%   165,641     -5.9%
       Other
        manufacturing
        costs            157,843       126,655    24.6%   176,329    -10.5%
       Deferred cost
        amortization       5,886         5,886     0.0%     5,886      0.0%
       Share-based
        compensation       1,024         1,015     0.9%       865     18.4%
    Gross profit (loss)    2,654       (12,897)      --    27,224    -90.3%
    Gross margin            0.8%         -4.8%               7.2%


    -- Cost of sales increased to $320.7 million in 3Q09, up 14.4% QoQ from
       $280.3 million in 2Q09.
    -- Gross profit of $2.7 million in 3Q09, compared to a gross loss of $12.9
       million in 2Q09 and gross profit of $27.2 million in 3Q08.
    -- Gross margins improved to 0.8% in 3Q09 from -4.8% in 2Q09 primarily due
       to an increase in wafer shipments and fab utilization QoQ.


    Operating Expense Analysis


    Amounts in US$ thousands       3Q09     2Q09       QoQ    3Q08     YoY
    Total operating expenses      99,184   81,606     21.5%  40,451   145.2%
      Research and development    50,003   48,450      3.2%  17,838   180.3%
      General and
       administrative             31,922   17,196     85.6%  10,761   196.7%
      Selling and marketing        7,693    6,905     11.4%   5,578    37.9%
      Amortization of
       intangible assets           9,535    8,858      7.6%   6,906    38.1%
      Loss (income) from
       disposal of properties         29      197    -85.3%    (632)      --


    -- Total operating expenses increased to $99.2 million in 3Q09 from $81.6
       million, an increase of 21.5% QoQ primarily due to an increase in G&A
       expenses.
    -- R&D expenses increased to $50.0 million in 3Q09, up 3.2% QoQ from $48.5
       million due to an increase in 45nm R&D activities
    -- G&A expenses increased to $31.9 million in 3Q09 from $17.2 million in
       2Q09 due to an increase in legal fees.
    -- Selling & marketing expenses increased to $7.7 million in 3Q09, up
       11.4% QoQ from $6.9 million in 2Q09.


    Other Income (Expenses)


    Amounts in US$ thousands
                               3Q09      2Q09        QoQ      3Q08      YoY
    Other income
    (expenses)               (3,943)    (5,802)    -32.0%   (15,631)  -74.8%
      Interest income           634        635      -0.2%     2,542   -75.1%
      Interest expense       (7,941)    (8,386)     -5.3%   (11,088)  -28.4%
      Foreign currency
       exchange gain (loss)   2,441        219    1014.6%    (7,023)      --
      Other, net                923      1,730     -46.6%       (62)      --


    -- Combined with the foreign exchange difference arising from operating
       activities, the Company recorded an overall foreign exchange loss of
       $0.5 million in 3Q09 as compared to a foreign exchange loss of $0.8
       million in 2Q09.


    Depreciation and Amortization

    -- Total depreciation and amortization in 3Q09 was $198.9 million compared
       to $202.9 million in 2Q09.



    Liquidity

    Amounts in US$ thousands                       3Q09                2Q09

    Cash and cash equivalents                     453,285            435,613
    Restricted cash                                20,071             22,580
    Short-term investments                          6,110              3,313
    Accounts receivable                           194,202            161,181
    Inventories                                   186,839            183,012
    Others                                         25,896             18,877
    Total current assets                          886,403            824,575

    Accounts payable                              175,170            166,699
    Short-term borrowings                         281,243            273,678
    Current portion of long-term debt             249,395            205,344
    Others                                        142,596            144,726
    Total current liabilities                     848,404            790,447

    Cash Ratio                                       0.5x               0.5x
    Quick Ratio                                      0.7x               0.7x
    Current Ratio
    Current Ratio                                    1.0x               1.0x


    Capital Structure

    Amounts in US$ thousands                      3Q09                 2Q09

    Cash and cash equivalents                   453,285              435,613
    Restricted cash                              20,071               22,580
    Short-term investments                        6,110                3,313

    Current portion of promissory note           29,493               29,242
    Promissory note                               9,582                9,500

    Short-term borrowings                       281,243              273,678
    Current portion of long-term debt           249,395              205,344
    Long-term debt                              573,697              615,999
    Total debt                                1,104,335            1,095,021

    Shareholders' equity                      2,411,556            2,478,322

    Total debt to equity ratio                    45.8%                44.2%



    Cash Flow

    Amounts in US$ thousands                         3Q09              2Q09

    Net cash from operating activities              72,954            43,198
    Net cash from investing activities             (64,555)          (27,353)
    Net cash from financing activities               9,380           (82,191)

    Net change in cash                              17,672           (66,403)



    Capex Summary

    -- Capital expenditures for 3Q09 were $52.6 million.
    -- Total planned capital expenditures for 2009 is around $190 million.

    Recent Highlights and Announcements

    -- SMIC Chooses KILOPASS Embedded Non-Volatile Memory (NVM) for its 65NM
       and 45NM CMOS Logic Processes (2009-09-25)
    -- SMIC Selects VIRAGE LOGIC's AEON@ Embedded Multi-time Programmable (MTP)
       Non-Volatile Memory (NVM) for RFID Applications  (2009-09-24)
    -- Announcement of unaudited interim results for the six months ended June
       30, 2009 (2009-09-21)
    -- SMIC Releases Presentation Materials from its Analyst Day on September
       15, 2009  (2009-09-18)
    -- Notification of Board Meeting (2009-09-04)
    -- Election of Means of Receipt and Language of Corporate Communications
       (2009-08-04)
    -- SMIC Reports Results for the Three Months Ended June 30, 2009
       (2009-07-28)
    -- SMIC 130nm Process Used in Commercial Production of Display Link USB
       Graphics Chips  (2009-07-27)
    -- Magma Announces Support for SMIC Processes with 65-nm Low-Power
       Reference Flow (2009-07-20)
    -- Notification of Board Meeting (2009-07-10)


                        Please visit SMIC's website at
     http://www.smics.com/website/enVersion/Press_Center/newsRelease.ftl
           for further details regarding the recent announcements.



            Semiconductor Manufacturing International Corporation
                          CONSOLIDATED BALANCE SHEET
                    (In US dollars, except per share data)

                                                          As of
                                          September 30, 2009   June 30, 2009
                                             (Unaudited)        (Unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents                 453,284,870        435,613,297
    Restricted Cash                            20,070,776         22,579,630
    Short-term investments                      6,110,231          3,312,592
    Accounts receivable, net of
     allowances of $6,509,798 and
     $5,637,336 on September 30 and June
     30, 2009, respectively                   194,202,163        161,181,170
    Inventories                               186,839,459        183,011,768
    Prepaid expense and other current
     assets                                    25,895,689         18,876,474
    Total current assets                      886,403,188        824,574,931

    Prepaid land use rights                    78,486,074         78,860,359
    Plant and equipment, net                2,478,950,867      2,625,371,271
    Acquired intangible assets, net           192,778,696        184,845,479
    Deferred cost, net                         29,432,198         35,318,637
    Equity investment                           9,962,419         10,275,172
    Other long-term prepayments                   551,535            825,389
    Long-term receivable                      131,205,267        131,072,053
    Deferred tax assets                        93,163,395         57,250,700
    TOTAL ASSETS                            3,900,933,639      3,948,393,991

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                          175,169,952        166,698,508
    Accrued expenses and other current
     liabilities                              109,116,249        114,632,973
    Short-term borrowings                     281,242,502        273,678,075
    Current portion of promissory note         29,492,873         29,242,001
    Current portion of long-term debt         249,395,373        205,343,559
    Income tax payable                          3,986,995            851,539
    Total current liabilities                 848,403,944        790,446,655

    Long-term liabilities:
    Promissory notes                            9,581,864          9,500,358
    Long-term debt                            573,696,518        615,998,747
    Long-term payables relating to
     license agreements                        16,674,534         16,488,420
    Other long-term liabilities                 6,000,000          3,000,000
    Deferred tax liabilities                      453,205            335,577
    Total long-term liabilities               606,406,121        645,323,102

    Total liabilities                       1,454,810,065      1,435,769,757

     Noncontrolling interest                   34,567,186         34,302,529

    Stockholders' equity:
    Ordinary shares, $0.0004 par value,
     50,000,000,000 shares authorized,
     22,366,133,058 and 22,353,411,672
     shares issued and outstanding on
     September 30 and June 30, 2009,
     respectively                               8,946,454          8,941,365
    Additional paid-in capital              3,497,010,545      3,494,327,734
    Accumulated other comprehensive
     (loss) income                                 (8,293)            98,945
    Accumulated deficit                    (1,094,392,318)    (1,025,046,339)
    Total stockholders' equity              2,411,556,388      2,478,321,705

     TOTAL LIABILITIES, NONCONTROLLING
      INTEREST AND STOCKHOLDERS' EQUITY     3,900,933,639      3,948,393,991



            Semiconductor Manufacturing International Corporation
                     CONSOLIDATED STATEMENT OF OPERATIONS
                    (In US dollars, except per share data)

                                               For the three months ended
                                          September 30, 2009    June 30, 2009
                                               (Unaudited)       (Unaudited)
    Sales                                      323,355,915       267,422,419
    Cost of sales                              320,702,261       280,318,656
    Gross profit (loss)                          2,653,654       (12,896,237)

    Operating expenses:
    Research and development                    50,003,000        48,450,248
    General and administrative                  31,922,632        17,195,574
    Selling and marketing                        7,693,241         6,904,892
    Amortization of acquired intangible
     assets                                      9,535,274         8,858,012
        Loss from sale of equipment and
         other fixed assets                         29,475           196,980
    Total operating expenses, net               99,183,622        81,605,706

    Loss from operations                       (96,529,968)      (94,501,943)

    Other income (expense):
    Interest income                                633,879           634,737
    Interest expense                            (7,941,202)       (8,386,025)
    Foreign currency exchange gain               2,441,374           219,319
    Others, net                                    923,152         1,730,404
    Total other expense, net                    (3,942,797)       (5,801,565)

    Loss before income tax                    (100,472,765)     (100,303,508)

    Income tax benefit                          31,704,196         2,880,291
    Loss from equity investment                   (312,752)         (481,605)
    Net loss                                   (69,081,321)      (97,904,822)

    Accretion of interest to
     noncontrolling interest                      (264,658)         (261,781)

    Loss attributable to Semiconductor
     Manufacturing International Corporation   (69,345,979)      (98,166,603)

    Net loss per share attributable to
     Semiconductor Manufacturing
     International Corporation ordinary
     shareholders, basic and diluted               (0.0031)          (0.0044)

    Net loss per ADS attributable to
     Semiconductor Manufacturing
     International Corporation ordinary
     shareholders, basic and diluted               (0.1550)          (0.2196)

    Shares used in calculating basic and
     diluted loss per share                 22,368,419,207    22,352,477,317




            Semiconductor Manufacturing International Corporation
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                               (In US dollars)

                                               For the three months ended
                                           September 30, 2009    June 30, 2009
                                               (Unaudited)       (Unaudited)
    Operating activities:

    Net Loss                                   (69,081,321)      (97,904,822)

    Adjustments to reconcile net loss to
     net cash provided by operating
     activities:

    Deferred taxes                             (35,795,067)       (5,319,471)
    Loss from sale of equipment and
     other fixed assets                             29,475           196,980
    Depreciation and amortization              186,777,756       191,368,626
    Non-cash interest expense on
     promissory note and long-term
     payable relating to license
     agreements                                    736,747           992,974
    Amortization of acquired intangible
     assets                                      9,535,274         8,858,012
    Share-based compensation                     2,622,067         2,630,178
    Loss from equity investment                    312,752           481,605
    Changes in operating assets and
     liabilities:
    Accounts receivable, net                   (33,020,992)      (77,071,568)
    Long-term receivable                          (133,214)       (4,966,252)
    Inventories                                 (3,827,691)      (28,228,273)
    Prepaid expense and other current
     assets                                     (6,745,362)        6,474,752
    Accounts payable                            (1,498,671)       39,046,117
    Accrued expenses and other current
     liabilities                                16,907,154         3,255,592
    Other long-term liabilities                  3,000,000         3,000,000
    Income tax payable                           3,135,456           383,671

    Net cash provided by operating
     activities                                 72,954,363        43,198,121

    Investing activities:

    Purchase of plant and equipment            (51,439,333)      (44,759,433)
    Proceeds from government grant to
     purchase plant and equipment               19,692,334        14,544,928
    Proceeds from sale of equipment                779,075          (191,827)
    Proceeds received from sale of
     assets held for sale                               --           (26,201)
    Purchase of acquired intangible
     assets                                    (33,298,688)       (2,987,788)
    Purchase of short-term investments          (6,027,164)       (5,648,618)
    Sale of short-term investments               3,229,525        23,067,587
    Change in restricted cash                    2,508,855       (11,351,889)

    Net cash used in investing activities      (64,555,396)      (27,353,241)

    Financing activities:

    Proceeds from short-term borrowings        153,106,179       215,404,493
    Repayment of short-term borrowings        (145,541,751)     (211,804,669)
    Proceeds from long-term debt                51,749,585                --
    Repayment of long-term debt                (50,000,000)      (70,827,750)
    Repayment of promissory note                        --       (15,000,000)
    Proceeds from exercise of employee
     stock options                                  65,832            37,245

    Net cash provided by (used in) financing
     activities                                  9,379,845       (82,190,681)

    Effect of exchange rate changes               (107,239)          (56,759)

    NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                           17,671,573       (66,402,560)

    CASH AND CASH EQUIVALENTS, beginning
     of period                                 435,613,297       502,015,857

    CASH AND CASH EQUIVALENTS, end of
     period                                    453,284,870       435,613,297

For the complete Chinese version of "SMIC Reports 2009 Third Quarter Results," please visit: http://www.prnasia.com/sa/attachment/2009/10/20091028175218.pdf

Web site: http://www.smics.com/
http://www.prnasia.com/sa/attachment/2009/10/20091028175218.pdf/