Shanghai [2007-10-30]
Shanghai, China ?C October 30, 2007. Semiconductor Manufacturing International Corporation (NYSE: SMI; SEHK: 981) (“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, 2007.
Third Quarter 2007 Highlights:
§ Revenue up by 6.1% over 3Q06 to $391.4 million and up by 4.4% from $374.8 million in 2Q07.
§ Gross margins were 10.8% in 3Q07 compared to 10.3% in 2Q07.
§ Net loss of $25.6 million in 3Q07 due to severe price declines in the DRAM market, compared to a net loss of $2.1 million in 2Q07.
§ Fully diluted EPS was ($0.0690) per ADS.
Commenting on the quarterly results, Dr. Richard Chang, Chief Executive Officer of SMIC remarked, “SMIC saw continued growth in our foundry business in the third quarter of 2007 and recorded revenue growth on a year-on-year and a quarter-on-quarter basis. Our logic and non-DRAM related business continued to grow as revenue increased 12.1% over the second quarter to $299.0 million. Revenues at 90-nanometer increased to 26.7%, up from 22.0% in second quarter of 2007. Gross margins increased slightly to 10.8% in 3Q07 from 10.3% in 2Q07 primarily due to higher utilization and a higher proportion of logic shipments. Operationally, wafer shipments increased year over year by 10.7%, while capacity utilization increased to 94.1%, up from 84.3% in the third quarter of 2006.
Despite the strength of our non-DRAM foundry services, our business was impacted by ongoing severe price declines in the DRAM market. DRAM revenues were reduced to 23.6% of total revenues, compared to 28.9% reported in the second quarter of 2007. We reported a quarterly loss of $25.6 million which includes an additional loss provision for DRAM inventories of about $10 million. We expect revenues from DRAM as a proportion of our total revenue to decrease in the next two quarters.
As a part of our long-term strategy to lower capital expenditures while increasing production capacity, we are currently managing fabs owned and financed by local governments. The 200-millimeter Chengdu fab is progressing smoothly. Pilot production began in the second quarter, and we expect to start mass production by the end of the year. For the 300-millimeter Wuhan fab, we still plan to start the equipment move-in during the fourth quarter of 2007.
Our technology roadmap is well on track, with our 65-nanometer technology development making steady progress. Commercial production of 2Gb NAND flash started in September, 2007, and we are developing an 8Gb NAND flash product. We were also pleased to announce recently that we have entered into a strategic agreement with Spansion, in which Spansion will transfer its 65nm flash technology to SMIC. This move will allow SMIC to enter selected segments of the flash memory market with a license to manufacture and sell 90nm and 65nm and potentially future Spansion MirrorBit® Quad products.
We are committed to our strategy and are confident that prudent development of advanced technology nodes in China for leading customers will position SMIC for solid, long-term growth.”
SMIC Q3 earnings release
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, providing integrated circuit (IC) manufacturing service at 0.35um to 90nm and finer line technologies. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) under pilot production 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, 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 under construction in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. For more information, please visit http://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 that revenues from DRAM as a proportion of our total revenue will decrease in the next two quarters, SMIC’s ability to grow and improve profitability, and statements under “Capex Summary” and “Fourth Quarter 2007 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, intense competition, timely wafer acceptance by SMIC’s customers, timely introduction of new technologies, SMIC’s ability to ramp new products into volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, 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, as amended, filed with the SEC on June 29, 2007, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, and its registration statement on Form A-1 as filed with the Stock Exchange of Hong Kong (SEHK) on March 8, 2004, 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.
Investor Contacts:
Theresa Teng
Tel: 86-21-5080-2000 ext. 16278
Theresa_Teng@smics.com
Phyllis Liu
Tel: 86-21-5080-2000 ext. 12315
Phyllis_Liu@smics.com
Adam Weng
Tel: 86-21-5080-2000 ext. 16275
Adam_Weng@smics.com
Shanghai, China ?C October 30, 2007. Semiconductor Manufacturing International Corporation (NYSE: SMI; SEHK: 981) (“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, 2007.
Third Quarter 2007 Highlights:
§ Revenue up by 6.1% over 3Q06 to $391.4 million and up by 4.4% from $374.8 million in 2Q07.
§ Gross margins were 10.8% in 3Q07 compared to 10.3% in 2Q07.
§ Net loss of $25.6 million in 3Q07 due to severe price declines in the DRAM market, compared to a net loss of $2.1 million in 2Q07.
§ Fully diluted EPS was ($0.0690) per ADS.
Commenting on the quarterly results, Dr. Richard Chang, Chief Executive Officer of SMIC remarked, “SMIC saw continued growth in our foundry business in the third quarter of 2007 and recorded revenue growth on a year-on-year and a quarter-on-quarter basis. Our logic and non-DRAM related business continued to grow as revenue increased 12.1% over the second quarter to $299.0 million. Revenues at 90-nanometer increased to 26.7%, up from 22.0% in second quarter of 2007. Gross margins increased slightly to 10.8% in 3Q07 from 10.3% in 2Q07 primarily due to higher utilization and a higher proportion of logic shipments. Operationally, wafer shipments increased year over year by 10.7%, while capacity utilization increased to 94.1%, up from 84.3% in the third quarter of 2006.
Despite the strength of our non-DRAM foundry services, our business was impacted by ongoing severe price declines in the DRAM market. DRAM revenues were reduced to 23.6% of total revenues, compared to 28.9% reported in the second quarter of 2007. We reported a quarterly loss of $25.6 million which includes an additional loss provision for DRAM inventories of about $10 million. We expect revenues from DRAM as a proportion of our total revenue to decrease in the next two quarters.
As a part of our long-term strategy to lower capital expenditures while increasing production capacity, we are currently managing fabs owned and financed by local governments. The 200-millimeter Chengdu fab is progressing smoothly. Pilot production began in the second quarter, and we expect to start mass production by the end of the year. For the 300-millimeter Wuhan fab, we still plan to start the equipment move-in during the fourth quarter of 2007.
Our technology roadmap is well on track, with our 65-nanometer technology development making steady progress. Commercial production of 2Gb NAND flash started in September, 2007, and we are developing an 8Gb NAND flash product. We were also pleased to announce recently that we have entered into a strategic agreement with Spansion, in which Spansion will transfer its 65nm flash technology to SMIC. This move will allow SMIC to enter selected segments of the flash memory market with a license to manufacture and sell 90nm and 65nm and potentially future Spansion MirrorBit® Quad products.
We are committed to our strategy and are confident that prudent development of advanced technology nodes in China for leading customers will position SMIC for solid, long-term growth.”
SMIC Q3 earnings release
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, providing integrated circuit (IC) manufacturing service at 0.35um to 90nm and finer line technologies. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) under pilot production 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, 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 under construction in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. For more information, please visit http://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 that revenues from DRAM as a proportion of our total revenue will decrease in the next two quarters, SMIC’s ability to grow and improve profitability, and statements under “Capex Summary” and “Fourth Quarter 2007 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, intense competition, timely wafer acceptance by SMIC’s customers, timely introduction of new technologies, SMIC’s ability to ramp new products into volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, 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, as amended, filed with the SEC on June 29, 2007, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, and its registration statement on Form A-1 as filed with the Stock Exchange of Hong Kong (SEHK) on March 8, 2004, 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.
Investor Contacts:
Theresa Teng
Tel: 86-21-5080-2000 ext. 16278
Theresa_Teng@smics.com
Phyllis Liu
Tel: 86-21-5080-2000 ext. 12315
Phyllis_Liu@smics.com
Adam Weng
Tel: 86-21-5080-2000 ext. 16275
Adam_Weng@smics.com
