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SMIC Reports 2009 Third Quarter Results

SHANGHAI, Oct. 28 /PRNewswire-Asia/ -- Semiconductor Manufacturing International Corporation (NYSE: SMI - News; SEHK: 981 - News; "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 rew 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:

-- 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.