omniture

SMIC Reports 2007 First 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.

Overview:

* Sales increased to $388.3 million in 1Q07, up 10.6% from 1Q06 and up

1.2% sequentially.

* Gross margins of 9.5% in 1Q07 from 5.1% in 4Q06.

* Net income of $8.8 million in 1Q07, compared to a net loss of $9.6

million in 1Q06 and net income of $0.1 million in the previous quarter.

SHANGHAI, China, April 27 /Xinhua-PRNewswire-FirstCall/ -- 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 March 31, 2007. Sales increased 1.2% in the first quarter of 2007 to $388.3 million from $383.8 million in the fourth quarter of 2006. The Company reported a decrease in capacity to 177,150 8-inch equivalent wafers per month and a utilization rate of 86.2% in the first quarter of 2007. Gross margins were 9.5% in the first quarter of 2007 compared to 5.1% in the fourth quarter of 2006. Net income of $8.8 million in the first quarter of 2007, compared to a net loss of $9.6 million in the first quarter of 2006 and a net income of $0.1 million in the fourth quarter of 2006.

"SMIC posted quarterly revenues of $388.3 million dollars during the first quarter of 2007," said Dr. Richard Chang, Chief Executive Officer of SMIC. "Gross profit increased to $36.9 million in 1Q07 up 89.2% QoQ from $19.5 million in 4Q06. Management fees from the Wuhan and Chengdu managed projects contributed to the revenue while demonstrating our ability to continue to grow our business".

Despite operating in a difficult business environment, SMIC was able to grow its revenues through several channels this quarter. We have seen several orders come back from major customers. During the quarter, we have seen significant growth in orders from the Chinese local design companies, which accounts for 12.8% of the revenue in 1Q07 as compared to 8.8% in 4Q06. We expect continued growth in the business from the Chinese local design companies for the rest of this year.

We will continue to focus on sustainable profitability and strategically identify opportunities to enhance shareholder value in the company. We are currently on track with our technology roadmap with 65nm technology development making good progress.

In the second quarter of 2007, we believe the steady development of advanced technology nodes for leading customers along with additional logic orders and revenue from our peripheral businesses positions SMIC for continual growth in 2007."

Conference Call / Webcast Announcement

Date: April 27, 2007

Time: 10:00 a.m. Shanghai time

Dial-in numbers and pass code: U.S. 1-617-597-5342 or HK 852-3002-1672

(Pass code: SMIC).

A live webcast of the 2007 first quarter announcement will be available at http://www.smics.com under the "Investor Relations" section. An archived version of the webcast, along with a soft copy of this news release will be available on the SMIC website for a period of 12 months following the webcast.

About SMIC

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 0.35mm to 90nm and finer line technologies. Headquartered in Shanghai, China, SMIC operates three 200mm fabs in Shanghai and one in Tianjin, and one 300mm fab in Beijing, the first of its kind in Mainland China. SMIC has customer service and marketing offices in the U.S., Italy, and Japan as well as a representative office in Hong Kong. For additional information, please visit http://www.smics.com .

Safe Harbor Statements

(Under the Private Securities Litigation Reform Act of 1995)

This press release may contain, 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 SMIC's plans to develop its capabilities, build its China customer base and expand its capacity, anticipated decreases in depreciation expenses, the percentage of total wafer revenue expected to come from 90nm sales, SMIC's ability to grow and improve profitability in 2007, and statements under "Capex Summary" and "Second 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, 2006, 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.

Material Litigation

Overview of TSMC Litigation:

Beginning in December 2003 through August 2004, the Company became subject to several lawsuits brought by Taiwan Semiconductor Manufacturing Company, Limited ("TSMC") relating to alleged infringement of certain patents and misappropriation of alleged trade secrets relating to methods for conducting semiconductor fab operations and manufacturing integrated circuits.

On January 31, 2005, the Company entered into a settlement agreement, without admission of liability, which provided for the dismissal of all pending legal actions without prejudice between the two companies (the "Settlement Agreement"). The terms of the Settlement Agreement also included:

-- The Company and TSMC agreed to cross-license each other's patent

portfolio for all semiconductor device products, effective from

January 2005 through December 2010.

-- TSMC covenanted not to sue the Company for trade secret

misappropriation as alleged in TSMC's legal actions as it related to

.15um and larger processes subject to certain conditions ("TSMC

Covenant"). The TSMC Covenant did not cover .13um and smaller

technologies after 6 months following execution of the Settlement

Agreement (July, 31, 2005). Excluding the .13um and smaller

technologies, the TSMC Covenant remains in effect indefinitely,

terminable upon a breach by the Company.

-- The Company is required to deposit certain Company materials relating

to .13um and smaller technologies into an escrow account until December

31, 2006 or under certain circumstances for a longer period of time.

-- The Company agreed to pay TSMC an aggregate of $175 million in

installments of $30 million for each of the first five years and $25

million in the sixth year.

Accounting under the Settlement Agreement:

Current Accounting

In accounting for the Settlement Agreement, the Company determined that there were several components of the Settlement Agreement -- settlement of litigation, TSMC Covenant, patents licensed by us to TSMC and the use of TSMC's patent license portfolio both prior and subsequent to the settlement date.

The Company does not believe that the settlement of litigation, TSMC Covenant or patents licensed by us to TSMC qualify as accounting elements. In regard to the settlement of litigation, the Company cites the following:

-- The Settlement Agreement expressly stated that there was no admission

of liability by either party;

-- The Settlement Agreement required all parties to bear their own legal

costs;

-- There were no damages recited in, or associated with, the Settlement

Agreement;

-- There was a provision in the Settlement Agreement for a grace period to

resolve any misappropriation issues had they existed;

-- Albeit a complaint had been filed by TSMC on trade secret infringement,

TSMC has never identified which trade secrets it claimed were being

infringed upon by the Company;

-- The Settlement Agreement was concluded when the litigation process was

still at a relatively early stage and the outcome of the litigation

was therefore highly uncertain.

The TSMC Covenant does not qualify as a separable asset in accordance with either SFAS 141 of SFAS 142 as TSMC had never specified or identified which trade secrets it claimed were misappropriated, the Company's belief that TSMC's alleged trade secrets may be obtained within the marketplace by other legal means and the Company never obtained the legal right to use TSMC's trade secrets.

In addition, the Company did not attribute any value to the patents licensed to TSMC under the Settlement Agreement due to the limited number of patents held by the Company at the time of the Settlement Agreement.

As a result, the Company determined that only the use of TSMC's patent license portfolio prior and subsequent to the settlement date were considered elements of an arrangement for accounting purposes. In attributing value to these two elements, the Company first discounted the payment terms of the $175 million settlement amount using an annual 3.4464% interest rate to arrive at a net present value of $158 million. This amount was then allocated to the pre- and post-settlement periods based on relative fair value, as further described below.

Based on this approach, $16.7 million was allocated to the pre-settlement period, reflecting the amount that the Company would have paid for use of the patent license portfolio prior to the date of the Settlement Agreement. The remaining $141.3 million, representing the relative fair value of the licensed patent license portfolio, was recorded on the Company's consolidated balance sheets as a deferred cost and is being amortized over a six-year period, which represents the life of the licensed patent license portfolio. The amortization of the deferred cost is included as a component of cost of sales in the consolidated statements of operations.

Valuation of Deferred Cost:

The fair value of the patent license portfolio was calculated by applying the estimated royalty rate to the specific revenue generated and expected to be generated from the specific products associated with the patent license portfolio.

-- The selected royalty rate was based on the review of median and mean

royalty rates for the following categories of licensing arrangements:

-- Existing third-party license agreements with SMIC;

-- The analysis of comparable industry royalty rates related to

semiconductor chip/integrated circuit ("IC") related technology;

and

-- The analysis of comparable industry royalty rates related to

semiconductor fabrication.

On an annualized basis, the amounts allocated to past periods was lower than that allocated to future periods as the Company assumed increases in revenues relating to the specific products associated with the patent license portfolio.

As the total estimated fair value of the patent license portfolio exceeded the present value of the settlement amount, the Company allocated the present value of the settlement amount based on the relative fair value of the amounts calculated prior and subsequent to the settlement date.

Recent TSMC Legal Developments:

On August 25, 2006, TSMC filed a lawsuit against the Company and certain subsidiaries (SMIC (Shanghai), SMIC (Beijing) and SMIC (Americas) in the Superior Court of the State of California, County of Alameda for alleged breach of the 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 the 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. Moreover, TSMC has not yet proven, nor produced evidence of, any trade secret misappropriation by the Company. At present, the claims rest as unproven allegations, denied by the Company. The Court has made no finding that TSMC's claims are valid, nor has it set a trial date.

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, 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.

In March 2007, the California Court denied TSMC's motion to enjoin the PRC action. TSMC has appealed this ruling to the California Court of Appeal.

Under the provisions of 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. We believe that the lawsuit is at a very early stage and we are still evaluating whether or not the litigation represents such an event. The Company expects further information to become available to us, which will aid us in making a determination. The outcome of any impairment analysis performed under SFAS 144 might result in a material impact to our financial position and results of operations.

Change of Accounting Estimate

With effect from the first quarter of 2007, the Company has changed the estimated useful life of fab-related machinery and equipment in the computation of annual depreciation. This change has an effect on the Company's gross profit and gross margin. Previously, we used a five-year straight-line depreciation method. We consider the previous useful life estimate overly conservative in light of the expected economic life of the equipment. We have changed the useful life estimate to a five to seven year range, which is consistent with industry practice and more accurately reflect the economics associated with the ownership of the equipment.

Summary of First Quarter 2007 Operating Results

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

1Q07 4Q06 QoQ 1Q06 YoY

Sales 388,284 383,813 1.2% 351,138 10.6%

Cost of sales 351,345 364,339 -3.6% 313,654 12.0%

Gross profit 36,940 19,474 89.7% 37,484 -1.5%

Operating expenses 21,722 5,762 277.0% 44,335 -51.0%

Income (Loss) from operations 15,218 13,712 11.0% (6,852) --

Other income (expenses),net (12,187) (16,468) -26.0% (7,806) 56.1%

Income tax credit (expense) 5,964 3,002 98.7% (14) --

Net income (loss) after

income taxes 8,995 246 3556.5% (14,671) --

Minority interest 977 941 3.8% 947 3.2%

Share of loss of affiliate

company (1,212) (1,044) 16.1% (1,059) 14.4%

Income (loss) attributable to

holders of ordinary shares

8,760 143 6025.9% (9,628) --

Operating margin 3.9% 3.6% -2.0%

Net income (loss) per ordinary

share - basic(1) 0.0005 0.0000 (0.0005)

Net income (loss) per ADS -

basic 0.0237 0.0004 (0.0263)

Net income (loss) per ordinary

share - diluted(1) 0.0005 0.0000 (0.0005)

Net income (loss) per ADS -

diluted 0.0234 0.0004 (0.0263)

Wafers shipped (in 8"

wafers)(2) 450,592 424,395 6.2% 388,010 16.1%

ASP(3) $904 -4.6% $905 -4.8%

Capacity utilization 86.2% 86.6% 94.9%

Note:

(1) Based on weighted average ordinary shares of 18,451 million (basic)

and 18,706 million (diluted) in 1Q07, 18,398 million (basic) and

18,609 million (diluted) in 4Q06 and 18,278 million in 1Q06

(2) Including copper interconnects

-- Sales increased slightly to $388.3 million in 1Q07, up 1.2% QoQ from

$383.8 million in 4Q06 and up 10.6% YoY from $351.1 million in 1Q06.

-- Cost of sales decreased to $351.3 million in 1Q07, down 3.6% QoQ from

$364.3 million in 4Q06, primarily due to lower depreciation expense.

-- Amortization of deferred cost associated with TSMC settlement has been

reclassified to a component of cost of sales from operating expenses

for all periods presented. Such reclassification has reduced the gross

margin by 1.5% for 1Q07 and 4Q06.

-- Gross profit increased to $36.9 million in 1Q07, up 89.7% QoQ from

$19.5 million in 4Q06 and down 1.5% YoY from $37.5 million in 1Q06.

-- Gross margin increased to 9.5% in 1Q07 from 5.1% in 4Q06 primarily due

to higher management service fees and lower depreciation expense.

-- Total operating expenses increased to $21.7 million in 1Q07 from $5.8

million, an increase of 277.0% QoQ, primarily due to lower operating

income recorded in 1Q07 from the sale of properties.

-- R&D expenses remained flat in 1Q07.

-- G&A expenses increased to $17.1 million in 1Q07 from $14.6 million in

4Q06 primarily due to an increase in general and administrative costs

related to legal fees and tax increases.

-- Selling & marketing expenses decreased to $3.9 million in 1Q07, down

17.7% QoQ from $4.7 million in 4Q06, primarily due to a decrease in

engineering material expenses associated with selling activities.

Analysis of Revenues

Sales Analysis

By Application 1Q07 4Q06 3Q06 2Q06 1Q06

Computer 33.0% 36.3% 33.0% 30.6% 36.0%

Communications 41.3% 40.1% 37.1% 46.2% 45.8%

Consumer 18.3% 19.3% 25.2% 18.6% 13.3%

Others 7.4% 4.3% 4.7% 4.6% 4.9%

By Device 1Q07 4Q06 3Q06 2Q06 1Q06

Logic (including copper interconnect) 58.2% 57.4% 65.4% 66.6% 62.8%

DRAM 34.7% 38.6% 30.1% 28.8% 32.4%

Other (mask making & probing, etc.) 7.1% 4.0% 4.5% 4.6% 4.8%

By Customer Type 1Q07 4Q06 3Q06 2Q06 1Q06

Fabless semiconductor companies 47.1% 36.1% 36.9% 49.8% 41.8%

Integrated device manufacturers (IDM) 43.2% 55.8% 50.4% 41.9% 52.8%

System companies and others 9.7% 8.1% 12.7% 8.3% 5.4%

By Geography 1Q07 4Q06 3Q06 2Q06 1Q06

North America 40.6% 36.3% 38.6% 46.7% 43.5%

Asia Pacific (ex. Japan) 24.2% 20.0% 25.4% 20.9% 21.3%

Japan 9.9% 11.3% 7.5% 4.9% 3.3%

Europe 25.2% 32.4% 28.5% 27.5% 31.9%

Wafer Revenue Analysis

By Technology (logic, DRAM & copper

interconnect only) 1Q07 4Q06 3Q06 2Q06 1Q06

0.09um 14.4% 14.4% 4.9% 0.9% --

0.13um 38.1% 43.0% 41.2% 46.6% 46.6%

0.15um/0.18um 37.0% 35.7% 43.3% 42.7% 44.4%

0.25um 0.7% 1.6% 2.6% 2.0% 1.6%

0.35um 9.8% 5.3% 8.0% 7.8% 7.4%

By Logic Only(1) 1Q07 4Q06 3Q06 2Q06 1Q06

0.09um 10.0% 14.7% 4.6% 0.2% --

0.13um(2) 17.6% 14.0% 11.1% 22.3% 13.3%

0.15um/0.18um 54.8% 59.0% 67.1% 63.0% 72.2%

Note:

(1) Excluding 0.13um copper interconnects

(2) Represents revenues generated from manufacturing full flow wafers

Capacity

Fab / (Wafer Size) 1Q07* 4Q06*

Shanghai Mega Fab (8")(1) 98,000 106,000

Beijing Mega Fab (12")(2) 57,150 56,250

Tianjin Fab (8") 22,000 20,000

Total monthly wafer

fabrication capacity 177,150 182,250

Note:

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

(1) Shanghai Mega Fab is now comprised of Fab 1, Fab 2, and Fab 3

(2) Beijing Mega Fab is now comprised of Fab 4, Fab 5, and Fab 6

-- As of the end of 1Q07, monthly capacity decreased to 177,150 8-inch

equivalent wafers due to the asset disposal from SMIC to Chengdu

Cension.

Shipment and Utilization

8" equivalent wafers 1Q07 4Q06 3Q06 2Q06 1Q06

Wafer shipments including

copper interconnects 450,592 424,395 413,985 388,498 388,010

Utilization rate(1) 86.2% 86.6% 84.3% 93.5 % 94.9%

Note:

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

capacity

-- Wafer shipments increased to 450,592 units of 8-inch equivalent wafers

in 1Q07 up 6.2% QoQ from 424,395 units of 8-inch equivalent wafers in

4Q06, and up 16.1% YoY from 388,010 8-inch equivalent wafers in 1Q06.

Detailed Financial Analysis

Gross Profit Analysis

Amounts in US$ thousands 1Q07 4Q06 QoQ 1Q06 YoY

Cost of sales 351,345 364,339 -3.6% 313,654 12.0%

Depreciation 185,707 210,045 -11.6% 189,054 -1.8%

Other manufacturing costs 159,752 148,407 7.6% 118,714 34.6%

Deferred Cost Amortization 5,886 5,886 -- 5,886 --

Gross Profit 36,940 19,474 89.7% 37,484 -1.5%

Gross Margin 9.5 % 5.1 % -- 10.7% --

-- Cost of sales decreased to $351.3 million in 1Q07, down 3.6 % QoQ from

$364.3 million in 4Q06, primarily due to lower depreciation expense.

-- Amortization of deferred cost associated with TSMC settlement has been

reclassified to a component of cost of sales from operating expenses

for all periods presented. Such reclassification has reduced the gross

margin by 1.5% for 1Q07 and 4Q06.

-- Gross profit increased to $36.9 million in 1Q07, up 89.7% QoQ from

$19.5 million in 4Q06 and down 1.5% YoY from $37.5 million in 1Q06.

-- Gross margin increased to 9.5% in 1Q07 from 5.1% in 4Q06. This was

primarily due to higher management service fees and lower depreciation

expense.

Operating Expense Analysis

Amounts in US$ thousands 1Q07 4Q06 QoQ 1Q06 YoY

Total operating expenses 21,722 5,762 277.0% 44,335 -51.0%

Research and development 21,733 21,913 -0.8% 20,593 5.5%

General and administrative 17,087 14,563 17.3% 11,749 45.4%

Selling and marketing 3,893 4,729 -17.7% 5,970 -34.8%

Amortization of intangible

assets 6,229 6,291 -1.0% 6,023 3.4%

Income from disposal of

properties (27,221) (41,734) -34.8% 1 0.0%

-- Total operating expenses increased to $21.7 million in 1Q07 from $5.8

million, an increase of 277.0% QoQ primarily due to lower operating

income from the disposal of properties in 1Q07.

-- R&D expenses remained flat in 1Q07.

-- G&A expenses increased to $17.1 million in 1Q07 from $14.6 million in

4Q06, primarily due to an increase in general and administrative costs

related to legal fees and tax increases.

-- Selling & marketing expenses decreased to $3.9 million in 1Q07, down

17.7% QoQ from $4.7 million in 4Q06, primarily due to a decrease in

engineering material expenses associated with selling activities.

Other Income (Expenses)

Amounts in US$ thousands 1Q07 4Q06 QoQ 1Q06 YoY

Other income (expenses) (12,187) (16,468) -26.0% (7,806) 56.1%

Interest income 1,972 3,311 -40.4% 4,595 -57.1%

Interest expense (15,003) (14,263) 5.2%(12,201) 23.0%

Other, net 844 (5,516) -- (200) --

-- Other non-operating loss of $12.2 million in 1Q07 as compared to a loss

of $16.5 million in 4Q06, primarily to foreign exchange gain associated

with non-operating activities during the quarter relative a loss

recorded in the previous quarter.

-- Interest income fell to $2.0 million in 1Q07 from $3.3 million in 4Q06

due to lower average cash balance held during the quarter.

-- Interest expenses of $15.0 million in 1Q07, up 5.2% QoQ from $14.3

million in 4Q06.

Liquidity

Amounts in US$ thousands 1Q07 4Q06

Cash and cash equivalents 341,704 363,620

Short term investments 79,830 57,950

Accounts receivable 288,027 252,185

Inventory 237,619 275,179

Others 128,080 100,732

Total current assets 1,075,260 1,049,666

Accounts payable 237,135 309,129

Short-term borrowings 43,000 71,000

Current portion of long-term debt 170,839 170,797

Others 138,758 126,436

Total current liabilities 589,732 677,362

Cash Ratio 0.6x 0.5x

Quick Ratio 1.2x 1.0x

Current Ratio 1.8x 1.5x

Capital Structure

Amounts in US$ thousands 1Q07 4Q06

Cash and cash equivalents 341,704 363,620

Short-term investment 79,830 57,951

Current portion of promissory note 29,493 29,242

Promissory note 78,267 77,602

Short-term borrowings 43,000 71,000

Current portion of long-term debt 170,839 170,797

Long-term debt 719,697 719,571

Total debt 933,536 961,368

Net cash (619,762) (646,641)

Shareholders' equity 3,022,697 3,007,420

Total debt to equity ratio 30.9% 32.0%

Cash Flow

Amounts in US$ thousands 1Q07 4Q06

Net income (loss) 8,760 143

Depreciation & amortization 173,370 245,365

Amortization of acquired intangible assets 6,229 6,291

Net change in cash (21,916) (191,706)

Capex Summary

-- Capital expenditures for 1Q07 was $90.9 million.

-- Total planned capital expenditures for 2007 will be approximately $720

million and will be adjusted based on market conditions.

Second Quarter 2007 Guidance

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

-- Revenues expected to remain flat from the first quarter.

-- Depreciation and amortization expected to be approximately $185 million

to $190 million.

-- Capital expenditures expected to be approximately $450 million to $510

million.

-- Operating expense as a percentage of sales expected to be in the mid-

teens.

Recent Highlights and Announcements

-- Announcement of 2006 annual results (2007-4-24)

-- Postponement of meeting of Board of Directors (2007-3-29)

-- SMIC Participates in SEMICON China 2007 (2007-3-21)

-- SMIC and Cascade Microtech Partner to Establish New Mixed-signal RFIC

Design Service Lab in Shanghai (2007-3-15)

-- SMIC and Agilent Technologies Joint Establish RFIC Test Lab Shanghai

(2007-03-14)

-- SMIC reports results for the Three Months Ended Dec 31th, 2006

(2007-1-31)

-- SMIC(BJ) Passes QC 080000 System Audit (2007-1-9)

-- SMIC Announcement on "Unusual Moment in Trading Volume" (2007-1-3)

Please visit SMIC's website at

http://www.smics.com/website/enVersion/Press_Center/pressRelease.jsp

for further details regarding the recent announcements.

Semiconductor Manufacturing International Corporation

CONSOLIDATED BALANCE SHEET

(In US dollars)

As of the end of

March 31, 2007 December 31, 2006

(unaudited) (unaudited)

ASSETS

Current assets:

Cash and cash equivalents $341,703,889 $363,619,731

Short term investments 79,829,802 57,950,603

Accounts receivable, net of

allowances of $3,924,775 and

$4,048,845 at March 31, 2007

and at Dec31, 2006, respectively 288,026,530 252,184,975

Inventories 237,619,469 275,178,952

Prepaid expense and other

current assets 17,161,431 20,766,945

Receivable for sale of

manufacturing equipments 110,136,499 70,544,560

Assets held for sale 781,985 9,420,729

Total current assets 1,075,259,605 1,049,666,495

Land use rights, net 38,005,628 38,323,333

Plant and equipment, net 3,149,255,434 3,244,400,822

Acquired intangible assets, net 65,866,883 71,692,498

Deferred cost, net 88,296,594 94,183,034

Equity investment 12,408,090 13,619,643

Other long-term prepayments 3,748,557 4,119,433

Deferred tax assets 31,356,917 25,286,900

TOTAL ASSETS $4,464,197,708 $4,541,292,158

LIABILITIES AND STOCKHOLDERS'

EQUITY

Current liabilities:

Accounts payable $237,134,879 $309,129,198

Accrued expenses and other

current liabilities 109,059,238 97,121,231

Short-term borrowings 43,000,000 71,000,000

Current portion of promissory

note 29,492,873 29,242,001

Current portion of long-term debt 170,839,010 170,796,968

Income tax payable 206,071 72,417

Total current liabilities 589,732,071 677,361,815

Long-term liabilities:

Promissory note 78,267,417 77,601,657

Long-term debt 719,697,029 719,570,905

Long-term payables relating to

license agreements 15,733,116 20,326,283

Other long-term payables -- --

Deferred tax liabilities 246,695 210,913

Total long-term liabilities 813,944,257 817,709,758

Total liabilities $1,403,676,328 $1,495,071,573

Minority interest 37,824,139 38,800,666

Stockholders' equity:

Ordinary shares,$0.0004 par

value, 50,000,000,000

shares authorized, shares

issued and outstanding

18,470,365,166 and

18,432,756,463 at 2007Q1

and 2006 respectively 7,388,146 7,373,103

Warrants 32,387 32,387

Additional paid-in capital 3,295,215,798 3,288,733,078

Accumulated other comprehensive

income 111,027 91,841

Accumulated deficit (280,050,117) (288,810,490)

Total stockholders' equity 3,022,697,241 3,007,419,919

TOTAL LIABILITIES AND STOCKHOLDERS'

EQUITY $4,464,197,708 $4,541,292,158

Semiconductor Manufacturing International Corporation

CONSOLIDATED STATEMENT OF OPERATIONS

(In US dollars)

For the three months ended

March 31, 2007 December 31, 2006

(unaudited) (unaudited)

Sales $388,284,436 $383,812,708

Cost of sales 351,344,670 364,338,733

Gross profit 36,939,766 19,473,975

Operating expenses:

Research and development 21,733,055 21,913,465

General and administrative 17,087,309 14,562,807

Selling and marketing 3,893,369 4,728,691

Litigation settlement -- --

Amortization of acquired

intangible assets 6,228,616 6,290,991

Income from sale of plant and

equipment and other fixed

assets (27,220,665) (41,733,713)

Total operating expenses 21,721,684 5,762,241

Income from operations 15,218,082 13,711,734

Other income (expenses):

Interest income 1,971,672 3,311,293

Interest expense (15,003,379) (14,263,257)

Foreign currency exchange gain

(loss) 428,279 (7,091,494)

Other income (expenses), net 416,621 1,575,094

Total other income (expenses), net (12,186,807) (16,468,364)

Net income (loss) before income tax 3,031,275 (2,756,630)

Income tax credit (expense) 5,964,124.00 3,002,499

Minority interest 976,527.00 940,520

Loss from equity investment (1,211,553.00) (1,043,727)

Net income attributable to holders

of ordinary shares $8,760,373 $142,662

Net income per share, basic 0.0005 0.0000

Net income per ADS, basic 0.0237 0.0004

Net income per share, diluted 0.0005 0.0000

Net income per ADS, Diluted 0.0234 0.0004

Ordinary shares used in calculating

basic income per ordinary share (in

millions) 18,451 18,398

Ordinary shares used in calculating

diluted income per ordinary share

(in millions) 18,706 18,609

Semiconductor Manufacturing International Corporation

CONSOLIDATED STATEMENT OF CASH FLOWS

(In US dollars)

For the three months ended

March 31, 2007 December 31, 2006

(Unaudited) (Unaudited)

Operating activities

Net income 8,760,373 142,662

Adjustments to reconcile net income

to net cash provided

by (used in) operating activities:

Minority interest (976,527) (940,520)

Gain on disposal of plant and

equipment (27,220,665) (41,733,713)

Depreciation and amortization 173,370,422 245,364,902

Amortization of acquired intangible

assets 6,228,615 6,290,991

Share-based compensation 4,996,846 5,632,158

Non cash interest expense on

promissory notes 1,207,020 1,365,080

Loss from equity investment 1,211,553 1,043,728

Changes in operating assets and

liabilities:

Accounts receivable, net (35,841,556) 13,337,566

Inventories 37,559,483 (31,222,108)

Prepaid expense and other current

assets 8,328,368 (2,753,096)

Accounts payable (6,657,095) 27,419,295

Accrued expenses and other current

liabilities 18,951,309 (17,425,744)

Other long term liabilities (3,333,333) (3,333,334)

Income tax payable 133,654 32,542

Deferred tax assets (6,070,017) (3,272,506)

Deferred tax liabilities 35,782 210,913

Net cash provided by operating

activities 180,684,232 200,158,816

Investing activities:

Purchase of plant and equipment (157,728,647) (278,677,400)

Proceeds from government grant to

purchase plant and equipment -- 2,208,758

Proceeds from disposal of plant and

equipment 1,823,994 532,214

Proceeds received from sale of

assets held for sale 3,963,708 1,609,274

Purchases of acquired intangible

assets (2,468,200) (4,327,949)

Purchase of short-term investments (48,838,238) (60,729,572)

Sale of short-term investments 26,959,039 55,208,572

Net cash used in investing

activities (176,288,344) (284,176,103)

Financing activities:

Proceeds from short-term borrowing 2,000,000 31,000,000

Proceeds from long-term debt 168,165

Repayment of promissory notes (15,000,000)

Repayment of long-term debt -- (119,931,070)

Repayment of short-term debt (30,000,000) (5,000,000)

Payment of loan initiation fee

Proceeds from exercise of employee

stock options 1,500,918 1,296,973

Repurchase of restricted ordinary

shares 14,589

Net cash provided by (used in)

financing activities (26,330,917) (107,619,508)

Effect of exchange rate changes 19,187 (69,110)

NET DECREASE IN CASH AND CASH

EQUIVALENTS (21,915,842) (191,705,905)

CASH AND CASH EQUIVALENTS,

beginning of period 363,619,731 555,325,636

CASH AND CASH EQUIVALENTS, end of

period 341,703,889 363,619,731

For more information, please contact:

Peter Yu

Tel: +86-21-5080-2000 x11319

Mobile: +86-139-1894-0553

Email: peter_yu@smics.com

Douglas Hsiung

Tel: +86-21-5080-2000 x 12804

Mobile: +86-137-9527-2240

Email: douglas_hsiung@smics.com

Deborah Hom

Tel: +86-21-5080-2000 x11967

Mobile: +86-139-1775-4411

Email: deborah_hom@smics.com

Source: Semiconductor Manufacturing International Corporation
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