omniture

SMIC Reports 2009 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.

SHANGHAI, April 29 /PRNewswire-Asia/ -- 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, 2009.

First Quarter 2009 Highlights:

-- Overall revenue decreased to $146.5 million in 1Q09, down by 46.2% QoQ

from 4Q08 due to a 47.8% decrease in wafer shipments.

-- Gross margin was -88.3% in 1Q09 compared to -27.4% in 4Q08 due to a

significant decline in wafer shipment and fab utilization.

-- The Company recorded a net loss of $178.4 million in 1Q09, compared to

a net loss of $139.5 million in 4Q08.

-- Despite a sharp reduction in fab utilization, the Company generated $78

million of net cash from operating activities in 1Q09.

-- The Company has lined up new credit facilities totalling approximately

$240 million.

-- Simplified ASP increased to $869 in 1Q09, up 3.1% QoQ from $843 in 4Q08

and up 8.9% YoY from $798 in 1Q08.

Second Quarter 2009 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” below.

-- Revenue is expected to increase 58% to 62%.

-- Operating expenses excluding foreign exchange difference are expected

to range from $79 million to $83 million.

-- Capital expenditures are expected to range from $38 million to $43

million.

-- Depreciation and amortization are expected to range from $203 million

to $206 million

Commenting on the quarterly results, Dr. Richard Chang, Chief Executive Officer of SMIC, remarked, “In the first quarter our revenue exceeded our previous guidance by 7.5%, and our quarterly ASP increased 8.9% year-over-year. Among the total wafer revenue, logic products contributed 96.9%. We also witnessed significant month-over-month increases on wafer orders and fab movements since Chinese New Year. The strong order recovery was driven in part by the replenishment of depleted inventory and also from increased demand in Chinese domestic consumption on wireless LAN, mobile phones, digital displays and other consumer electronics. Global customers continue to utilize SMIC’s strategic position to capture the China market, which has experienced faster recovery since the beginning of this year due to various domestic stimulus programs sponsored by the Chinese government. We expect our second quarter 2009 utilization rate to double compared to the first quarter.

From the advanced technology front, our 45nm low-power technology qualification progress is on-track and has shown qualification chip yield improvement. We completed licensed technology transfer from IBM on high-performance bulk-CMOS technology last quarter and process qualification is in progress in our Shanghai 300mm facility. Numerous customers are engaged in our lead-customer partnership and design-in activities, in parallel with SMIC’s silicon verification with IBM’s proven 45nm technologies. Furthermore, 65nm customer low-power product qualification is in its final stage. We are positioned to move into volume production in the third quarter of 2009.

In the first quarter, we have received strong orders reflecting recovering demand from 90nm and 130nm technology nodes. Furthermore, we see promising new tape-out activities in the first quarter, averaging more than one tape-out per day. We continue to forge more strategic alliances to better serve our customers; such as with Dolphin Integration for its ultra-low power

digital-to-analog audio converters for the Portable Media Player market, and with FlipChip International for next-generation 300mm flip chip bumping and wafer level packaging. We remain committed to collaborating with global partners to enhance our product portfolio and service scope.

In the first quarter of 2009, we generated $78 million net cash from operating activities despite the challenging market conditions. In March 2009, we signed a memorandum on strategic cooperation with China Export-Import Bank (“China EXIM Bank”), under which China EXIM Bank intends to provide total credit facilities up to RMB 3 billion (US$438 million) to SMIC. As phase one of this cooperation, China EXIM Bank has already approved a $140 million 2-year credit facility to us. During the first quarter of 2009, the Company has lined up new credit facilities totalling approximately $240 million, which includes the $140 million credit facility referred to above. This has significantly strengthened our financial position.

Into the second quarter of 2009, we are encouraged by the increasing orders received. We anticipate approximately 60% quarter-over-quarter increase in revenue in the second quarter of 2009. We are hopeful that the worst is behind us, and we are working hard on all fronts to strengthen our operational and financial performance as the overall market continues to recover.”

Conference Call / Webcast Announcement

Date: April 30, 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 first 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 (“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) 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 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 expected increase in our second quarter 2009 utilization rate, anticipated timing for moving into volume production for 65nm customer low power product, future collaboration with global partners, anticipated future credit facilities, anticipated increase in revenue in the second quarter 2009, our expectations regarding market recovery, our ability to strengthen our operational and financial performance, our expectations regarding the amount of our capital expenditures in 2009, and statements under “Capex Summary” and “Second 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 products 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, as amended, filed with the SEC on November 28, 2008, 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 2005 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 set forth in the 2005 Settlement Agreement 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.

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 the 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 0.30um 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, 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 Court’s ruling may be appealed by SMIC following the filing of a final judgement by the Court in this matter.

The California Court has scheduled a trial upon all liability issues related to a selected list of TSMC trade secret claims and SMIC trade secret claims to commence on September 8, 2009.

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. There are no further hearings scheduled by that Court and it is expected that the Court will issue a ruling based on the evidence presented to it.

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 discovery 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. Because the case is in its discovery stage, the Company is unable to evaluate the likelihood of an unfavourable outcome or to estimate the amount or range of potential loss.

Summary of First Quarter 2009 Operating Results

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

1Q09 4Q08 QoQ 1Q08(3) YoY

Revenue 146,519 272,479 -46.2% 362,369 -59.6%

Cost of sales 275,900 347,114 -20.5% 394,940 -30.1%

Gross loss (129,381) (74,635) 73.4% (32,571) 297.2%

Operating expenses 46,681 46,445 0.5% 170,151 -72.6%

Loss from operations (176,062) (121,080) 45.4% (202,722) -13.2%

Other expenses, net (4,480) (4,146) 8.1% (3,596) 24.6%

Income tax (expenses)

credit 3,305 (745) -- (19,142) --

Net loss after income

taxes (177,237) (125,972) 40.7% (225,460) -21.4%

Loss from equity

investment (874) (92) 850.0% (241) 262.7%

Net loss (178,111) (126,064) 41.3% (225,701) -21.1%

Accretion of interest to

non-controlling interest

holder (259) (13,394) -98.1% 846 --

Loss attributable to

holders of ordinary

shares (178,370) (139,458) 27.9% (224,855) (20.7%)

Gross margin -88.3% -27.4% -9.0%

Operating margin -120.2% -44.4% -55.9%

Net loss per ordinary

share - basic (1) (0.01) (0.01) (0.01)

Net loss per ADS - basic (0.40) (0.37) (0.61)

Net loss per ordinary

share - diluted (1) (0.01) (0.01) (0.01)

Net loss per ADS - diluted (0.40) (0.37) (0.61)

Wafers shipped (in 8”

wafers)(2) 168,682 323,175 (47.8%) 454,259 (62.9%)

Capacity utilization 34.9% 67.7% 92.1%

Note:

(1) Based on weighted average ordinary shares of 22,344 million (basic)

and 22,344 million (diluted) in 1Q09, 18,948 million (basic) and

18,948 million (diluted) in 4Q08 and 18,579 million (basic) and 18,579

million (diluted) in 1Q08

(2) Including copper interconnects

(3) As restated in “SMIC Reports 2008 Second Quarter Results” issued on

July 28, 2008

-- Revenue decreased to $146.5 million in 1Q09, down 46.2% QoQ from $272.5

million in 4Q08 and down 59.6% YoY from $362.4 million in 1Q08 due to

lower wafer shipments.

-- Cost of sales decreased to $275.9 million in 1Q09, down 20.5% QoQ from

$347.1 million in 4Q08, primarily due to a decrease in wafer shipments.

-- Gross loss increased to $129.4 million in 1Q09, up 73.4% QoQ from $74.6

million in 4Q08 and up 297.2% YoY from $32.6 million in 1Q08.

-- Gross margins decreased to -88.3% in 1Q09 from -27.4% in 4Q08 primarily

due to a significant decrease in wafer shipments as well as fab

utilization QoQ.

-- Total operating expenses increased to $46.7 million in 1Q09 from $46.4

million, an increase of 0.5% QoQ primarily due to a decrease in

government R&D subsidies received in 1Q09. Excluding foreign exchange

gain, total operating expenses in 1Q09 was $52.6 million as compared to

the 1Q09 guidance of $53 million to $56 million.

-- R&D expenses increased to $18.5 million in 1Q09, up 47.7% QoQ from

$12.5 million due to a decrease in government subsidies received in

1Q09. Excluding the government subsidies, R&D expenses decreased by

6.2% due primarily to a decrease in engineer experiment related

expenses.

-- G&A expenses decreased to $14.9 million in 1Q09 from $16.1 million in

4Q08 primarily due to an increase in the foreign exchange gain related

to operating activities, from $2.1 million in 4Q08 to $5.9 million in

1Q09.

-- Selling & marketing expenses decreased to $4.2 million in 1Q09, down

28.0% QoQ from $5.8 million in 4Q08.

Analysis of Revenues

Sales Analysis

By Application 1Q09 4Q08 1Q08

Computer 4.2% 4.5% 12.8%

Communications 50.9% 45.9% 54.3%

Consumer 32.9% 37.5% 25.9%

Others 12.0% 12.1% 7.0%

By Service Type 1Q09 4Q08 1Q08

Logic (1) 85.3% 85.6% 78.4%

DRAM 2.8% 2.6% 12.1%

Management Services 4.1% 2.2% 2.5%

Mask Making, testing, others 7.8% 9.6% 7.0%

By Customer Type 1Q09 4Q08 1Q08

Fabless semiconductor companies 70.9% 65.0% 54.4%

Integrated device manufacturers (IDM) 11.4% 15.2% 31.6%

System companies and others 17.7% 19.8% 14.0%

By Geography 1Q09 4Q08 1Q08

North America 60.4% 59.9% 53.6%

Greater China (2) 32.3% 33.6% 27.7%

Asia Pacific (3) 5.2% 4.1% 6.1%

Europe 2.1% 2.4% 12.6%

Wafer Revenue Analysis

By Technology 1Q09 4Q08 1Q08

0.065um 0.1% -- --

0.09um 8.1% 11.1% 19.8%

0.13um 30.8% 34.4% 25.0%

0.15um 0.8% 2.2% 4.2%

0.18um 31.5% 32.5% 32.1%

0.25um 0.4% 0.6% 0.5%

0.35um 28.3% 19.2% 18.4%

Note:

(1) Including 0.13mm copper interconnects

(2) Includes Hong Kong and Taiwan

(3) Excluding Greater China

Capacity*

Fab / (Wafer Size) 1Q09 4Q08

Shanghai Mega Fab (8")(1) 85,000 88,000

Beijing Mega Fab (12")(2) 33,750 40,500

Tianjin Fab (8") 32,000 32,000

Total monthly wafer fabrication capacity 150,750 160,500

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

-- The change in capacity is due primarily to a change in product mix.

Shipment and Utilization

8" equivalent wafers 1Q09 4Q08 1Q08

Wafer shipments including copper

interconnects 168,682 323,175 454,259

Utilization rate (1) 34.9% 67.7% 92.1%

Note:

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

capacity

-- Wafer shipments decreased 47.8% QoQ to 168,682 units of 8-inch

equivalent wafers in 1Q09 from 323,175 units of 8-inch equivalent

wafers in 4Q08, and down 62.9% YoY from 454,259 8-inch equivalent

wafers in 1Q08.

Detailed Financial Analysis

Gross Profit Analysis

Amounts in US$ thousands 1Q09 4Q08 QoQ 1Q08 YoY

Cost of sales 275,900 347,114 -20.5% 394,940 -30.1%

Depreciation 130,375 183,916 -29.1% 159,715 -18.4%

Other manufacturing costs 138,791 156,446 -11.3% 227,731 -39.1%

Deferred cost amortization 5,886 5,886 -- 5,886 --

Share-based compensation 848 866 -2.1% 1,608 -47.3%

Gross Profit (129,381) (74,636) 73.3% (32,571) 297.2%

Gross Margin -88.3% -27.4% -9.0%

-- Cost of sales decreased to $275.9 million in 1Q09, down 20.5% QoQ from

$347.1 million in 4Q08, primarily due to a decrease in wafer shipments.

-- Gross loss increased to $129.4 million in 1Q09, up 73.4% QoQ from $74.6

million in 4Q08 and up 297.2% YoY from $32.6 million in 1Q08.

-- Gross margins decreased to -88.3% in 1Q09 from -27.4% in 4Q08 primarily

due to a significant decrease in wafer shipments as well as fab

utilization QoQ.

Operating Expense Analysis

Amounts in US$ thousands 1Q09 4Q08 QoQ 1Q08 YoY

Total operating expenses 46,681 46,445 0.5% 170,151 -72.6%

Research and development 18,494 12,524 47.7% 34,233 -46.0%

General and administrative 14,928 16,146 -7.5% 18,606 -19.8%

Selling and marketing 4,208 5,843 -28.0% 4,884 -13.8%

Amortization of intangible

assets 9,031 11,564 -21.9% 6,784 33.1%

Impairment loss of long-lived

assets -- 967 -- 105,774 --

Loss (Income) from disposal of

properties 20 (599) -- (130) --

-- Total operating expenses increased to $46.7 million in 1Q09 from $46.4

million, an increase of 0.5% QoQ primarily due to a decrease in

government R&D subsidies received in 1Q09. Excluding foreign exchange

gain, total operating expenses in 1Q09 was $52.6 million as compared to

1Q09 guidance of $53 million to $56 million.

-- R&D expenses increased to $18.5 million in 1Q09, up 47.7% from $12.5

million due to a decrease in government subsidies received in 1Q09.

Excluding the government subsidies, R&D expenses decreased by 6.2% due

primarily to a decrease in engineer experiment related expenses.

-- G&A expenses decreased to $14.9 million in 1Q09 from $16.1 million in

4Q08 primarily due to an increase in the foreign exchange gain related

to operating activities, from $2.1 million in 4Q08 to $5.9 million in

1Q09.

-- Selling & marketing expenses decreased to $4.2 million in 1Q09, down

28.0% QoQ from $5.8 million in 4Q08.

Other Income (Expenses)

Amounts in US$ thousands 1Q09 4Q08 QoQ 1Q08 YoY

Other income (expenses) (4,480) (4,146) 8.1% (3,596) 24.6%

Interest income 436 1,184 -63.2% 3,758 -88.4%

Interest expense (5,498) (7,133) -22.9% (17,267) -68.2%

Foreign currency exchange

gain (loss) (357) (2,543) -86.0% 10,317 --

Other, net 939 4,346 -78.4% (404) --

-- Interest income declined in 1Q09 due to significantly lower bank

deposit rate.

-- Overall interest expense decreased to $5.5 million in 1Q09 from $7.1

million in 4Q08 primarily due to a lower average loan balance and lower

interest rates; however, the effect was partially offset by lower

government interest subsidies received in 1Q09.

-- Foreign exchange loss arising from non-operating activities decreased

to $0.4 million in 1Q09 from $2.5 million in 4Q08. Combined with the

foreign exchange gain arising from operating activities, the Company

recorded an overall foreign exchange gain of $5.5 million in 1Q09 as

compared to a foreign exchange loss of $0.4 million in 4Q08.

-- Other, net decreased to $0.9 million in 1Q09 from $4.3 million in 4Q08.

Depreciation and Amortization

-- Total depreciation and amortization in 1Q09 was $207.8 million as

compared to $207.7 million in 4Q08.

Liquidity

Amounts in US$ thousands 1Q09 4Q08

Cash and cash equivalents 502,016 450,230

Restricted Cash 11,228 6,255

Short term investments 20,732 19,928

Accounts receivable 156,177 199,372

Inventory 154,783 171,637

Others 78,728 79,437

Total current assets 923,664 926,859

Accounts payable 135,352 185,919

Short-term borrowings 270,078 201,258

Current portion of long-term debt 359,080 360,629

Others 144,146 151,967

Total current liabilities 908,656 899,773

Cash Ratio 0.5x 0.5x

Quick Ratio 0.7x 0.7x

Current Ratio 1.0x 1.0x

Capital Structure

Amounts in US$ thousands 1Q09 4Q08

Cash and cash equivalents 502,016 450,230

Restricted Cash 11,228 6,255

Short-term investment 20,732 19,928

Current portion of promissory note 29,493 29,242

Promissory note 23,792 23,590

Short-term borrowings 270,078 201,258

Current portion of long-term debt 359,080 360,629

Long-term debt 533,090 536,518

Total debt 1,162,248 1,098,405

Shareholders’ equity 2,573,891 2,749,365

Total debt to equity ratio 45.2% 40.0%

-- The increase in debt to equity ratio as of end of 1Q09 is primarily due

to a decrease in shareholders’ equity as a result of the net income

loss recorded in 1Q09.

Cash Flow

Amounts in US$ thousands 1Q09 4Q08

Net cash from operating activities 78,117 171,213

Net cash from investing activities (81,785) (120,085)

Net cash from financing activities 54,846 6,460

Net change in cash 51,786 57,349

Capex Summary

-- Capital expenditures for 1Q09 were $24 million as compared to the 1Q09

guidance of $40 million to $45 million.

-- Total planned capital expenditures for 2009 will be approximately $190

million and will be adjusted based on market conditions.

Recent Highlights and Announcements

-- FlipChip International, LLC, Announces 300mm Strategic Partnership with

SMIC [2009-3-16]

-- Grant of Options [2009-2-17]

-- Further Announcement [2009-2-10]

-- Change in Directorate [2009-2-5]

-- SMIC Reports 2008 Fourth Quarter Results [2009-2-5]

-- Extraordinary General Meeting Held on February 3, 2009 Poll Results

[2009-2-3]

-- Change in Directorate [2009-1-29]

-- SMIC releases preliminary version of three 65-nanometer Standard Cell

Libraries [2009-1-21]

-- Notice of Extraordinary General Meeting [2009-1-15]

-- Letter to Shareholders: Website notification letter [2009-1-15]

-- Non-Exempt Continuing Connected Transactions and Refreshment of General

Mandate to Allot and Issue Shares [2009-1-15]

-- Change in Directorate [2009-1-14]

-- Closure of Register of Members [2009-1-12]

-- Notification of Board Meeting [2009-1-9]

-- SMIC (NYSE: SMI, SEHK: 981) Schedules Fourth Quarter 2008 Webcast

Conference Call [2009-1-9]

-- Non-Exempt Continuing Connected Transactions [2009-1-8]

-- Unusual Increase in Share Trading Price [2009-1-7]

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, December 31,

2009 2008

(Unaudited) (Unaudited)

ASSETS

Current assets:

Cash and cash equivalents 502,015,857 450,229,569

Restricted Cash 11,227,741 6,254,813

Short-term investments 20,731,562 19,928,289

Accounts receivable, net of

allowances of $5,870,986 and

$5,680,658 at March 31, 2009 and

December 31, 2008, respectively 156,177,160 199,371,694

Inventories 154,783,494 171,636,868

Prepaid expense and other

current assets 57,287,558 56,299,086

Receivable for sale of

manufacturing equipment 21,440,494 23,137,764

Total current assets 923,663,866 926,858,083

Land use rights, net 79,234,650 74,293,284

Plant and equipment, net 2,792,875,058 2,963,385,840

Acquired intangible assets, net 191,028,492 200,059,106

Deferred cost, net 41,205,077 47,091,516

Equity investment 10,756,777 11,352,186

Other long-term prepayments 1,486,807 1,895,337

Deferred tax assets 51,969,380 45,686,470

TOTAL ASSETS 4,092,220,107 4,270,621,822

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Account payable 135,351,888 185,918,539

Accrued expenses and other

current liabilities 114,185,387 122,173,803

Short-term borrowings 270,078,251 201,257,773

Current portion of promissory notes 29,492,873 29,242,001

Current portion of long-term debt 359,079,883 360,628,789

Income tax payable 467,869 552,006

Total current liabilities 908,656,151 899,772,911

Long-term liabilities:

Promissory notes 23,792,341 23,589,958

Long-term debt 533,090,173 536,518,281

Long-term payables relating to

license agreements 18,375,736 18,169,006

Deferred tax liabilities 373,727 411,877

Total long-term liabilities 575,631,977 578,689,122

TOTAL LIABILITIES 1,484,288,128 1,478,462,033

Non-controlling interest 34,040,748 42,795,288

Commitments

Stockholders’ equity:

Ordinary shares,$0.0004 par value,

50,000,000,000 shares authorized,

shares issued and outstanding

22,350,521,609 and 22,327,784,827 at

March 31, 2009 and December

31, 2008, respectively 8,940,209 8,931,114

Additional paid-in capital 3,491,661,468 3,489,382,267

Accumulated other comprehensive

(loss) income 169,290 (439,123)

Accumulated deficit (926,879,736) (748,509,757)

Total stockholders’ equity 2,573,891,231 2,749,364,501

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY 4,092,220,107 4,270,621,822

Semiconductor Manufacturing International Corporation

CONSOLIDATED STATEMENT OF OPERATIONS

(In US dollars)

For the three months ended

March 31, December 31,

2009 2008

(Unaudited) (Unaudited)

Sales 146,518,884 272,478,762

Cost of sales 275,899,824 347,114,296

Gross loss (129,380,940) (74,635,534)

Operating expenses (income):

Research and development 18,494,784 12,523,835

General and administrative 14,927,735 16,146,415

Selling and marketing 4,207,593 5,843,252

Amortization of acquired intangible

assets 9,030,614 11,563,678

Impairment loss of long-lived assets -- 966,667

Loss (Income) from sale of equipment

and other fixed assets 20,484 (598,819)

Total operating expenses, net 46,681,210 46,445,028

Loss from operations (176,062,150) (121,080,562)

Other income (expense):

Interest income 436,294 1,183,576

Interest expense (5,498,154) (7,132,535)

Foreign currency exchange gain loss (357,034) (2,542,966)

Others, net 938,969 4,346,182

Total other expense, net (4,479,925) (4,145,743)

Loss before income tax (180,542,075) (125,226,305)

Income tax benefit (expense) 3,304,513 (745,310)

Loss from equity investment (873,513) (92,319)

Net loss (178,111,075) (126,063,934)

Accretion of interest to non-controlling

interest holder (258,904) (13,394,087)

Loss attributable to holders of ordinary

shares (178,369,979) (139,458,021)

Net loss per share, basic (0.01) (0.01)

Net loss per ADS, basic (0.40) (0.37)

Net loss per share, diluted (0.01) (0.01)

Net loss per ADS, diluted (0.40) (0.37)

Ordinary shares used in calculating

basic loss per ordinary share 22,343,640,476 18,947,602,493

Ordinary shares used in calculating

diluted loss per ordinary share 22,343,640,476 18,947,602,493

Semiconductor Manufacturing International Corporation

CONSOLIDATED STATEMENT OF CASH FLOWS

(In US dollars)

For the three months ended

March 31, December 31,

2009 2008

(Unaudited) (Unaudited)

Operating activities

Net loss (178,111,075) (126,063,934)

Adjustments to reconcile net income (loss)

to net cash provided

by operating activities:

Deferred tax (6,321,059) (1,924,575)

Loss (income) from sale of equipment and

other fixed assets 20,484 (598,820)

Depreciation and amortization 196,535,950 193,779,737

Amortization of acquired intangible assets 9,030,614 11,563,678

Share-based compensation 2,272,359 2,358,942

Non-cash interest expense on promissory

note and long-term payable relating

to license agreements 1,046,426 1,480,674

Loss from equity investment 873,513 92,320

Impairment loss of long-lived assets -- 966,667

Changes in operating assets and liabilities:

Accounts receivable, net 43,194,535 86,502,133

Inventories 16,853,373 61,385,789

Prepaid expense and other current assets (579,942) (5,798,143)

Accounts payable (6,456,221) (36,579,576)

Accrued expenses and other current

liabilities (158,281) (15,985,881)

Income tax payable (84,138) 34,327

Net cash provided by operating activities 78,116,538 171,213,338

Investing activities:

Purchase of plant and equipment and land

use rights (72,018,394) (129,327,507)

Proceeds from government grant to purchase

plant and equipment 6,437,831 4,181,922

Proceeds from sale of equipment 1,700,577 913,738

Proceeds received from sale of assets held

for sale 770,931 --

Purchases of acquired intangible assets (12,621,260) (23,315,762)

Purchase of short-term investments (31,496,963) --

Purchase of equity investment (278,103) --

Sale of short-term investments 30,693,690 30,717,248

Changes in restricted cash (4,972,928) (3,254,813)

Net cash used in investing activities (81,784,619) (120,085,174)

Financing activities:

Proceeds from short-term borrowing 182,644,921 57,407,359

Repayment of short-term borrowings (113,824,443) (68,750,000)

Proceeds from long-term debt -- 39,397,145

Repayment of long-term debt (4,977,014) (174,736,605)

Repayment of promissory notes -- (15,000,000)

Proceeds from issuance of ordinary shares -- 168,100,000

Proceeds from exercise of employee

stock options 15,937 42,307

Redemption of non-controlling interest (9,013,444) --

Net cash provided by financing activities 54,845,957 6,460,206

Effect of exchange rate changes 608,412 (239,821)

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS 51,786,288 57,348,549

CASH AND CASH EQUIVALENTS,

beginning of period 450,229,569 392,881,020

CASH AND CASH EQUIVALENTS, end of period 502,015,857 450,229,569

Source: Semiconductor Manufacturing International Corporation
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