SMIC Reports 2015 Second Quarter Results

China

+86 400-620-8038

(Pass code: SMIC)

Hong Kong

+852 3018-6771

(Pass code: SMIC)

Taiwan

+886 2-2650-7825

(Pass code: SMIC)

United States, New York

+1 845-675-0437

(Pass code: SMIC)

2Q15

1Q15

QoQ

2Q14

YoY

Revenue

546,615

509,798

7.2%

511,344

6.9%

Cost of sales

(370,210)

(359,871)

2.9%

(368,291)

0.5%

Gross profit

176,405

149,927

17.7%

143,053

23.3%

Operating expenses

(115,728)

(104,423)

10.8%

(84,861)

36.4%

Profit from operations

60,677

45,504

33.3%

58,192

4.3%

Other income (expense), net

11,943

6,125

95.0%

(1,105)

-

Profit before tax

72,620

51,629

40.7%

57,087

27.2%

Income tax (expense) benefit

(924)

(54)

1611.1%

93

-

Profit for the period

71,696

51,575

39.0%

57,180

25.4%

Other comprehensive income:

Exchange differences on
    translating foreign operations

397

(400)

-

(858)

-

Change in value of available-
   for-sale financial assets

(1,006)

1,451

-

-

-

Total comprehensive income 
   for the period

71,087

52,626

35.1%

56,322

26.2%

Profit for the period attributable to:

SMIC

76,704

55,477

38.3%

56,801

35.0%

Non-controlling interests

(5,008)

(3,902)

28.3%

379

-

Profit for the period

71,696

51,575

39.0%

57,180

25.4%

Gross margin

32.3%

29.4%

-

28.0%

-

Earnings per ordinary share⁽¹⁾
Basic

0.00

0.00

0.00

Diluted

0.00

0.00

0.00

Earnings per ADS⁽²⁾

Basic

0.10

0.08

0.09

Diluted

0.10

0.07

0.08

Wafers shipped (in 8"
equivalent wafers)

731,730

692,131

5.7%

648,764

12.8%

Capacity utilization⁽³⁾

102.1%

99.7%

-

94.6%

-

Note:

(1) Based on weighted average ordinary shares of 37,192 million (basic) and 41,572 million (diluted) in 2Q15, 35,877 million (basic) and 40,181 million (diluted) in 1Q15, and 32,766 million (basic) and 35,291 million (diluted) in 2Q14.

(2) Each ADS represents 50 ordinary shares.

(3) Based on total equivalent wafers out divided by estimated total quarterly capacity.

Revenue Analysis

By Application

2Q15

1Q15

Computer

4.5%

3.6%

2.8%

Communications

49.4%

44.2%

41.4%

Consumer

37.7%

46.3%

48.0%

Others

8.4%

5.9%

7.8%

By Service Type

2Q15

1Q15

2Q14

Wafers

95.4%

96.3%

95.4%

Mask making, testing, others

4.6%

3.7%

4.6%

By Customer Type

2Q15

1Q15

2Q14

Fabless semiconductor companies

72.7%

81.3%

85.2%

Integrated device manufacturers (IDM)

2.7%

2.5%

3.0%

System companies and others

24.6%

16.2%

11.8%

By Geography

2Q15

1Q15

2Q14

North America

32.0%

41.1%

42.0%

China⁽¹⁾

51.1%

47.0%

44.4%

Eurasia⁽²⁾

16.9%

11.9%

13.6%

Wafer Revenue Analysis

By Technology

2Q15

1Q15

40/45 nm

15.3%

16.0%

13.2%

55/65 nm

25.2%

26.1%

26.3%

90 nm

4.8%

4.6%

3.4%

0.13 µm

10.9%

10.2%

12.1%

0.15/0.18 µm

39.9%

39.7%

40.2%

0.25/0.35 µm

3.9%

3.4%

4.8%

Note:

(1) Including Hong Kong, but excluding Taiwan

(2) Excluding China and Hong Kong

Fab / (Wafer Size)

2Q15

1Q15

Shanghai Mega Fab (8")

99,000

97,000

Shanghai 12-inch Fab (12")

31,500

31,500

Beijing Mega Fab (12")

83,250

81,000

Tianjin Fab (8")

42,000

42,000

Total monthly wafer fabrication capacity**

255,750

251,500

Note:

* Wafers per month at the end of the period in 8" equivalent wafers,
   calculated on a 30-day basis for comparison purposes

**Our new 8-inch fab in Shenzhen and 12-inch fab in Beijing have reached 
  an installed capacity of 10,000 and 600 wafers per month but not entered
  into mass production at the end of 2Q15.

8" equivalent wafers

2Q15

1Q15

QoQ

2Q14

YoY

Wafer shipments

731,730

692,131

5.7%

648,764

12.8%

Utilization rate⁽¹⁾

102.1%

99.7%

-

94.6%

-

Note:

(1) Based on total equivalent wafers out divided by estimated total quarterly capacity.

Amounts in US$ thousands

2Q15

1Q15

QoQ

2Q14

YoY

Cost of sales

370,210

359,871

2.9%

368,291

0.5%

Depreciation

95,942

100,929

-4.9%

106,236

-9.7%

Other manufacturing costs

272,552

257,708

5.8%

260,365

4.7%

Share-based compensation

1,716

1,234

39.1%

1,690

1.5%

Gross profit

176,405

149,927

17.7%

143,053

23.3%

Gross margin

32.3%

29.4%

-

28.0%

-

Amounts in US$ thousands

2Q15

1Q15

QoQ

2Q14

YoY

Operating expenses

115,728

104,423

10.8%

84,861

36.4%

Research and development, net

55,202

53,453

3.3%

45,080

22.5%

General and administrative

52,051

42,486

22.5%

35,528

46.5%

Selling and marketing

9,159

9,205

-0.5%

9,018

1.6%

Other operating income

(684)

(721)

-5.1%

(4,765)

-85.6%

Amounts in US$ thousands

2Q15

1Q15

QoQ

2Q14

YoY

Other income (expense), net

11,943

6,125

95.0%

(1,105)

-

Interest income

956

1,369

-30.2%

3,021

-68.4%

Finance costs

(2,416)

(5,010)

-51.8%

(8,231)

-70.6%

Foreign exchange gains or losses

4,960

120

4033.3%

(1,860)

-

Other gains or losses, net

8,592

9,621

-10.7%

5,399

59.1%

Share of profits of associates

(149)

25

-

566

-

Amounts in US$ thousands

2Q15

1Q15

QoQ

2Q14

YoY

Depreciation and amortization

124,911

125,461

-0.4%

138,463

-9.8%

Amounts in US$ thousands

2Q15

1Q15

Cash and cash equivalent

766,165

402,378

Restricted cash

105,791

229,500

Other financial assets⁽¹⁾

568,886

586,047

Trade and other receivables

489,675

454,383

Prepayment and prepaid
   operating expenses

37,507

38,969

Inventories

365,332

340,889

Total current assets

2,333,356

2,052,166

Current tax liabilities

412

33

Accrued liabilities

132,714

124,711

Deferred government funding

62,368

65,200

Short-term Borrowings

119,727

192,775

Trade and other payables

863,210

699,467

Total current liabilities

1,178,431

1,082,186

Cash Ratio⁽²⁾

0.7x

0.4x

Quick Ratio⁽³⁾

1.7x

1.6x

Current Ratio⁽⁴⁾

2.0x

1.9x

Note:

(1) Other financial assets contain financial products sold by
     bank and bank deposit over 3 months.

(2) Cash and cash equivalent divided by total current liabilities.

(3) Current assets excluding inventories divided by total current liabilities

(4) Total current assets divided by total current liabilities.

Amounts in US$ thousands

 2Q15   

 1Q15   

Cash and cash equivalent

766,165

402,378

Restricted cash

105,791

229,500

Other financial assets⁽¹⁾

568,886

586,047

Short-term borrowings

119,727

192,775

Long-term borrowings

85,484

39,087

Convertible bonds

385,947

382,668

Corporate bonds

492,383

491,976

Total debt

1,083,541

1,106,506

Net debt⁽²⁾

(251,510)

118,081

Equity

3,846,024

3,364,264

Total debt to equity ratio⁽³⁾

28.2%

32.9%

Net debt to equity ratio⁽⁴⁾

N/A⁽⁵⁾

3.5%

Note:

(1) Other financial assets contain financial products sold by bank and bank deposit over 3 months.

(2) Net debt is total debt minus cash and cash equivalent, and other financial assets.

(3) Total debt divided by equity.

(4) Net debt divided by equity.

(5) The ratio was not applicable due to the negative net debt in 2Q15.

Amounts in US$ thousands

2Q15

1Q15

Net cash from operating activities

154,577

Net cash used in investing activities

(170,372)

(148,888)

Net cash from (used in) financing activities

379,423

(185,819)

Effect of exchange rate changes

159

(224)

Net change in cash and cash equivalent

363,787

(200,658)

--  Capital expenditures for 2Q15 were $367.6 million.

--  The planned 2015 capital expenditures for foundry operations are approximately $1.5 billion.

--  The planned 2015 capital expenditures for non-foundry operations, mainly for the construction of
     living quarters, are approximately $150 million. The Group plans to rent out or sell these living
     quarter units to employees in the future.

Ÿ -- List of Directors and their Roles and Functions (2015-06-26)

Ÿ -- Poll Results of the Annual General Meeting held on 26 June 2015 (2015-06-26)

Ÿ -- SMIC Receives "2014 Foundry Supplier of the Year" Award from Qualcomm (2015-06-25)

Ÿ -- SMIC, Huawei, imec, and Qualcomm in Joint Investment on SMIC's New Research and
     Development Company (2015-06-23)

Ÿ -- Retirement of Independent Non-Executive Director and Withdrawal of Resolution 2(d) In Notice
     of Annual General Meeting dated 30 April 2015 (2015-06-23)

Ÿ -- Non-Exempt Connected Transactions Pre-emptive Subscriptions by Datang and Country Hill 
     and Grant of Restricted Share Units to a Director (2015-06-12)

Ÿ -- Closure of Register of Members (2015-06-08)

Ÿ -- Completion of Issue of 4,700,000,000 New Shares to a Wholly-Owned Subsidiary of China
     Integrated Circuit Industry Investment Fund Co., Ltd., Under General Mandate (2015-06-08)

Ÿ -- Brite Semiconductor, CEVA and SMIC collaborate on IoT ASIC platform (2015-06-02)

Ÿ -- SMIC and Semiconductor Companies Donate over 2.76 million yuan to its Liver Transplant
     Program for Children (2015-06-01)

Ÿ -- Grant of Options (2015-05-21)

Ÿ -- SMIC Beijing's New 12-inch Fab Awarded LEED Gold Certification (2015-05-15)

Ÿ -- SMIC Reports Unaudited Results for the Three Months Ended March 31, 2015 (2015-05-07)

Ÿ -- Circulars - Letter and Reply Form to New Registered Shareholders - Election of Means of
     Receipt and Language of Corporate Communication (2015-04-29)

Ÿ -- Circulars - Notification Letter and Request Form for Non-registered Shareholders (2015-04-29)

Ÿ -- Circulars - Notification Letter and Change Request Form for Registered Shareholders (2015-04-
     29)

Ÿ -- Circulars - Notification Letter for Registered Shareholders (2015-04-29)

Ÿ -- Notice of Annual General Meeting (2015-04-29)

Ÿ -- Proxy Forms - Form of Proxy for Use at the Annual General Meeting to be held on 26 June 2015
     (2015-04-29)

Ÿ -- Proposals for Re-election of Directors, General Mandates to Issue and Repurchase Shares and
     Notice of Annual General Meeting (2015-04-29)

Ÿ -- 2014 Annual Report (2015-04-29)

Ÿ -- Overseas Regulatory Announcement (2015-04-29)

Ÿ -- Notification of Board Meeting (2015-04-20)

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(In US$ thousands except share data)

For the three months ended

June 30, 2015

March 31, 2015

(Unaudited)

(Unaudited)

Revenue

546,615

509,798

Cost of sales

(370,210)

(359,871)

Gross profit

176,405

149,927

Research and development expenses, net

(55,202)

(53,453)

General and administration expenses

(52,051)

(42,486)

Sales and marketing expenses

(9,159)

(9,205)

Other operating income

684

721

Operating expenses

(115,728)

(104,423)

Profit from operation

60,677

45,504

Other income, net

11,943

6,125

Profit before tax

72,620

51,629

Income tax expense

(924)

(54)

Profit for the period

71,696

51,575

Other comprehensive income

Item that may be reclassified subsequently to profit or loss

Exchange differences on translating foreign operations

397

(400)

Change in value of available-for-sale financial assets

(1,006)

1,451

Total comprehensive income for the period

71,087

52,626

Profit for the period attributable to:

Owners of the Company

76,704

55,477

Non-controlling interests

(5,008)

(3,902)

71,696

51,575

Total comprehensive income for the period attributable to:

Owners of the Company

76,090

56,528

Non-controlling interests

(5,003)

(3,902)

71,087

52,626

Earnings per share attributable to Semiconductor Manufacturing
International Corporation ordinary shareholders

Basic

0.00

0.00

Diluted

0.00

0.00

Earnings per ADS attributable to Semiconductor Manufacturing
International Corporation ordinary ADS holders

Basic

0.10

0.08

Diluted

0.10

0.07

Shares used in calculating basic earnings per share

37,191,800,114

35,876,740,022

Shares used in calculating diluted earnings per share

41,571,630,732

40,180,857,955

^{Reconciliations of Non-GAAP Financial Measures to
Comparable GAAP Measures(1)}

Non-GAAP operating expenses

(110,901)

(99,669)

Note:

(1) Non-GAAP operating expenses are defined as operating expenses adjusted to exclude the effect of employee bonus accrual, government funding and gain from the disposal of living quarters. SMIC reviews non-GAAP operating expenses together with operating expenses to understand, manage and evaluate its business and make financial and operational decisions. The Group also believes it is useful supplemental information for investors and analysts to assess its operating performance. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact our net profit for the period. In addition, because non-GAAP financial measures are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider the non-GAAP operating expenses in isolation from or as an alternative to operating expenses prepared in accordance with IFRS.

The following table sets forth the reconciliation of the non-GAAP operating expenses to its most directly comparable financial measure presented in accordance with IFRS, for the periods indicated.

For the three months ended

June 30, 2015

March 31, 2015

June 30, 2014

(Unaudited)

(Unaudited)

(Unaudited)

Operating expenses

(115,728)

(104,423)

(84,861)

Employee bonus accrual

16,035

10,492

10,849

Government funding

(11,208)

(5,514)

(8,494)

Gain from the disposal of living quarters

-

(224)

(4,094)

Non-GAAP operating expenses

(110,901)

(99,669)

(86,600)

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In $US thousands)

For the three months ended

June 30, 2015

March 31, 2015

(Unaudited)

(Unaudited)

Cash flow from operating activities

Profit for the period

71,696

51,575

Depreciation and amortization

124,911

125,461

Share of profits of associates

149

(25)

Changes in working capital and others

(42,179)

(42,738)

Net cash from operating activities

154,577

134,273

Cash flow from investing activities:

Payments for property, plant and equipment

(235,515)

(224,436)

Payments for intangible assets

(6,633)

(9,935)

Payments for land use rights

(9,265)

-

Proceeds from disposal of property, plant and equipment

41,656

11,486

Changes in restricted cash relating to investing activities

122,557

7,770

Payments to acquire financial assets

(551,419)

(657,899)

Proceeds on sale of financial assets

575,380

723,215

Proceeds from disposal of available-for-sale investment

-

1,204

Net cash outflow from deconsolidation of subsidiaries

(248)

-

Payment to acquire long-term investment

(106,885)

(293)

Net cash used in investing activities

(170,372)

(148,888)

Cash flow from financing activities:

Proceeds from borrowings

79,256

57,626

Repayment of borrowings

(105,907)

(244,020)

Proceeds from issuance of ordinary shares

399,460

-

Proceeds from exercise of employee stock options

6,614

575

Net cash from (used in) financing activities

379,423

(185,819)

Effects of exchange rate changes on the balance of cash held in foreign
currencies

159

(224)

Net increase (decrease) in cash and cash equivalent

363,787

(200,658)

Cash and cash equivalent, beginning of period

402,378

603,036

Cash and cash equivalent, end of period

766,165

402,378