SMIC Reports 2013 Third Quarter Results

 
We target another full year of record high revenue in 2013 with sustainable profitability and growth as our priority. Looking into 2014, we aim to outgrow the industry average again. We have a number of exciting opportunities ahead of us. 1) Our 40nm ramp up will continue. 2) Our 28nm technology is coming on line. 3) Our embedded Non-Volatile Memory (e-NVM) is finding wide spread customer acceptance. 4) A number of other differentiated technologies will be rolling out in 2014. And lastly, our new capacity for high-end and mature technology is coming on line. It will be an exciting 2014."

Conference Call / Webcast Announcement

Date: October 23, 2013

Time: 8:30 a.m. Shanghai time

Dial-in numbers and pass code:


China

400-620-8038 

(Pass code: SMIC)

Hong Kong 

852-2475-0994 

(Pass code: SMIC)

Taiwan 

886-2-2650-7825 

(Pass code: SMIC)

United States, New York

1-845-675-0437

(Pass code: SMIC)

The call will be webcast live with audio at http://www.smics.com/eng/investors/ir_presentations.php or http://www.media-server.com/m/p/k3yzasi5.

An archived version of the webcast, along with an electronic copy of this news release will be available on the SMIC website for a period of 12 months following the webcast.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 0.35-micron to 40-nanometer. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) and a 200mm mega-fab in Shanghai, a 300mm mega-fab in Beijing, a 200mm fab in Tianjin, and a 200mm fab project under development in Shenzhen. SMIC also has customer service and marketing offices in the U.S., Europe, Japan, and Taiwan, and a representative office in Hong Kong.

For more information, please visit 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 under "Fourth Quarter 2013 Guidance" and in the last paragraph of the quote of SMIC's Chief Executive Officer, as well as the statements regarding future 2013 capital expenditures 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 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 the global economic slowdown, orders or judgments from pending litigation 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 filed with the SEC on April 15, 2013, especially the consolidated financial statements, and such other documents that SMIC may file with the SEC or The Hong Kong Stock Exchange Limited ("SEHK") from time to time, including current reports 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 may be 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.

About Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures

To supplement SMIC's consolidated financial results presented in accordance with IFRS, SMIC uses in this press release measures of operating results that are adjusted to exclude wafer shipments from Wuhan Xinxin Semiconductor Manufacturing Corporation ("Wuhan Xinxin"), which SMIC began gradually phasing out in 3Q13. This earnings release includes non-GAAP revenue, non-GAAP cost of sales and non-GAAP gross margin. It also includes fourth quarter 2013 guidance for non-GAAP revenues and non-GAAP gross margin, which exclude such shipments, and for non-GAAP operating expenses, which is adjusted to exclude the effect of foreign exchange, employee bonus accrual, funding of R&D contracts from the government and gain from the disposal of living quarters. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS.

SMIC believes that use of these non-GAAP financial measures facilitates investors' and management's comparisons to SMIC's historical performance. The Company's management regularly uses these non-GAAP financial measures to understand, manage and evaluate the Company's business and make financial and operational decisions.

The accompanying table has more information and reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.

Contact:

Investor Relations

+86-21-3861-0000 ext. 12804

ir@smics.com

 


Summary of Third Quarter 2013 Operating Results

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



3Q13

2Q13

QoQ

3Q12

YoY

Revenue

534,256

541,302

-1.3%

461,168

15.8%

Cost of sales

(422,274)

(406,075)

4.0%

(334,347)

26.3%

Gross profit

111,982

135,227

-17.2%

126,821

-11.7%

Operating expenses

(63,447)

(56,095)

13.1%

(106,455)

-40.4%

Profit from operations

48,535

79,132

-38.7%

20,366

138.3%

Other expense, net

(4,681)

(3,292)

42.2%

(7,335)

-36.2%

Profit before tax

43,854

75,840

-42.2%

13,031

236.5%

Income tax expenses

(914)

(510)

79.2%

(1,112)

-17.8%

Profit for the period

42,940

75,330

-43.0%

11,919

260.3%

Other comprehensive income:






Exchange differences on

   translating foreign operations

77

278

-72.3%

258

-70.2%

Total comprehensive income 

   for the period

43,017

75,608

-43.1%

12,177

253.3%







Profit attributable to SMIC

42,491

75,401

-43.6%

11,966

255.1%







Gross margin

21.0%

25.0%

-

27.5%

-







Earnings per ordinary share
(basic and diluted) ( 1 )

0.00

0.00

-

0.00

-

Earnings per ADS (basic and

diluted)

0.07

0.12

-

0.02

-







Wafers shipped (in 8"

equivalent wafers)

653,090

687,651

-5.0%

605,543

7.9%







Capacity utilization ( 2 )

88.2%

98.5%

-

92.0%

-


Note:

(1) Based on weighted average ordinary shares of 32 , 084 million (basic) and 32,355 million (diluted) in 3 Q1 3 , 32,051 million (basic) and 32,312 million (diluted) in 2 Q1 3 , and 31,983 million (basic) and 31,993 million (diluted) in 3 Q1 2 .

(2) B ased on total equivalent wafers out divided by estimated total quarterly capacity .

  • Revenue decreased to $534.3 million in 3Q13, down 1.3% QoQ from $541.3 million in 2Q13, mainly due to a decrease of revenue generated by shipments from Wuhan Xinxin. The Company began phasing out wafer shipments from Wuhan Xinxin in 3Q13.
  • Non-GAAP revenue excluding wafer shipments from Wuhan Xinxin was $503.7 million in 3Q13, compared to $501.8 million in 2Q13.
  • Cost of sales increased to $422.3 million in 3Q13, up 4.0% QoQ from $406.1 million in 2Q13.
  • Gross profit was $112.0 million in 3Q13, a decrease of 17.2% QoQ from $135.2 million in 2Q13.
  • Gross margin was 21.0% in 3Q13, down from 25.0% in 2Q13 primarily due to lower fab utilization in 3Q13 and product mix change.
  • Non-GAAP gross margin excluding wafer shipments from Wuhan Xinxin was 22.1% in 3Q13, down from 26.7% in 2Q13.
  • Operating expenses increased to $63.4 million in 3Q13, an increase of 13.1% QoQ from $56.1 million in 2Q13, mainly due to the reasons stated in Operating Expenses (Income) Analysis below.

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