Motorola and SMIC Announce Strategic Foundry Relationship to Fully Utilize Semiconductor Factory

• Motorola’s MOS-17 Assets to be Transferred to SMIC to Meet the Foundry’s Growing Capacity Needs
• Motorola to Continue to Own and Operate Other Tianjin Facilities; SMIC Will Remain a Pure-Play Foundry Focused on Servicing a Global Customer Base

AUSTIN, Texas, SHANGHAI and TIANJIN, China -- Oct. 23, 2003 – Motorola China Electronics Ltd. and Semiconductor Manufacturing International Corporation (SMIC), one of the largest and most technologically advanced semiconductor foundries in China, have announced the signing of agreements to enter into a long-term, strategic relationship. In connection with the completion of the transaction, Motorola will transfer its MOS-17 wafer fabrication facility in Tianjin to SMIC, in exchange for SMIC shares. SMIC will build out and operate the fab.

In this relationship, SMIC will act as a strategic foundry partner, supporting Motorola in a full range of technologies from the MOS-17 facility as well as other SMIC fabs. Motorola will become one of the major investors in SMIC. In addition, the two companies will enter into a strategic intellectual property agreement in areas of patents and advanced CMOS process technology.

As part of the transfer, Motorola will retain an interest in the MOS-17 fab by becoming one of the major equity holders in SMIC, and will gain a seat on SMIC’s board of directors. Motorola will continue to own and operate its nearby BAT-3 semiconductor assembly and test facility, which employs 1,200 workers. Motorola also will continue to grow the number of employees at its Tianjin Semiconductor Design Center.

“This agreement with SMIC maximizes the use of our manufacturing and R&D resources,” said Scott Anderson, president and CEO of Motorola’s Semiconductor Products Sector. “It will eliminate the overhead and capital costs for Motorola at MOS-17, maintain our presence in Tianjin and China, and grow that country’s contributions to our short- and long-term sales.”

”This strategic foundry relationship between SMIC and Motorola will benefit the employees of MOS-17 and our companies’ customers, strategic partners and vendors who are actively seeking market share in China. SMIC’s ability to fully utilize this facility will support SMIC’s aggressive growth of its business. This expansion in capacity and strengthening of IP position will further enhance our flexibility as a foundry to service the different needs of our customers. SMIC will remain a pure-play foundry focused on servicing a global customer base,” said Richard Chang, president and CEO of SMIC. “We are pleased to be working closely with Motorola, which is known for its commitment to China and its quality of products. We feel this will be a very positive long-term relationship and will further solidify SMIC as the leading foundry in China.”

Motorola's Tianjin Integrated Semiconductor Manufacturing Complex, consisting of both MOS-17 and BAT-3, was built in 2000. The facility was among the first state-of-the-art fabs in China. The agreement between Motorola and SMIC will allow the MOS-17 factory to be fully utilized and continue Motorola’s chip production in China, the fastest-growing region in the world for the consumption of semiconductors.

Closing of the transaction is subject to receipt of governmental and third-party approvals. As part of the transaction, SMIC will make employment offers to all Motorola employees associated with MOS-17. Motorola will retain full ownership of the BAT-3 site, where several assembly and test operations from around the world were consolidated in 2002.

Motorola currently produces microcontrollers and other integrated circuits in MOS-17. Those products are based on advanced sub-micron technologies and support wireless communications devices, automobile electronics, and other advanced consumer electronics. SMIC will produce similar products for Motorola, as well as for other advanced semiconductor companies.

SMIC intends to install a range of equipment and processes that support continually progressive technologies at the MOS-17 site.

Financial terms of the agreement were not disclosed by the two companies.

About Motorola
Motorola, Inc. (NYSE:MOT) is a global leader in wireless, automotive and broadband communications. Sales in 2002 were $27.3 billion. Motorola is a global corporate citizen dedicated to ethical business practices and pioneering important innovations that make things smarter and life better, honored traditions that began when the company was founded 75 years ago this year. For more information, please visit www.motorola.com.

About SMIC
As one of China's most advanced foundries, SMIC provides IC manufacturing at 0.35-micron, 0.25-micron, 0.18-micron, and 0.15-micron technologies, as well as 0.13-micron copper backend services. Established in April 2000, SMIC is a Cayman Islands company with three 8-inch fabs in volume production in Shanghai and a 12-inch facility currently under construction in Beijing. In May 2003, SMIC's Fab1 was named one of the two "Top Fabs of the Year 2003" by Semiconductor International magazine, a leading industry publication. In addition to IC manufacturing, SMIC provides customers with a full range of services that includes design services, mask manufacturing and testing. As a result of its dedication towards providing high quality services and protecting the environment, all three fabs in Shanghai have obtained ISO9001 and ISO14001 certifications. For more information, please visit www.smics.com.


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