SMIC reports 2005 second quarter results

Shanghai, China -- July 29, 2005 -- 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 June 30, 2005. Sales increased 12.3% in the second quarter of 2005 to $279.5 million from $248.8 million in the prior quarter. The Company reported an increase in capacity to 139,025 8-inch equivalent wafers per month and a utilization rate of 87% in the second quarter of 2005. Net loss increased to $40.4 million in the second quarter of 2005 compared to a loss of $30.0 million in the first quarter of 2005.

“The second quarter of 2005 marked what we believe to be the trough of this current semiconductor cycle,” said Dr. Richard Chang, President and Chief Executive Officer of SMIC. “During this period, our financial performance was consistent with our expectations. Despite the general weakness in the semiconductor industry as a whole and in particular the foundry sector, we continued to increase our revenues during the second quarter of 2005. Based on the demand forecasts provided by our customers, we believe that the second half of 2005 will be a period of financial growth and improvement and have increased our projected capital expenditure budget to $1.1 billion for 2005. With the semiconductor industry gearing up for a rebound in the second half of the year, we have secured an additional $600 million in financing which we believe, together with our expected cashflow from operations, will be sufficient to cover our funding requirements for 2005 and into 2006.

During the quarter we added 20 new customers, over half of which came from Mainland China. We are pleased to see continuous progress from our customers in China.

On the technology front, our first customer products at 90nm are currently under qualification and remain on-schedule. Further along the technology roadmap, we are now developing our 65nm technology process flow in our 300mm fabs.

Today we are pleased to announce two separate projects. The first relates to a partnership which SMIC has formed with Saifun Semiconductors, Ltd. to license Saifun’s NROM® technology for the production of flash memory-based products. Our new flash-memory strategy will enable us to meet the increasing demand for flash-based products in the consumer electronics and telecommunication sectors.

The second project relates to the wafer reclamation project in Shanghai to produce solar power modules. We will start facility installation in the third quarter and anticipate equipment move-in during the fourth quarter.

In addition to our core foundry business, we will continue to look for ways to increase shareholder value and maximize our position as the leading foundry in China.”

For the full SMIC second quarter earnings release, please click on the following link.

SMIC Q2 earnings release

About SMIC

SMIC (NYSE: SMI, SEHK: 0981.HK) is one of the leading semiconductor foundries in the world, providing integrated circuit (IC) manufacturing at 0.35-micron to 0.11-micron and finer line technologies to customers worldwide. Established in 2000, SMIC has four 8-inch wafer fabrication facilities in volume production in Shanghai and Tianjin. In the first quarter of 2005, SMIC commenced commercial production at its 12-inch wafer fabrication facility in Beijing. SMIC also maintains customer service and marketing offices in the U.S., Europe, and Japan, and a representative office in Hong Kong. As part of its dedication towards providing high-quality services, SMIC strives to comply with or exceed international standards and has achieved ISO9001, ISO/TS16949, OHSAS18001, TL9000 and ISO14001 certifications. For additional information, please visit http://www.smics.com.

SMIC reports 2005 second quarter results

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