SMIC Acquires LFoundry and Enters into Global Automotive Electronics Market

AVEZZANO, Italy and SHANGHAI, China, June 24, 2016 -- Semiconductor Manufacturing International Corporation ("SMIC"; NYSE: SMI; SEHK: 981), one of the leading semiconductor foundries in the world and the largest and most advanced foundry in mainland China, jointly announces with LFoundry Europe GmbH ("LFE") and Marsica Innovation S.p.A. ("MI"), the signing of an agreement on June 24, 2016 to purchase a 70% stake of LFoundry for a consideration of 49 million EUR. LFoundry is an integrated circuit wafer foundry headquartered in Italy, which is owned by LFE and MI. At the closing, SMIC, LFE and MI will own 70%, 15% and 15% of the corporate capital of the target respectively. This acquisition benefits both SMIC and LFoundry, through increased combined scale, strengthened overall technology portfolios, and expanded market opportunities for both parties to gain footing in new market sectors. This also represents the Mainland China IC foundry industry's first successful acquisition of an overseas-based manufacturer, which marks a major step forward in internationalizing SMIC; furthermore, through this acquisition, SMIC has formally entered into the global automotive electronics market.

As the leading semiconductor foundry in Mainland China, in the first quarter of 2016, SMIC recorded profit for the 16th consecutive quarter with revenue of US$634.3 million, an increase of over 24% year-on-year. In 2015, SMIC recorded annual revenue of US$2.24 billion. In fiscal year 2015, LFoundry revenue reached 218 million EUR.

This acquisition will bring both companies additional room for business expansion. At present, SMIC's total capacity includes 162,000 8-inch wafers per month and 62,500 12-inch wafers per month, which represents a total 8-inch equivalent capacity of 302,600 wafers per month. LFoundry's capacity amounts to 40,000 8-inch wafers per month. Thus, by consolidating the entities, overall total capacity would increase by 13%; this combined capacity will provide increased flexibility and business opportunities for supporting both SMIC and LFoundry customers.

SMIC has a diversified technology portfolio, including applications such as radio frequency ("RF"), connectivity, power management IC's ("PMIC"), CMOS image sensors ("CIS"), embedded memory, MEMS, and others--mainly for the communications and consumer markets. Complementarily, LFoundry's key focus is primarily in automotive, security, and industrial related applications including CIS, smart power, touch display driver IC's ("TDDI"), embedded memory, and others. Such consolidation of technologies will broaden the overall technology portfolios and enlarge the areas of future development for both SMIC and LFoundry.

The semiconductor industry is one of the most globalized industries; the successful establishment of a multi-country manufacturing base sets a precedent in the Mainland Chinese IC foundry industry. The union of Chinese and Italian enterprises in the semiconductor industry will bring China market opportunities to LFoundry and more potential European customers to SMIC. Both SMIC and LFoundry can further develop the business potential of the Euro-Asia market.

Dr. Tzu-Yin Chiu, the CEO and Executive Director of SMIC said, "The successful completion of the LFoundry srl acquisition agreement is an important step in our global strategy. Both SMIC and LFoundry will mutually benefit from the shared technology, products, human talents and complementary markets. This will additionally expand our production scale and allows us to service the automotive IC market and for LFoundry to enter into China's consumer electronics market, thus bolstering our overall development and growth. Through the acquisition, communication and cooperation in the semiconductor industry between China and Europe has been further enhanced, and contributes to the mutual success of the integrated circuit industry in both regions. In the future SMIC will continue to enhance, strengthen, and further expand leadership in the global semiconductor ecosystem."

Sergio Galbiati, the Managing Director of MI and Chairman of LFoundry srl, said, "This is the beginning of a new era for LFoundry and our Italian fab. We are pleased to become part of a very strong worldwide player, SMIC. Together we can further improve LFoundry's strength on optical sensor related technology, which is well recognized worldwide, and continue to contribute to the growth of technology in Europe, thanks to our partnerships with many relevant players. The agreement with SMIC will enable us to have a stronger level playing field in Europe."

Günther Ernst, the Managing Director of LFE and CEO of LFoundry srl, said, "We have made significant efforts in achieving technology excellence. The agreement with SMIC will further enable us to better use our own manufacturing capacity and have access to SMIC's extremely diverse technology offerings while taking advantage of SMIC's commercial network and overall capacity. As part of SMIC, LFoundry will continue to pioneer technology to help our customers achieve success and drive value for our partners and employees around the world. We look forward to working closely with the SMIC team to ensure a smooth transition."

For the full details of the related announcement please see the filing: http://www.smics.com/eng/investors/ir_filings.php

You are also invited to join SMIC's management as they highlight the announcement and take questions from analysts.

Conference Call / Webcast Announcement

Date: June 27, 2016
Time: 8:30 a.m. Shanghai time
Dial-in numbers and pass code:
Mainland 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)

The call will be webcast live with audio at: http://www.smics.com/eng/investors/ir_presentations.php or http://edge.media-server.com/m/p/2wu5fu9p.

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. SMIC provides integrated circuit (IC) foundry and technology services at 0.35-micron to 28-nanometer. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) and a 200mm mega-fab in Shanghai; a 300mm mega-fab and a majority owned 300mm fab under development for advance nodes in Beijing; and 200mm fabs in Tianjin and Shenzhen. SMIC also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan, and a representative office in Hong Kong. For more information, please visit www.smics.com.