SMIC Announced the Establishment of a Joint Venture in Beijing

SHANGHAI, June 3, 2013 /PRNewswire/ -- Semiconductor Manufacturing International Corporation ("SMIC"; NYSE: SMI; SEHK: 981), mainland China's largest and most advanced semiconductor foundry, today announced that it entered into the Joint Venture Agreement with SMIC Beijing, BIDIMC and ZDG in relation to the establishment of the Joint Venture Company (subject to the approval of the relevant PRC authorities).

Following its establishment and depending on the environment in which the Joint Venture Company operates and market conditions, the Joint Venture Company is expected to establish and build up significant manufacturing capacity with a focus on 45-nanometer and finer technologies and aims to reach a manufacturing capacity of 35,000 wafers per month. The total investment is estimated to be US$3.59 billion. US$1.2 billion of the total investment will be contributed by the parties in the form of registered capital, and the remaining amount is intended to be funded through the Joint Venture Company's internal cash flow, shareholders' further contribution to share capital, shareholders' loan and/or bank loans.

SMIC and SMIC Beijing shall contribute 55% of the registered capital in an aggregate amount of US$660 million, ZDG and BIDIMC shall contribute 45% of the registered capital in an aggregate amount of US$540 million. The registered capital shall be made by the parties within two years from the establishment of the Joint Venture Company.

Funding to the Joint Venture Company in the form of shareholders' further contribution to share capital or shareholders' loan, if any, will be contributed as to 55% by SMIC and SMIC Beijing, and as to 45% by ZDG and BIDIMC. In addition, the Joint Venture Company and the parties involved may seek debt financing on terms beneficial to the Joint Venture Company.

The progress of contributions by the parties to the Joint Venture Agreement may be adjusted by the Joint Venture Company in accordance with its actual operational needs. If a party does not fully make its relevant contribution by the timing required, until such contribution is fully made, the party may only enjoy its shareholder rights based on its proportional actual contribution. Each of the parties may transfer its rights to subscribe to the share capital and contribution obligations under the Joint Venture Agreement to its affiliates, subject to certain conditions. The cash capital contribution from SMIC will be funded by internal cash flow and, if necessary, other form of financing.

The board of directors of the Joint Venture Company will comprise 5 directors. SMIC and SMIC Beijing are together entitled to nominate 3 directors in total and ZDG is entitled to nominate 2 directors. BIDMIC is entitled to appoint an observer to sit in at the board meetings. SMIC will be responsible for managing the daily operations of the Joint Venture Company. The term of operation of the Joint Venture Company will be 25 years from the date of the issue of its business license. The parties to the Joint Venture Agreement shall decide whether to extend the term of operation of the Joint Venture Company at least six months prior to the expiry date of the term of operation, subject to the approval of the relevant PRC authorities. The Joint Venture Agreement will, after being agreed and signed by the parties, become effective on the day on which all necessary approvals and consents from the relevant PRC governmental and regulatory authorities have been obtained. The obligations of the parties under the Joint Venture Agreement are subject to compliance with applicable laws (including those of regulatory authorities (including the Stock Exchange)).

About SMIC and SMIC Beijing

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.

SMIC Beijing is a wholly foreign-owned enterprise established in the PRC and a wholly-owned subsidiary of SMIC. For more information, please visit www.smics.com.

About ZDG

ZDG was established in 2010, by merging and restructuring the existing development units of Zhongguancun Science Park. It holds total assets of RMB 64,300 million and net assets of RMB 16,400 million. As an integrated and highly market-based business platform, its mission is to promote the Innovation Demonstration Zone, drive the hi-tech industry development. Its core businesses focus on investment, science and technology park developments and financial services. ZDG is an important carrier for Beijing Municipal government to build the Zhongguancun National Innovation Demonstration Zone with high standards, fulfills the strategic plan of developing Beijing as a "culturally enriched, technologically competitive and eco-friendly" city, and supports the China's transition towards an innovative nation.

About BIDIMC

BIDIMC is a company wholly owned by the State with capital contributed in full by Beijing State-owned Assets Management Co., Ltd. It is a novel investment management company established with the approval of the Beijing Municipal Government with the objective of bringing into play the government's pivotal role in investing activities and ensuring scientific and efficient application of State-owned funds in fulfillment of the requirements of a Socialist market economy. BIDIMC aims to revitalize the modern manufacturing sectors in Beijing and facilitate structural realignment of the State-owned industrial economy in Beijing. Its investments are focused on selected key projects relating to the construction of industrial bases in the electronic information, modern equipment manufacturing sectors and other industries in Beijing.

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 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 current 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 Form 20-F filed with the SEC on April 15, 2013, especially in the "Risk Factors Related to Our Financial Condition and Business" and "Operating and Financial Review and Prospects" sections, and such other documents that SMIC may file with the SEC or the Hong Kong Stock Exchange 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.

SMIC Contact Information:

English Media
Anny Liao
Tel: +86-21-3861-0000 x16036
Email: Anny_Liao@smics.com 

Chinese Media
Angela Miao
Tel: +86-21-3861-0000 x10088
Email: Angela_Miao@smics.com

SOURCE Semiconductor Manufacturing International Corporation



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