SMIC Reports 2013 First Quarter Results

All currency figures stated in this report are in US Dollars unless stated otherwise.

The Company started to prepare consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") in 2012's Annual Report. This is the first Earnings Release under IFRS and all prior period information reclassified to conform to IFRS presentation.

News provided by

Semiconductor Manufacturing International Corporation

Apr 24, 2013, 07:19 ET

SHANGHAI, April 24, 2013 /PRNewswire/ -- 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 March 31, 2013. 

First Quarter 2013 Highlights:

  • Fourth consecutive quarter of record high revenue of $501.6 million in 1Q13, an increase of 50.8% year over year, and up 3.2% quarter over quarter.
  • Revenues from China-based customers contributed 38.6% of overall revenue in 1Q13, compared to 32.5% in 1Q12 and 34.8% in 4Q12.
  • Gross margin was 20.4% in 1Q13, compared to 12.0% in 1Q12 and 19.9% in 4Q12.
  • Net income attributable to SMIC was $40.6 million in 1Q13, compared to net loss of $42.8 million in 1Q12 and net income of $46.6 million in 4Q12.

Second Quarter 2013 Guidance:

The following statements are forward looking statements which are based on current expectations and which involve risks and uncertainties, some of which are set forth under "Safe Harbor Statements" below.

  • Revenue is expected to increase between 3% to 5% quarter over quarter.
  • Gross margin is expected to range from 20% to 22%.
  • Expenses from continuing operations excluding the effect of foreign exchange and government R&D grants are expected to range from $85 million to $88 million.

Dr. Tzu-Yin Chiu, SMIC's Chief Executive Officer and Executive Director, commented, "I am very pleased to report that SMIC has again achieved record high revenue of $501.6 million in the first quarter of 2013, representing year over year growth of 50.8%. In addition, revenue from our China-based customers grew 14.5% sequentially and 79.1% year-over-year, contributing 38.6% of total revenue in the first quarter of 2013, an all-time high. Income attributable to SMIC was $40.6 million in 1Q 2013 compared to a loss of $42.8 million in 1Q 2012. Despite the normal seasonally slow fourth and first quarters, we achieved five consecutive quarters of revenue growth and four consecutive quarters of net profit.

"40/45nm revenue contribution more than doubled to 6.4% compared to 2.6% wafer revenue in the fourth quarter of 2012. This increase was mainly driven by higher demand for mobile products from both U.S. and China-based customers. Along the same line, our 28nm advanced development, for both HKMG and PolySiON processes, continues to be on track and are targeted to be ready by the fourth quarter of 2013.

"We currently expect 2Q 2013 to continue to grow 3% to 5% sequentially, which means SMIC would achieve 6 consecutive quarters of growth. Our growth driver in 2013 will continue to be 40/45nm process, servicing primarily mobile related applications, as well as the strong demand from China.

"I'd like to reiterate that we will continue to focus on sustainable profitability, growth, and shareholder value."

Conference Call / Webcast Announcement

Date: April 25, 2013

Time: 8:30 a.m. Shanghai time

Dial-in numbers and pass code:


United States               

1-718-354-1231             

(Pass code: SMIC)

Hong Kong                  

852-2475-0994              

(Pass code: SMIC)

China                          

86-80-0819-0121           

(Pass code: SMIC)

Taiwan                                     

886-2-2650-7825           

(Pass code: SMIC)

The call will be webcast live with audio at http://www.smics.com/eng/investors/ir_presentations.php, or at http://www.media-server.com/m/p/se33etcs.

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 "Second Quarter 2013 Guidance", the statement regarding our expectation that both HKMG and PolySiON processes will be ready by the fourth quarter of 2013, and the statement regarding our expectation that our 2Q 2013 revenue will continue to grow 3% to 5% sequentially, 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.

Contact:

Investor Relations
+86-21-3861-0000 ext. 12804
[email protected]

Summary of First Quarter 2013 Operating Results

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

1Q13

4Q12(3)

QoQ

1Q12

YoY

Revenue                                                                          

501,609

485,894

3.2%

332,711

50.8%

Cost of sales

(399,471)

(389,127)

2.7%

(292,867)

36.4%

Gross profit

102,138

96,767

5.6%

39,844

156.3%

Expenses from continuing
  operations

(71,065)

(64,742)

9.8%

(90,127)

-21.2%

Total other income (loss), net

11,975

17,072

-29.9%

(3,960)

-

Profit (loss) before tax

43,048

49,097

-12.3%

(54,243)

-

Income tax (expenses) benefit

(2,536)

(2,665)

-4.8%

11,418

-

Profit (loss) for the period

40,512

46,432

-12.7%

(42,825)

-

Other comprehensive income:




Exchange differences on
  translating foreign operations

43

(2)

-

44

-2.3%

Total comprehensive income
  (expense) for the period

40,555

46,430

-12.7%

(42,781)

-




Income (loss) attributable to
  SMIC

40,604

46,570

-12.8%

(42,825)

-




Gross margin

20.4%

19.9%

-

12.0%

-




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

0.00

0.00

-

(0.00)

-

Earnings (loss) per ADS (basic
and diluted)

0.06

0.07

-

(0.08)

-




Wafers shipped (in 8"
equivalent wafers)

631,776

608,372

3.8%

445,689

41.8%




Capacity utilization(2)

89.0%

90.5%

-

74.1%

-


Note:

(1)     Based on weighted average ordinary shares of 32,014million (basic) and 32,182million (diluted) in
         1Q13, 31,997million (basic) and 32,044 million (diluted) in 4Q12, and 27,504 million (basic) and
         27,504 million (diluted) in 1Q12.

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

(3)     Revised from Q4 earnings release to reflect the reversal of US$6.9million land appreciation tax provision  
          relating to disposal of employees' living quarters as a result of finalization of tax filing after the earning
          release,  but before the issuance of the 2012 consolidated financial statements.


  • Revenue increased to $501.6 million in 1Q13, up 3.2% QoQ from $485.9 million in 4Q12, mainly due to the increase of 40/45nm wafer shipments.
  • Cost of sales increased to $399.5 million in 1Q13, an increase of 2.7% QoQ from $389.1 million in 4Q12, mainly due to an increase in wafer shipments.
  • Gross profit was $102.1 million in 1Q13, an increase of 5.6% QoQ from $96.8 million in 4Q12.
  • Gross margin was 20.4% in 1Q13, up from 19.9% in 4Q12 primarily due to lower shipments from Wuhan Xinxin, which had a lower gross margin.
  • Expenses from continuing operations increased to $71.1 million in 1Q13, an increase of 9.8% QoQ from $64.7 million in 4Q12, mainly due to the reasons stated in Expenses from Continuing Operations Analysis.

   Analysis of Revenue

Revenue Analysis


By Application

1Q13

4Q12

1Q12

Computer

1.3%

1.0%

3.2%

Communications

47.3%

47.4%

48.3%

Consumer

42.5%

42.6%

40.2%

Others

8.9%

9.0%

8.3%

By Service Type

1Q13

4Q12

1Q12

Wafers

94.1%

94.0%

94.4%

Mask making, testing, others

5.9%

6.0%

5.6%

By Customer Type

1Q13

4Q12

1Q12

Fabless semiconductor companies

88.7%

86.6%

91.4%

Integrated device manufacturers (IDM)

6.1%

9.3%

5.0%

System companies and others

5.2%

4.1%

3.6%

By Geography

1Q13

4Q12

1Q12

North America

51.4%

54.4%

55.2%

China(1)

38.6%

34.8%

32.5%

Eurasia(2)

10.0%

10.8%

12.3%

Wafer Revenue Analysis


By Technology (logic, memory only)

1Q13

4Q12

1Q12

40/45nm

6.4%

2.6%

0.3%

55/65nm

32.1%

35.3%

22.3%

90nm

6.7%

8.0%

8.6%

0.13 um

10.7%

10.2%

22.7%

0.15/0.18um

39.9%

39.9%

39.4%

0.25/0.35    um

4.2%

4.0%

6.7%


Note:

(1) Including Hong Kong, but excluding Taiwan

(2) Excluding China


   Capacity*

Fab / (Wafer Size)

1Q13

4Q12

Shanghai Mega Fab (8")

90,000

90,000

Shanghai 12-inch Fab (12")

14,150

13,500

Beijing Mega Fab (12")

81,000

78,750

Tianjin Fab (8")

34,450

37,000

Total monthly wafer fabrication capacity

219,600

219,250

Note:

* Wafers per month at the end of the period in 8" equivalent wafers, calculated on a 30-day basis for comparison purposes

  • Capacity increased to 219,600 8-inch equivalent wafers in 1Q13 from 219,250 8-inch equivalent wafers in 4Q12, primarily due to product mix change in our Tianjin fab and improved efficiency in our Beijing and Shanghai 12-inch fabs.

  Shipment and Utilization  


8" equivalent wafers

1Q13

4Q12

QoQ

1Q12

YoY

Wafer shipments including copper interconnects

631,776

608,372

3.8%

445,689

41.8%

Utilization rate(1)

89.0%

90.5%

-

74.1%

-

Note:  

(1)  Based on total equivalent wafers out divided by estimated total quarterly capacity. 

  Detailed Financial Analysis

       Gross Profit Analysis

Amounts in US$ thousands

1Q13

4Q12

QoQ

1Q12

YoY

Cost of sales

399,471

389,127

2.7%

292,867

36.4%

  Depreciation

127,339

112,290

13.4%

106,317

19.8%

  Other manufacturing costs

271,687

276,367

-1.7%

186,254

45.9%

  Share-based compensation

445

470

-5.3%

296

50.3%

Gross profit

102,138

96,767

5.6%

39,844

156.3%

Gross margin

20.4%

19.9%

-

12.0%

-

  • Cost of sales increased to $399.5 million in 1Q13, an increase of 2.7% QoQ from $389.1 million in 4Q12, mainly due to the increase in wafer shipments.
  • Depreciation within the cost of sales increased in 1Q13 relative to 4Q12 primarily due to lower utilization of our Beijing fab.
  • Gross profit was $102.1 million in 1Q13, an increase of 5.6% QoQ from $96.8 million in 4Q12.
  • Gross margin was 20.4% in 1Q13, up from 19.9% in 4Q12 primarily due to lower shipments from Wuhan Xinxin which had a lower gross margin.

       Expenses from Continuing Operations Analysis

Amounts in US$ thousands

1Q13

4Q12

QoQ

1Q12

YoY

Total expenses from continuing    
  operations

71,065

64,742

9.8%

90,127

-21.2%

  Research and development

23,408

26,677

-12.3%

59,311

-60.5%

  General and administrative

39,783

29,436

35.2%

23,924

66.3%

  Selling and marketing

7,874

8,629

-8.7%

6,892

14.2%

  • R&D expenses decreased to $23.4 million in 1Q13, down 12.3% QoQ from $26.7 million in 4Q12 mainly due to lower usage of wafers and masks for our R&D activities.
  • General and administrative expenses increased to $39.8 million in 1Q13, up 35.2% QoQ from $29.4 million in 4Q12, mainly due to the employee bonus accrual and the recovery of bad debt in 4Q12.

       Total Other Income (Loss), Net

Amounts in US$ thousands

1Q13

4Q12

QoQ

1Q12

YoY

Total other income (loss), net

11,975

17,072

-29.9%

(3,960)

-

Finance costs

(10,850)

(10,449)

3.8%

(7,687)

41.1%

Interest income

1,352

1,276

6.0%

1,199

12.8%

Other income or expenses

(1,366)

2,125

-

1,763

-

  Other gains or losses

22,393

24,016

-6.8%

392

5612.5%

  Share of profits of associates

446

104

328.8%

373

19.6%

Other gains or losses include mostly the gain arising from the disposal of part of the living quarters in Shanghai.

       Depreciation and Amortization

Amounts in US$ thousands

1Q13

4Q12

QoQ

1Q12

YoY

Deprecation and amortization

135,752

140,021

-3.0%

142,888

-5.0%

       Liquidity  

Amounts in US$ thousands

1Q13

4Q12

Cash and bank balances

292,932

358,490

Restricted cash

185,031

217,603

Other financial assets

1,239

18,730

Trade and other receivables

355,293

328,211

Prepaid operating expenses

51,061

46,986

Inventories

284,653

295,728

Assets classified as held-for-sale

1,428

4,239

Total current assets

1,171,637

1,269,987

Current tax liabilities

60

2,321

Other financial liabilities

8

25

Promissory notes

29,582

29,374

Accrued liabilities

73,696

84,611

Borrowings

529,440

567,803

Trade and other payables

459,235

423,952

Total current liabilities

1,092,021

1,108,086

Cash Ratio

0.3x

0.3x

Quick Ratio

0.8x

0.9x

Current Ratio

1.1x

1.1x

      Capital Structure


Amounts in US$ thousands

1Q13

4Q12

Cash and cash equivalents

292,932

358,490

Restricted cash

185,031

217,603

Current portion of promissory notes

29,582

29,374

Short-term borrowings

529,440

567,803

Long-term debt

429,000

528,612

Total debt

958,440

1,096,415

Equity(1)

2,319,036

2,276,452

Total debt to equity ratio(2)

41.3%

48.2%

Note:

(1)    Including portion of noncontrolling interest.

(2)    Total debt divided by equity, total debt including short-term borrowings and long-term debt.

Cash and cash equivalents decreased to $292.9 million in 1Q13, down 18.3% QoQ from $358.5 million in 4Q12 primarily because the Company used the cash on hand to retire some of the bank borrowings.

      Cash Flow

Amounts in US$ thousands

1Q13

4Q12

Net cash generated from operating activities

154,638

183,799

Net cash used in investing activities

(82,628)

(74,719)

Net cash (used in) generated from financing activities

(137,503)

17,835

Effect of exchange rate changes

(65)

(210)

Net change in cash

(65,558)

126,705

Capex Summary

  • Capital expenditures for 2013Q1 were $184.7 million.
  • The Company has increased the planned 2013 capital expenditures for foundry operations by $75 million to $675 million. The additional capital expenditures will be used for the expansion of our Shanghai 12-inch fab to meet the customer demand for our 40/45 nm capacity.

Recent Highlights and Announcements

Please visit SMIC's website at http://www.smics.com/eng/press/press_releases.php and http://www.smics.com/eng/investors/ir_filings.php
for further details regarding the recent announcements.

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In US$ thousands except share data)



 For the three months ended



 March 31, 2013


 December 31, 2012



 (Unaudited)


 (Unaudited)

Continuing operations



Revenue

501,609

485,894

Cost of sales

(399,471)

(389,127)

Gross profit

102,138

96,767

Research and development

(23,408)

(26,676)

General and administration expenses

(39,783)

(29,437)

Sales and marketing expenses

(7,874)

(8,629)

Total other income, net

11,975

17,072

Profit before tax

43,048

49,097

Income tax expense

(2,536)

(2,665)

Profit for the period

40,512

46,432

Other comprehensive income



Item that may be reclassified subsequently to profit or loss



Exchange differences on translating foreign operations

43

(2)

Total comprehensive income for the period

40,555

46,430

Profit (loss) for the period attributable to:



Owners of the Company

40,604

46,570

Non-controlling  interests

(92)

(138)

40,512

46,432

Total comprehensive income for the period attributable to:



Owners of the Company

40,647

46,568

Non-controlling  interests

(92)

(138)

40,555

46,430



Earnings per share attributable to Semiconductor Manufacturing
       International Corporation ordinary shareholders, basic and diluted 


0.00

0.00

Earnings per ADS attributable to Semiconductor Manufacturing
       International Corporation ordinary ADS holders, basic and diluted 


0.06

0.07



Shares used in calculating basic earnings per share

32,014,142,052

31,996,848,100

Shares used in calculating diluted earnings per share


32,182,139,336

32,044,388,752

 


Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In US$ thousands)



As of

March 31, 2013

 December  31, 2012

(Unaudited)

(Unaudited)

ASSETS



Non-current assets



Property,  plant  and  equipment

2,443,230

2,385,435

Prepaid Land use right

73,576

73,962

Intangible assets

226,787

235,378

Investments in associates

22,190

21,636

Deferred tax assets

43,461

43,380

Other assets

41,065

43,382

Total non-current assets

2,850,309

2,803,173

Current assets



Inventories

284,653

295,728

Prepaid  operating  expenses

51,061

46,986

Trade  and  other  receivables

355,293

328,211

Other  financial  assets

1,239

18,730

Restricted  cash

185,031

217,603

Cash and bank balances

292,932

358,490

1,170,209

1,265,748

Assets  classified  as  held-for-sale

1,428

4,239

Total current assets

1,171,637

1,269,987

TOTAL ASSETS

4,021,946

4,073,160



EQUITY AND LIABILITIES



Capital and reserves



Ordinary shares, $0.0004 par value, 50,000,000,000
           shares authorized, 32,023,168,050 and 32,000,139,623
           shares issued and outstanding at March 31, 2013 and  
           December  31, 2012 , respectively

12,809

12,800

Share premium

4,084,942

4,083,588

Reserves

46,857

46,148

Accumulated  deficit

(1,826,432)

(1,867,036)

Equity attributable to owners of the Company

2,318,176

2,275,500

Non-controlling  interests

860

952

Total equity

2,319,036

2,276,452

Non-current  liabilities



Borrowings

429,000

528,612

Deferred tax liabilities

314

440

Deferred  government  grant

171,987

150,347

Long-term  financial  liabilities

4,588

4,223

Other  liabilities

5,000

5,000

Total  non-current  liabilities

610,889

688,622

Current  liabilities



Trade and other payables

459,235

423,952

Borrowings

529,440

567,803

Accrued liabilities

73,696

84,611

Promissory notes  

29,582

29,374

Other  financial  liabilities

8

25

Current  tax  liabilities

60

2,321

Total current liabilities

1,092,021

1,108,086

Total liabilities

1,702,910

1,796,708

TOTAL EQUITY AND LIABILITIES

4,021,946

4,073,160

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In $US thousands)

 For the three months ended



March 31, 2013

December 31, 2012

(Unaudited)

(Unaudited)

Cash flow from operating activities





Profit for the period

40,512

46,432

Depreciation and amortization


135,752

140,021

Share of profits of associates  

(446)

(104)

Changes in working capital and others


(21,180)

(2,550)

Net cash generated from operating activities


154,638

183,799



Cash flow from investing activities:





Payments for property, plant and equipment

(123,132)

(97,392)

Payments for intangible assets

(14,580)

(17,927)

Proceeds from disposal of property, plant and equipment and intangible assets

(8,416)

36,237

Changes in restricted cash relating to investing activities


46,388

16,623

Payments to acquire financial assets

(1,527)

(21,617)

Proceeds on sale of financial assets

18,966

9,357

Others

(327)

-

Net cash used in investing activities


(82,628)

(74,719)



Cash flow from financing activities:





Proceeds from borrowings

55,675

300,229

Repayment of borrowings

(193,745)

(267,500)

Repayment of promissory notes


-

(15,000)

Proceeds from exercise of employee stock options

567

106

Net cash (used in) generated from financing activities


(137,503)

17,835



Effects of exchange rate changes on the balance of cash held in foreign
currencies

(65)

(210)



Net (decrease) increase in cash and cash equivalents


(65,558)

126,705



Cash and bank balances, beginning of period


358,490

231,785



Cash and bank balances, end of period


292,932

358,490

SOURCE Semiconductor Manufacturing International Corporation