SMIC Reports 2016 Second Quarter Results

SHANGHAI, Aug. 10, 2016 /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 June 30, 2016.

Second Quarter 2016 Highlights

• Revenue was a record high of $690.2 million in 2Q16, an increase of 8.8% QoQ from $634.3 million in 1Q16 and an increase of 26.3% YoY from $546.6 million in 2Q15.
• Gross margin was 31.6% in 2Q16, compared to 24.2% in 1Q16 and 32.3% in 2Q15.
• Profit from operations was $115.4 million in 2Q16, compared to $66.1 million in 1Q16 and $60.7 million in 2Q15.
• Net profit for the period attributable to SMIC was $97.6 million in 2Q16, as compared to $61.4 million in 1Q16 and $76.7 million in 2Q15.
  

Third Quarter 2016 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. The Company expects:

• Revenue to increase by 8% to 11% quarter over quarter.
• Gross margin to range from 28% to 30%.
• Non-GAAP operating expenses excluding the effect of employee bonus accrual, government funding and gain from the disposal of living quarters to range from $140 million to $145 million.
• Non-controlling interests of our majority-owned subsidiaries to range from positive $4 million to positive $6 million (losses to be borne by non-controlling interests).

Dr. Tzu-Yin Chiu, SMIC's Chief Executive Officer and Executive Director commented, "Q2 was another excellent quarter: with record-high revenue, gross profit, and operating profit, marking our 17th consecutive quarter of profitability. Revenue reached a historical high of $690.2 million, growing 26.3% YoY and 8.8% QoQ. Gross and operating profits hit all-time highs, growing 23.5% and 90.2% YoY and 41.7% and 74.5% QoQ, respectively. On a quarterly basis, our Q2 return on equity reached 10% and our utilization was 98%. In 2015, our EBITDA margin was around 35%; we now target EBITDA margin to increase for the full year of 2016 compared to 2015.

Wafer revenue from 40nm grew 92% YoY and 27% QoQ. Our revenue from China grew 28.7% YoY and 20.1% QoQ. There are 3 components to this large growth from China. 1) Chinese system houses are winning end-product market share, 2) Chinese fabless growth is robust, and 3) SMIC is increasing market share. With our technology readiness, being the preferred foundry partner in China, and strong China positioning, SMIC has effectively captured many opportunities.

We are guiding another strong quarter of growth in Q3. We target continued growth in Q4, contrary to seasonality, and another record year for 2016. Demand continues to be exceedingly strong. With this great demand and our recent acquisition of LFoundry, we now raise our annual revenue growth percentage target to mid-to-high 20's this year.

All-in-all, we are doing our best to expand shareholder value, through profitable growth, cash generation, and careful funding selection. We are witnessing strength across the board, with robust growth, strong cash position, advantageous market positioning, enormous demand, and great opportunities. We are working hard to balance our profitability, growth, building shareholder value, and serving our customers for the benefit of all stakeholders."

Conference Call / Webcast Announcement

Date: August 11, 2016
Time: 8:30 a.m. Shanghai time
Dial-in numbers and pass code:

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/urm96zku.

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 second majority owned 300mm fab 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.

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 "Third Quarter 2016 Guidance", "CapEx Summary" and the statements contained in the quotes of our CEO are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project," "target" 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 cyclical nature of the semiconductor industry, changes in demand for our products, competition in our markets, our reliance on a small number of customers, orders or judgments from pending litigation, intensive intellectual property lawsuits in semiconductor industry and financial stability in end markets, general economic conditions and fluctuations in currency exchange rates.

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 25, 2016, 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.

About Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures

To supplement SMIC's consolidated financial results presented in accordance with IFRS, SMIC uses in this press release non-GAAP measures of operating results that are adjusted to exclude finance cost, depreciation and amortization, income tax expenses, the effect of employee bonus accrual, government funding and gain from the disposal of living quarters. This earnings release also includes third quarter 2016 guidance for non-GAAP operating expenses. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. This earnings release includes EBITDA margin and non-GAAP operating expenses which consist of total operating expenses as adjusted to exclude the effect of employee bonus accrual, government funding and gain from the disposal of living quarters. These non-GAAP financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for financial measures prepared in accordance with IFRS, and should be read only in conjunction with the Group's financial measures prepared in accordance with IFRS. The Group's non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies.

SMIC believes that use of these non-GAAP financial measures facilitates investors' and management's comparisons to SMIC's historical performance. The Group's management regularly uses these non-GAAP financial measures to understand, manage and evaluate the Group's business and make financial and operational decisions.

The accompanying table has more information and reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis because the effect of these adjustment items excluded for the purpose of non-GAAP operating expenses guidance are subject to some unpredictable conditions that cannot be estimated with reasonable certainty.

For the full announcement see: http://www.smics.com/eng/investors/ir_filings.php.

SOURCE Semiconductor Manufacturing International Corporation

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