Shanghai, China - October 28, 2005. Semiconductor Manufacturing International Corporation (NYSE: SMI; SEHK: 981) ("SMIC" or the "Company") today announced its consolidated results of operations for the three months ended September 30, 2005. Sales increased 10.9% in the third quarter of 2005 to $310.0 million from $279.5 million in the prior quarter. The Company reported an increase in capacity to 143,188 8-inch equivalent wafers per month and an increase in utilization rate to 92% in the third quarter of 2005 compared to 82% in the second quarter of 2005. Gross margins were 8.2% in the third quarter of 2005 compared to 2.3% in the second quarter of 2005. Net loss decreased to $26.1 million in the third quarter of 2005 compared to a net loss of $40.4 million in the second quarter of 2005.
"As we continued to focus on the execution of our business plan we saw strong orders from our customers across leading edge and mainstream technology nodes during the third quarter," said Dr. Richard Chang, President and Chief Executive Officer of SMIC. "We increased the contribution from our high-end processes deriving more than 90% of our revenues from 0.18um and below technology for the first time.
Our business continues to generate strong cash flows from operations with approximately $500 million year to date. At the end of third quarter, we had over $577 million of cash on hand and available credit facilities of over $700 million, which will enable us to continue investing in advanced technology development and equipment to serve our customers.
During this quarter, we have added one of the top five fabless customers in the world to our customer base and have engaged with another top five fabless company. We are expanding our presence in the computer application segment and hope to extend our partnership with these leading semiconductor companies to more advanced technology nodes. We've taped out 25 new products, with over one third of the new tape out products coming from Mainland Chinese customers and one third of those at the 0.13um technology node. As we continue to focus on the Mainland Chinese IC industry, we have successfully manufactured the world's first working 0.13um TD-SCDMA chip for Chongqing Chongyou Information Technology Co., Ltd.
I am pleased to report that our research and development team has made progress in the execution of our 90nm technology roadmap. Our qualification lot yields have exceeded the targets set by our customer and are comparable to the industry average. We expect to commence pilot production by the end of the fourth quarter and commercial production shortly thereafter. We will also use our 90nm logic process with the technology licensed from Saifun Semiconductors to manufacture a 2-gigabit NAND flash product. We have also entered into a definitive agreement with Elpida to migrate our customer's capacity from 100nm to the 90nm process at Fab 4 in Beijing.
Further down the technology roadmap, we have recently entered into an agreement with a customer to co-develop our 65nm process to deliver engineering samples by the end of 2006.
Our testing and assembly project in Chengdu is on schedule to begin pilot production during the fourth quarter, which will allow us to offer in-house turn-key manufacturing services in China. In addition, with the shortage of assembly house capacity for memory and flip-chip logic products, we are eager to commence commercial production to serve our customers.
We will continue to focus on our business fundamentals and are committed to delivering shareholder value to our investor community."
Conference call / Webcast announcement details Date: October 28, 2005 Time: 8:00 a.m. Shanghai time Dial-in numbers and pass code: U.S. 1-617-224-4324 or HK 852-3002-1672 (Pass code: SMIC).
A live webcast of the 2005 third quarter announcement will be available at http://www.smics.com under the "Investor Relations" section. An archived version of the webcast, along with a soft copy of this news release will be available on the SMIC website for a period of 12 months following the webcast.
SMIC (NYSE: SMI, SEHK: 0981.HK) is one of the leading semiconductor foundries in the world, providing integrated circuit 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 has achieved ISO9001, ISO/TS16949, OHSAS18001, TL9000, BS7799 and ISO14001 certifications. For additional information, please visit http://www.smics.com.