SMIC and Datang Holdings Pursue a Strategic Alliance Which Enhances Their International Competitiveness by Leveraging Both Companies’ Resources and the Rapid Development of TD-SCDMA 3G Business in China
SHANGHAI, China --, Nov. 10, 2008 -- Semiconductor Manufacturing International Corporation (“SMIC”) (NYSE: SMI, HKSE: 981) and Datang Telecom Technology & Industry Holdings Co., LTD (“Datang Holdings”) announced today that the two companies have reached a definitive agreement under which Datang Holdings is investing US$172 million in common equity in SMIC for a 16.6% interest in the Company proforma for the new shares issued. Datang Holdings will acquire 3,699 million new SMIC common shares at HK$ 0.36 per share. Upon closing of the investment, Datang Holdings will have the right to nominate, for the appointment by the Board, two Board representatives out of a total of nine members of the Board of Directors at SMIC. In connection with the investment, Datang Holdings will also have the right to nominate a Vice President at SMIC in charge of Time Division-Synchronous Code Division Multiple Access (“TD-SCDMA”), which is an international third generation (3G) mobile telecommunications standard and also China’s self-developed 3G wireless standard.
SMIC, a leader in semiconductor manufacturing, together with Datang Holdings, a leader in China’s self-developed mobile telecommunication technologies, have also agreed to use commercially reasonable efforts to enter into a strategic co-operative agreement at or prior to closing of the investment. Both companies have identified numerous areas of collaboration. This alliance will provide SMIC with a valuable strategic partner as both parties seek to enhance their global market share, capture business opportunities around the world and penetrate the growing mobile telecommunication terminal integrated circuit market.
“We are looking forward to working with Datang Holdings and leveraging its technology and industry expertise, resources and relationships in wireless communication. This investment represents a validation of our strategy, strength of our business, and reflects the strides we have made in the worldwide semiconductor manufacturing space. Further, Datang Holdings’ leadership in TD-SCDMA 3G development will enable us to capture the large market opportunity presented by China transitioning from 2G to 3G wireless communication.” said Morning Wu, SMIC’s Acting Chief Financial Officer. “We intend to use proceeds from this investment to pursue strategic opportunities, strengthen our domestic and global position, retain maximum flexibility in a difficult and challenging public financing market, improve our working capital condition, and assist our capital expenditures needs, among other general corporate purposes.”
Dr. Chen Shanzhi, Datang Holdings’ Vice President, said “We have attached great importance to our investment into SMIC, a world-class semiconductor manufacturing and service company. With SMIC and Datang Holdings working together, I am confident this powerful alliance will significantly promote the development of China’s semiconductor as well as mobile telecommunication industries, and improve the international competitiveness of both companies by taking advantage of the opportunities arising from the rapid development of TD-SCDMA 3G in China.”
The closing of Datang Holdings’ investment is subject to customary conditions, and approval from the relevant government authorities.
SMIC will host a webcast at 8:30a.m. HKT on November 11, 2008, to answer questions from investors and financial analysts regarding Datang Holdings’ investment in 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) manufacturing service at 0.35um to 65nm and finer line technologies. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) under pilot production and three 200mm wafer fabs in its Shanghai mega-fab, two 300mm wafer fabs in its Beijing mega-fab, a 200mm wafer fab in Tianjin, a 200mm and a 300mm fab under construction in Shenzhen, and an in-house assembly and testing facility in Chengdu. SMIC also has customer service and marketing offices in the U.S., Europe, and Japan, and a representative office in Hong Kong. In addition, SMIC manages and operates a 200mm wafer fab in Chengdu owned by Cension Semiconductor Manufacturing Corporation and a 300mm wafer fab in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. For more information, please visit http://www.smics.com
Datang Telecom Technology & Industry Holdings Co., Ltd is a subsidiary of Datang Telecom Technology & Industry Group, headquartered in Beijing. It is the international standard setter for TD-SCDMA third generation (3G) mobile telecommunication, an owner of core TD-SCDMA technologies, and a key promoter of TD-SCDMA industrialization. Datang Holdings is mainly engaged in the core business areas of TD-SCDMA third generation (3G) mobile telecommunication, wireless access, and integrated circuit design. Datang Holdings has profound experience in technology development and innovation in mobile telecommunication and chip design. It has introduced a series of telecommunication products of advanced domestic and international standards, and has achieved significant technology innovation in essential intellectual properties. With industry competitiveness and comparable advantages, Datang Holdings has become one of the leading forces in technology innovation in China. For more information, please visit http://www.datanggroup.cn .