Shanghai [2008-01-29]
All currency figures stated in this report are in US Dollars unless stated otherwise.
Shanghai, China ?C January 29, 2008. 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 December 31, 2007.
2007 HIGHLIGHTS:
- Revenue up by 5.8% over 2006 to $1,549.8 million despite unprecedented difficult condition in the DRAM market.
- Gross profit up by 20% to $152.7 million from 2006 due to solid growth in the non-DRAM business.
- Gross margin was 9.9% in 2007 compared to 8.7% in 2006.
- Net loss of $40.0 million in 2007 compared to a net loss of $44.1 million in 2006.
FOURTH QUARTER 2007 HIGHLIGHTS:
- Revenue up by 3.0% over 4Q06 to $395.3 million and up by 1.0% from $391.4 million in 3Q07.
- Gross margin was 8.9% in 4Q07 compared to 10.8% in 3Q07 primarily due to the continuous price decline in the DRAM market.
- Net loss of $21.2 million in 4Q07, compared to a net loss of $25.6 million in 3Q07, mainly from the DRAM business.
- Fully diluted EPS was ($0.0570) per ADS.
Over a conference call, Dr. Richard Chang, Chief Executive Officer of SMIC, spoke with analysts about the quarterly results. "SMIC has continued to grow its revenue in the fourth quarter of 2007 on a year-on-year and a quarter-on-quarter basis," he said. "Operationally, our capacity at the end of the fourth quarter of 2007 has increased to 185,250 8-inch-equivalent wafers per month, with a high utilization rate of 94%. For 2007, our wafer shipments and sales increased by 14.6% and 5.8%, respectively, over 2006.
"As part of our plan to mitigate the continuing DRAM pricing erosion, we reduced our DRAM foundry services in the fourth quarter. We have successfully reduced our DRAM shipments by about 22% since 1Q07, excluding a single large shipment in 4Q07 to clear inventory of discontinued DRAM product lines. Confronted with a more difficult DRAM market in 4Q07 than in the previous quarter, we still managed to reduce our net loss in the fourth quarter. We expect DRAM revenue as a portion of total revenue to decrease to below 20% in the first quarter of 2008, with further reduction throughout the remainder of the year.
"SMIC experienced solid growth in its non-DRAM business. Revenue from non-DRAM business increased by 13.5% to $1,121 million in 2007, compared to $988 million in 2006. Gross profit from non-DRAM business saw a 104% year-on-year increase in 2007. As more of our logic customersmigrated to more advanced technology process nodes, our logic sales from 0.13 micron and 90-nanometer technology nodes also significantly increased by 42% over 2006.
"As the overall semiconductor market continues to expand rapidly in China, SMIC has captured this significant growth trend, demonstrated by a 56% growth in our China sales in 2007. We are pleased to see continuous progress from our customers in China and remain committed to further growth and expansion within the China market.
"In 2007, we saw strong foundry demand for handset ICs, power management ICs, WLAN, and consumer applications such as STB, DTV and MP3/MPEG4, indicative of demand in the industry at large. We also enjoyed the addition of 77 new customers worldwide in 2007, a large number of which are PRC-based, representing a 23.3% increase in our customer base.
"To complement our ongoing in-house research and development, and to strengthen our capabilities in serving customers, we are pleased to announce that we have entered into a licensing agreement with IBM, in which IBM will license its 45-nanometer bulk CMOS technology to SMIC. This agreement will allow SMIC to accelerate its technology advancement in logic process technology and help provide optimal solutions for customers at the 12-inch facilities. With the roadmap extended to 45 nm technologies, we observed the trend of more customers seeking our foundry services in the 90 nm and 65 nm technology nodes as well.
"Our capital expenditure in the fourth quarter increased to $260 million, due in part to investment in the 45-nanometer technology project. We expect our CAPEX to be around $700 million in 2008 as we continue to invest in the development of advanced technology nodes and continue the planned conversion of DRAM capacity to logic in our Beijing fabrication facility.
"In terms of operations, we are pleased to announce that SMIC plans to start a new IC production project in Shenzhen. In connection with this project, SMIC will register an independent legal entity, the Semiconductor Manufacturing International (Shenzhen) Corporation Ltd., which will set up an IC technology research and development center, an 8-inch wafer production line and a 12-inch fab. The 12-inch fab will introduce advanced process technology licensed from IBM pursuant to the licensing agreement. With the support of the Shenzhen municipal government in financing, incentive policies and ways of operations, we expect this project to break ground in the first half of 2008.
"We believe that as we continue to execute our business plans and reach technological milestones, we are laying a solid foundation for long-term growth and development and serving the interests of our shareholders."
The financial statement amounts in this report are determined in accordance with US GAAP.
SMIC Q4 earnings release
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) manufacturing service at 0.35um to 90nm 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, 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 under construction in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. For more information, please visit http://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 concerning our expectation for first quarter 2008 revenue, our expectation that DRAM revenue as a percentage of overall revenue will decrease in 2008, expected timing for beginning commercial production for our 65nm technology, SMIC's ability to grow and improve profitability in 2008, and statement under "Capex Summary" and "First Quarter 2008 Guidance," are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words "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 are necessarily estimates reflecting the best judgment of SMIC's senior management and 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 cyclicality and market conditions in the semiconductor industry, intense competition, timely wafer acceptance by SMIC's customers, timely introduction of new technologies, SMIC's ability to ramp new products into volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, orders or judgments from pending litigation, availability of manufacturing capacity 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, as amended, filed with the SEC on June 29, 2007, especially in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections, and such other documents that SMIC may file with the SEC or SEHK from time to time, including 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 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.
All currency figures stated in this report are in US Dollars unless stated otherwise.
Shanghai, China ?C January 29, 2008. 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 December 31, 2007.
2007 HIGHLIGHTS:
- Revenue up by 5.8% over 2006 to $1,549.8 million despite unprecedented difficult condition in the DRAM market.
- Gross profit up by 20% to $152.7 million from 2006 due to solid growth in the non-DRAM business.
- Gross margin was 9.9% in 2007 compared to 8.7% in 2006.
- Net loss of $40.0 million in 2007 compared to a net loss of $44.1 million in 2006.
FOURTH QUARTER 2007 HIGHLIGHTS:
- Revenue up by 3.0% over 4Q06 to $395.3 million and up by 1.0% from $391.4 million in 3Q07.
- Gross margin was 8.9% in 4Q07 compared to 10.8% in 3Q07 primarily due to the continuous price decline in the DRAM market.
- Net loss of $21.2 million in 4Q07, compared to a net loss of $25.6 million in 3Q07, mainly from the DRAM business.
- Fully diluted EPS was ($0.0570) per ADS.
Over a conference call, Dr. Richard Chang, Chief Executive Officer of SMIC, spoke with analysts about the quarterly results. "SMIC has continued to grow its revenue in the fourth quarter of 2007 on a year-on-year and a quarter-on-quarter basis," he said. "Operationally, our capacity at the end of the fourth quarter of 2007 has increased to 185,250 8-inch-equivalent wafers per month, with a high utilization rate of 94%. For 2007, our wafer shipments and sales increased by 14.6% and 5.8%, respectively, over 2006.
"As part of our plan to mitigate the continuing DRAM pricing erosion, we reduced our DRAM foundry services in the fourth quarter. We have successfully reduced our DRAM shipments by about 22% since 1Q07, excluding a single large shipment in 4Q07 to clear inventory of discontinued DRAM product lines. Confronted with a more difficult DRAM market in 4Q07 than in the previous quarter, we still managed to reduce our net loss in the fourth quarter. We expect DRAM revenue as a portion of total revenue to decrease to below 20% in the first quarter of 2008, with further reduction throughout the remainder of the year.
"SMIC experienced solid growth in its non-DRAM business. Revenue from non-DRAM business increased by 13.5% to $1,121 million in 2007, compared to $988 million in 2006. Gross profit from non-DRAM business saw a 104% year-on-year increase in 2007. As more of our logic customersmigrated to more advanced technology process nodes, our logic sales from 0.13 micron and 90-nanometer technology nodes also significantly increased by 42% over 2006.
"As the overall semiconductor market continues to expand rapidly in China, SMIC has captured this significant growth trend, demonstrated by a 56% growth in our China sales in 2007. We are pleased to see continuous progress from our customers in China and remain committed to further growth and expansion within the China market.
"In 2007, we saw strong foundry demand for handset ICs, power management ICs, WLAN, and consumer applications such as STB, DTV and MP3/MPEG4, indicative of demand in the industry at large. We also enjoyed the addition of 77 new customers worldwide in 2007, a large number of which are PRC-based, representing a 23.3% increase in our customer base.
"To complement our ongoing in-house research and development, and to strengthen our capabilities in serving customers, we are pleased to announce that we have entered into a licensing agreement with IBM, in which IBM will license its 45-nanometer bulk CMOS technology to SMIC. This agreement will allow SMIC to accelerate its technology advancement in logic process technology and help provide optimal solutions for customers at the 12-inch facilities. With the roadmap extended to 45 nm technologies, we observed the trend of more customers seeking our foundry services in the 90 nm and 65 nm technology nodes as well.
"Our capital expenditure in the fourth quarter increased to $260 million, due in part to investment in the 45-nanometer technology project. We expect our CAPEX to be around $700 million in 2008 as we continue to invest in the development of advanced technology nodes and continue the planned conversion of DRAM capacity to logic in our Beijing fabrication facility.
"In terms of operations, we are pleased to announce that SMIC plans to start a new IC production project in Shenzhen. In connection with this project, SMIC will register an independent legal entity, the Semiconductor Manufacturing International (Shenzhen) Corporation Ltd., which will set up an IC technology research and development center, an 8-inch wafer production line and a 12-inch fab. The 12-inch fab will introduce advanced process technology licensed from IBM pursuant to the licensing agreement. With the support of the Shenzhen municipal government in financing, incentive policies and ways of operations, we expect this project to break ground in the first half of 2008.
"We believe that as we continue to execute our business plans and reach technological milestones, we are laying a solid foundation for long-term growth and development and serving the interests of our shareholders."
The financial statement amounts in this report are determined in accordance with US GAAP.
SMIC Q4 earnings release
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) manufacturing service at 0.35um to 90nm 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, 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 under construction in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. For more information, please visit http://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 concerning our expectation for first quarter 2008 revenue, our expectation that DRAM revenue as a percentage of overall revenue will decrease in 2008, expected timing for beginning commercial production for our 65nm technology, SMIC's ability to grow and improve profitability in 2008, and statement under "Capex Summary" and "First Quarter 2008 Guidance," are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words "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 are necessarily estimates reflecting the best judgment of SMIC's senior management and 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 cyclicality and market conditions in the semiconductor industry, intense competition, timely wafer acceptance by SMIC's customers, timely introduction of new technologies, SMIC's ability to ramp new products into volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, orders or judgments from pending litigation, availability of manufacturing capacity 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, as amended, filed with the SEC on June 29, 2007, especially in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections, and such other documents that SMIC may file with the SEC or SEHK from time to time, including 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 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.
