SMIC Reports 2007 Second Quarter Results

-- All currency figures stated in this report are in US Dollars unless stated otherwise. -- The financial statement amounts in this report are determined in accordance with US GAAP.

SHANGHAI, China, July 26 /Xinhua-PRNewswire-FirstCall/ -- Semiconductor Manufacturing International Corporation (''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, 2007.

Second Quarter 2007 Highlights: -- Revenue increased by 3.7% over 2Q06 to $374.8 million, but decreased by 3.5% from $388.3 million in 1Q07. -- Gross margins were 10.3% in 2Q07 compared to 9.5% in 1Q07. -- Net loss of $2.1 million in 2Q07, compared to a net income of $8.8 million in 1Q07. -- Fully diluted EPS was ($0.0056) per ADS. -- Contribution from 90nm production increased to 22.0% of wafer revenue in 2Q07 compared to 14.4% in 1Q07.

Commenting on the results, Dr. Richard Chang, Chief Executive Officer of SMIC stated, ''SMIC continued to expand its foundry business in the second quarter of 2007. The Company posted increasing revenues year-on-year, but declining revenues quarter-on-quarter due to difficult pricing pressures in the DRAM market.

Looking at the recent market trends, mobile phone applications continue to grow in demand as well as in variety. We also see strong foundry demand for power management ICs and consumer applications such as personal multimedia players and MP3 and MPEG4 applications.

In terms of technology, we saw an increase in revenues at 90-nanometer to 22% of wafer revenue, up from 14% in the first quarter of 2007, and up from less than 1% in the second quarter of 2006. For the third quarter of 2007, we expect total revenue to increase 2% to 5% while revenue contribution from the 90-nanometer node will continue to increase.

We are currently developing an 8Gb NAND flash product and the 2Gb NAND flash product is expected to reach the market in the second half of this year. This milestone demonstrates SMIC's technological and manufacturing capabilities and strategically positions SMIC as one of the foundry service providers in the NAND flash market.

Our technology roadmap is on track and we are making good progress in the development of the 65-nanometer technology. We expect to enter pilot production for our 65-nanometer logic technology by the end of this year. In addition to the development of the 65-nanometer logic technology, we expect our DRAM product will start to convert to below 90-nanometer by the end of this year.

We remain committed to improving profitability, accelerating our growth and strategically identifying opportunities to enhance shareholder value in our company. We believe the continued prudent development of advanced technology nodes for leading customers will position SMIC for continual growth and improved profitability in the second half of 2007 and the year 2008.''

Conference Call / Webcast Announcement Date: July 27, 2007 Time: 7:30 a.m. Shanghai time Dial-in numbers and pass code: U.S. 1-617-597-5342 or HK 852-3002-1672 (Pass code: SMIC).

A live webcast of the 2007 second quarter announcement will be available at http://www.smics.com/ under the ''Investor Relations'' section. 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) manufacturing service at 0.35 m to 90nm and finer line technologies. Headquartered in Shanghai, SMIC operates three 200mm wafer fabrication facilities in its Shanghai mega-fab, a 200mm wafer fab in Tianjin, and a 300mm mega-fab in Beijing, the first of its kind in Mainland China. SMIC also operates an in-house assembly and testing facility in Chengdu. SMIC has customer service and marketing offices in the U.S., Italy, and Japan as well as a representative office in Hong Kong. In addition, SMIC manages and operates a 200mm wafer fab owned by Chengdu Cension Semiconductor Manufacturing Corporation and one 300mm wafer fab owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. F or additional 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 third quarter 2007 revenue and continued increase in revenue contribution from 90nm sales, expected timing for products or products in development to reach market or be in commercial production, expected timing for entering pilot production for our 65nm technology, expected timing for our DRAM product to start to convert to below 90nm, SMIC's ability to grow and improve profitability in the second half of 2007 and 2008, and statements under ''Capex Summary'' and ''Third Quarter 2007 Guidance'', 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 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, 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 its registration statement on Form A-1 as filed with the Stock Exchange of Hong Kong (SEHK) on March 8, 2004, 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.

Material Litigation Recent TSMC Legal Developments:

On August 25, 2006, TSMC filed a lawsuit against the Company and certain subsidiaries (SMIC (Shanghai), SMIC (Beijing) and SMIC (Americas)) in the Superior Court of the State of California, County of Alameda for alleged breach of the Settlement Agreement, alleged breach of promissory notes and alleged trade secret misappropriation by the Company. TSMC seeks, among other things, damages, injunctive relief, attorneys' fees, and the acceleration of the remaining payments outstanding under the Settlement Agreement.

In the present litigation, TSMC alleges that the Company has incorporated TSMC trade secrets in the manufacture of the Company's 0.13-micron or smaller process products. TSMC further alleges that as a result of this claimed breach, TSMC's patent license is terminated and the covenant not to sue is no longer in effect with respect to the Company's larger process products.

The Company has vigorously denied all allegations of misappropriation. Moreover, TSMC has not yet proven, nor produced evidence of, any trade secret misappropriation by the Company. At present, the claims rest as unproven allegations, denied by the Company. The Court has made no finding that TSMC's claims are valid, nor has it set a trial date.

On September 13, 2006, the Company announced that in addition to filing a response strongly denying the allegations of TSMC in the United States lawsuit, it filed on September 12, 2006, a cross-complaint against TSMC seeking, among other things, damages for TSMC's breach of contract and breach of implied covenant of good faith and fair dealing.

On November 16, 2006, the High Court in Beijing, the People's Republic of China, accepted the filing of a complaint by the Company and its wholly-owned subsidiaries, SMIC (Shanghai) and SMIC (Beijing), regarding the unfair competition arising from the breach of bona fide (i.e. integrity, good faith) principle and commercial defamation by TSMC (''PRC Complaint''). In the PRC Complaint, the Company is seeking, among other things, an injunction to stop TSMC's infringing acts, public apology from TSMC to the Company and compensation from TSMC to the Company, including profits gained by TSMC from their infringing acts.

In March 2007, the California Court denied TSMC's motion to enjoin the PRC action. TSMC has appealed this ruling to the California Court of Appeal.

Under the provisions of SFAS 144, the Company is required to make a determination as to whether or not this pending litigation represents an event that requires a further analysis of whether the patent license portfolio has been impaired. We believe that the lawsuit is at a very early stage and we are still evaluating whether or not the litigation represents such an event. The Company expects further information to become available to us, which will aid us in making a determination. The outcome of any impairment analysis performed under SFAS 144 might result in a material impact to our financial position and results of operations.

Summary of Second Quarter 2007 Operating Results Amounts in US$ thousands, except for EPS and operating data 2Q07 1Q07 QoQ 2Q06(3) YoY Revenue 374,829 388,284 -3.5 % 361,446 3.7 % Cost of sales 336,339 351,345 -4.3 % 318,116 5.7 % Gross profit 38,490 36,940 4.2 % 43,330 -11.2 % Operating expenses 47,113 21,722 116.9 % 50,624 -6.9 % Income (Loss) from operations (8,623) 15,218 -- (7,293) 18.2 % Other income (expenses), net 6,085 (12,187) -- (10,007) -- Income tax credit 1,621 5,964 -72.8 % 18,892 -91.4 % Net income (loss) after income taxes (917) 8,995 -- 1,591 -- Minority interest (137) 977 -- 768 -- Share of loss of affiliate company (1,001) (1,212) -17.4 % (1,002) -0.1 % Income (loss) attributable to holders of ordinary shares (2,054) 8,760 -- 1,356 -- Gross margin 10.3 % 9.5 % 12.0 % Operating margin -2.3 % 3.9 % -2.0 % Net income (loss) per ordinary share - basic(1) (0.0001) 0.0005 0.0001 Net income (loss) per ADS - basic (0.0056) 0.0237 0.0001 Net income (loss) per ordinary share - diluted(1) (0.0001) 0.0005 0.0001 Net income (loss) per ADS - diluted (0.0056) 0.0234 0.0001 Wafers shipped (in 8'' wafers)(2) 443,445 450,592 -1.6 % 388,498 14.1 % Capacity utilization 88.9 % 86.2 % 93.5 % Note: (1) Based on weighted average ordinary shares of 18,477 million (basic) and18,477 million (diluted) in 2Q07, 18,451 million (basic) and 18,705 million (diluted) in 1Q07, and 18,303 million (basic) and 18,729 million(diluted) in 2Q06 (2) Including copper interconnects (3) As restated -- Revenue decreased to $374.8 million in 2Q07, down 3.5% QoQ from $388.3 million in 1Q07 and up 3.7% YoY from $361.4 million in 2Q06. The decrease in revenue is primarily due to the downturn in the DRAM market. -- Cost of sales decreased to $336.3 million in 2Q07, down 4.3% QoQ from $351.3 million in 1Q07, primarily due to higher utilization and lower depreciation expenses. -- Gross profit increased to $38.5 million in 2Q07, up 4.2% QoQ from $36.9 million in 1Q07 and down 11.2% YoY from $43.3 million in 2Q06. -- Gross margins increased to 10.3% in 2Q07 from 9.5% in 1Q07 primarily due to higher utilization and lower depreciation expenses. -- Total operating expenses increased to $47.1 million in 2Q07 from $21.7 million, an increase of 116.9% QoQ, primarily due to income from sale of plant and equipment that was recorded in 1Q07. Excluding the sale of plant of equipment, total operating expenses fell by 1.1% in 2Q07 as compared to 1Q07. -- R&D expenses increased to $23.2 million in 2Q07, up 6.7% from $21.7 million due to the R&D cost relating to the new 12-inch project in Shanghai. -- G&A expenses decreased to $14.7 million in 2Q07 from $17.1 million in 1Q07 primarily due to foreign exchange gain arising from operating activities. -- Selling & marketing expenses increased to $4.2 million in 2Q07, up 8.8% QoQ from $3.9 million in 1Q07. Analysis of Revenue Sales Analysis By Application 2Q07 1Q07 2Q06 Computer 25.2 % 33.0 % 30.6 % Communications 40.7 % 41.3 % 46.2 % Consumer 24.3 % 18.3 % 18.6 % Others 9.8 % 7.4 % 4.6 % By Service Type 2Q07 1Q07 2Q06 Logic(3) 61.8 % 58.2 % 66.6 % DRAM 28.9 % 34.7 % 28.8 % Management services 3.2 % 3.2 % 0.2 % Mask making, testing, others 6.1 % 3.9 % 4.4 % By Customer Type 2Q07 1Q07 2Q06 Fabless semiconductor companies 43.8 % 47.1 % 49.8 % Integrated device manufacturers (IDM) 42.3 % 43.2 % 41.9 % System companies and others 13.9 % 9.7 % 8.3 % By Geography 2Q07 1Q07 2Q06 North America 39.6 % 40.6 % 46.7 % Asia Pacific (ex. Japan) 29.1 % 24.2 % 20.9 % Japan 8.9 % 9.9 % 4.9 % Europe 22.4 % 25.2 % 27.5 % Wafer Revenue Analysis By Technology (logic, DRAM & copper interconnect only) 2Q07 1Q07 2Q06 0.09 um 22.0 % 14.4 % 0.9 % 0.13 um 33.0 % 38.1 % 46.6 % 0.15 um 1.2 % 2.9 % 4.7 % 0.18 um 30.8 % 34.1 % 38.0 % 0.25 um 0.7 % 0.7 % 2.0 % 0.35 um 12.3 % 9.8 % 7.8 % By Technology (Logic Only)(1) 2Q07 1Q07 2Q06 0.09 um 15.3 % 10.0 % 0.2 % 0.13 um(2) 19.0 % 17.6 % 22.3 % 0.15 um 1.9 % 4.7 % 7.2 % 0.18 um 43.6 % 50.1 % 55.8 % 0.25 um 0.9 % 1.0 % 2.5 % 0.35 um 19.3 % 16.6 % 12.0 % Note: (1) Excluding 0.13 um copper interconnects (2) Represents revenues generated from manufacturing full flow wafers (3) Including 0.13 um copper interconnects Capacity Fab / (Wafer Size) 2Q07* 1Q07* Shanghai Mega Fab (8")(1) 94,000 98,000 Beijing Mega Fab (12")(2) 54,000 57,150 Tianjin Fab (8") 21,000 22,000 Total monthly wafer fabrication capacity 169,000 177,150 Note: * Wafers per month at the end of the period in 8'' wafers (1) Shanghai Mega Fab is comprised of Fab 1, Fab 2, and Fab 3 (2) Beijing Mega Fab is comprised of Fab 4, Fab 5, and Fab 6 -- Total capacity decreased to 169,000 8-inch wafer equivalent per month at the end of 2Q07 due to the change in product mix. Shipment and Utilization 8'' equivalent wafers 2Q07 1Q07 2Q06 Wafer shipments including copper interconnects 443,445 450,592 388,498 Utilization rate(1) 88.9 % 86.2 % 93.5 % Note: (1) Capacity utilization based on total wafer out divided by estimated capacity -- Wafer shipments decreased to 443,445 units of 8-inch equivalent wafers in 2Q07 down 1.6% QoQ from 450,592 units of 8-inch equivalent wafers in 1Q07, and up 14.1% YoY from 388,498 8-inch equivalent wafers in 2Q06. Detailed Financial Analysis Gross Profit Analysis Amounts in US$ thousands 2Q07 1Q07 QoQ 2Q06 YoY Cost of sales 336,339 351,345 -4.3 % 318,116 5.7 % Depreciation 159,154 185,707 -14.3 % 188,663 -15.6 % Other manufacturing costs 168,408 157,279 7.1 % 120,552 39.7 % Deferred cost amortization 5,886 5,886 -- 5,886 -- Share-based compensation 2,891 2,473 16.9 % 3,015 -4.1 % Gross Profit 38,491 36,940 4.2 % 43,330 -11.2 % Gross Margin 10.3 % 9.5 % -- 12.0 % -- -- Cost of sales decreased to $336.3 million in 2Q07, down 4.3% QoQ from $351.3 million in 1Q07, primarily due to higher utilization and lower depreciation expenses. -- Gross profit increased to $38.5 million in 2Q07, up 4.2% QoQ from $36.9 million in 1Q07 and down 11.2% YoY from $43.3 million in 2Q06. -- Gross margins increased to 10.3% in 2Q07 from 9.5% in 1Q07 primarily due to higher utilization and lower depreciation expenses. Operating Expense Analysis Amounts in US$ thousands 2Q07 1Q07 QoQ 2Q06 YoY Total operating expenses 47,113 21,722 116.9 % 50,624 -6.9 % Research and development 23,194 21,733 6.7 % 24,345 -4.7 % General and administrative 14,746 17,087 -13.7 % 16,837 -12.4 % Selling and marketing 4,234 3,893 8.8 % 3,918 8.1 % Amortization of intangible assets 6,213 6,229 -0.3 % 6,040 2.9 % Income from disposal of properties (1,274) (27,220) -95.3 % (516) 146.9 % -- Total operating expenses increased to $47.1 million in 2Q07 from $21.7 million, an increase of 116.9% QoQ, primarily due to income from sale of plant and equipment that was recorded in 1Q07. Excluding the sale of plant and equipment, total operating expenses decreased 1.1% QoQ. -- R&D expenses increased to $23.2 million in 2Q07, up 6.7% from $21.7 million due to the R&D cost relating to the new 12-inch project in Shanghai. -- G&A expenses decreased to $14.7 million in 2Q07 from $17.1 million in 1Q07 primarily due to foreign exchange gain arising from operating activities. -- Selling & marketing expenses increased to $4.2 million in 2Q07, up 8.8% QoQ from $3.9 million in 1Q07. Other Income (Expenses) Amounts in US$ thousands 2Q07 1Q07 QoQ 2Q06 YoY Other income (expenses) 6,085 (12,187) -- (10,007) -- Interest income 2,679 1,972 35.9 % 4,039 -33.7 % Interest expense 3,343 (15,003) -- (12,214) -- Other, net 63 844 -92.5 % (1,832) -- -- Other non-operating gain of $6.1 million in 2Q07 as compared to a loss of $12.2 million in 1Q07, primarily due to government interest subsidies received in conjunction with the ramp-up of the 12-inch fabs. Liquidity Amounts in US$ thousands 2Q07 1Q07 Cash and cash equivalents 372,449 341,704 Short term investments 73,080 79,830 Accounts receivable 300,379 288,027 Inventory 237,966 237,619 Others 125,413 128,080 Total current assets 1,109,287 1,075,260 Accounts payable 483,925 237,135 Short-term borrowings 108,000 43,000 Current portion of long-term debt 290,533 170,839 Others 124,086 138,758 Total current liabilities 1,006,544 589,732 Cash Ratio 0.4x 0.6x Quick Ratio 0.7x 1.2x Current Ratio 1.1x 1.8x -- Accounts payable increase primarily due to advanced equipment purchases for 12-inch fabs. Capital Structure Amounts in US$ thousands 2Q07 1Q07 Cash and cash equivalents 372,449 341,704 Short-term investment 73,080 79,830 Current portion of promissory note 29,242 29,493 Promissory note 64,443 78,267 Short-term borrowings 108,000 43,000 Current portion of long-term debt 290,533 170,839 Long-term debt 574,564 719,697 Total debt 973,097 933,536 Shareholders' equity 3,027,635 3,022,697 Total debt to equity ratio 32.1 % 30.9 % Cash Flow Amounts in US$ thousands 2Q07 1Q07 Net cash provided by operating activities 151,803 180,684 Net cash used in investing activities (145,605) (176,288) Net cash provided by/used in financing 24,593 (26,331) activities Net change in cash 30,745 (21,916) Capex Summary -- Capital expenditures for 2Q07 were $370 million. -- Total planned capital expenditures for 2007 will be approximately $720 million and will be adjusted based on market conditions. Third Quarter 2007 Guidance

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

-- Revenues expected to increase 2% to 5% from the second quarter. -- Depreciation and amortization expected to be approximately $190 million to $195 million. -- Capital expenditures expected to be approximately $150 million to $200 million. -- Operating expense as a percentage of sales expected to be in the mid-teens. Recent Highlights and Announcements -- Saifun Acquires 90nm Process Know-How from SMIC (2007-07-02) -- Annual General Meeting Held on 23rd May, 2007 Poll Results (2007-05-25) -- SMIC Participates in Signing Ceremony between U.S. and Chinese Companies and U.S. - China Hi-Tech Cooperation Forum (2007-05-10) -- Notice of Annual General Meeting (2007-04-30) -- SMIC Reports 2007 First Quarter Results (2007-04-27)

Please visit SMIC's website at http://www.smics.com/website/enVersion/Press_Center/pressRelease.jsp for further details regarding the recent announcements.

Taylor Rafferty Associates, Inc. Investor Relations and Financial Communications Hong Kong Ruby Yim Managing Director ruby.yim@taylor-rafferty.com David Dambro Director david.dambro@taylor-rafferty.com +852 3196 3712 New York Dana Johnston Director dana.johnston@taylor-rafferty.com +212 889 4350 SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION CONSOLIDATED BALANCE SHEET (In US dollars) As of the end of June 30, 2007 March 31, 2007 (unaudited) (unaudited) ASSETS Current assets: Cash and cash equivalents $372,449,095 $341,703,889 Short term investments 73,079,577 79,829,802 Accounts receivable, net of allowances of $4,688,098 and $3,924,775 at June 30, 2007 and at March 31, 2007, respectively 300,379,234 288,026,530 Inventories 237,966,018 237,619,469 Prepaid expense and other current assets 13,059,060 17,161,431 Receivable for sale of plant and equipment and other fixed assets 109,907,931 110,136,499 Assets held for sale 2,445,806 781,985 Total current assets 1,109,286,721 1,075,259,605 Land use rights, net 47,139,822 38,005,628 Plant and equipment, net 3,375,543,336 3,149,255,434 Acquired intangible assets, net 62,413,712 65,866,883 Deferred cost 82,410,154 88,296,594 Equity investment 11,407,056 12,408,090 Other long-term prepayments 3,551,063 3,748,557 Deferred tax assets 33,036,474 31,356,917 TOTAL ASSETS $4,724,788,338 $4,464,197,708 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $483,925,496 $237,134,879 Accrued expenses and other current liabilities 94,683,683 109,059,238 Short-term borrowings 108,000,000 43,000,000 Current portion of promissory note 29,242,001 29,492,873 Current portion of long-term debt 290,533,471 170,839,010 Income tax payable 159,421 206,071 Total current liabilities 1,006,544,072 589,732,071 Long-term liabilities: Promissory note 64,442,787 78,267,417 Long-term debt 574,563,677 719,697,029 Long-term payables relating to license agreements 14,458,131 15,733,116 Deferred tax liabilities 184,367 246,695 Total long-term liabilities 653,648,962 813,944,257 Total liabilities $1,660,193,034 $1,403,676,328 Minority interest 36,960,657 37,824,139 Stockholders' equity: Ordinary shares,$0.0004 par value, 50,000,000,000 shares authorized, shares issued and outstanding 18,493,184,050 and 18,470,356,166 respectively 7,397,274 7,388,146 Warrants 32,387 32,387 Additional paid-in capital 3,302,244,424 3,295,215,798 Accumulated other comprehensive income 64,874 111,027 Accumulated deficit (282,104,312) (280,050,117) Total stockholders' equity 3,027,634,647 3,022,697,241 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,724,788,338 $4,464,197,708 SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In US dollars) For the three months ended June 30, 2007 March 31, 2007 (unaudited) (unaudited) Sales 374,829,258 388,284,436 Cost of sales 336,338,574 351,344,670 Gross profit 38,490,684 36,939,766 Operating expenses: Research and development 23,193,707 21,733,055 General and administrative 14,746,510 17,087,309 Selling and marketing 4,234,048 3,893,369 Amortization of acquired intangible assets 6,213,171 6,228,616 Income from sale of plant and equipment and other fixed assets (1,274,018) (27,220,665) Total operating expenses 47,113,418 21,721,684 Income (loss) from operations (8,622,734) 15,218,082 Other income (expenses): Interest income 2,678,460 1,971,672 Interest expense 3,343,327 (15,003,379) Foreign currency exchange gain (loss) (1,514,169) 428,279 Other income, net 1,577,151 416,621 Total other income (expenses), net 6,084,769 (12,186,807) Net income (loss) before income tax (2,537,965) 3,031,275 Income tax credit 1,621,322 5,964,124 Minority interest (136,518) 976,527 Loss from equity investment (1,001,034) (1,211,553) Net income (loss) attributable to holders of ordinary shares $(2,054,195) $8,760,373 Net income (loss) per share, basic (0.0001) 0.0005 Net income (loss) per ADS, basic (0.0056) 0.0237 Net income (loss) per share, diluted (0.0001) 0.0005 Net income (loss) per ADS, diluted (0.0056) 0.0234 Ordinary shares used in calculating basic income (loss) per ordinary share (in millions) 18,477 18,451 Ordinary shares used in calculating diluted income (loss) per ordinary share (in millions) 18,477 18,706 *Share-based compensation related to each account balance as follows: Cost of sales 2,890,848 2,472,770 Research and development 1,274,430 953,159 General and administrative 1,291,079 1,105,667 Selling and marketing 549,542 465,250 SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (In US dollars) For the three months ended June 30, 2007 March 31, 2007 (Unaudited) (Unaudited) Operating activities Net income (loss) (2,054,195) 8,760,374 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Minority interest 136,518 (976,527) Gain on disposal of plant and equipment (2,469,694) (27,220,665) Depreciation and amortization 175,187,932 173,370,422 Amortization of acquired intangible assets 6,213,171 6,228,615 Share-based compensation 6,005,899 4,996,846 Non cash interest expense on promissory notes 1,195,552 1,207,020 Loss from equity investment 1,001,034 1,211,553 Changes in operating assets and liabilities: Accounts receivable, net (12,352,703) (35,841,556) Inventories (346,549) 37,559,483 Prepaid expense and other current assets (52,120) 8,328,367 Accounts payable (4,132,746) (6,657,095) Accrued expenses and other current liabilities (14,740,560) 18,951,309 Other long term liabilities -- (3,333,333) Income tax paybable (46,650) 133,654 Deferred tax assets (1,679,557) (6,070,017) Deferred tax liabilities (62,328) 35,782 Net cash provided by operating activities 151,803,004 180,684,232 Investing activities: Purchase of plant and equipment (159,994,428) (157,728,647) Proceeds from disposal of plant and equipment 9,121,739 1,823,994 Proceeds received from sale of assets held for sale 2,501,868 3,963,708 Purchases of aquired intangible assets (3,984,011) (2,468,200) Purchase of short-term investments (15,006,035) (48,838,238) Sale of short-term investments 21,756,260 26,959,039 Net cash used in investing activities (145,604,607) (176,288,344) Financing activities: Proceeds from short-term borrowing 105,000,000 2,000,000 Proceeds from long-term debt -- 168,165 Repayment of promissory notes (15,000,000) -- Repayment of long-term debt (25,438,892) -- Repayment of short-term debt (40,000,000) (30,000,000) Proceeds from exercise of employee stock options 1,031,855 1,500,918 Repurchase of redeemable preference shares (1,000,000) -- Net cash provided by (used in) financing activities 24,592,963 (26,330,917) Effect of exchange rate changes (46,154) 19,187 NET DECREASE IN CASH AND CASH EQUIVALENTS 30,745,206 (21,915,842) CASH AND CASH EQUIVALENTS, beginning of period 341,703,889 363,619,731 CASH AND CASH EQUIVALENTS, end of period 372,449,095 341,703,889 For more information, please contact: Investor Contacts: Theresa Teng Tel: +86-21-5080-2000 x16278 Mobile: +86-136-4177-0892 Email: Theresa_Teng@smics.com Peter Yu Tel: +86-21-5080-2000 x11319 Mobile: +86-139-1894-0553 Email: Peter_Yu@smics.com Adam Weng Tel: +86-21-5080-2000 x16275 Mobile: +86-135-6431-0303 Email: Adam_Weng@smics.com