SMIC Reports 2019 Third Quarter Results

All currency figures stated in this report are in US Dollars unless stated otherwise.

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS").

SHANGHAI, Nov. 12, 2019 /PRNewswire/ -- Semiconductor Manufacturing International Corporation (SEHK: 981; OTCQX: SMICY) ("SMIC", the "Company" or "our"), one of the leading semiconductor foundries in the world, today announced its consolidated results of operations for the three months ended September 30, 2019.

2019 third Quarter Highlights

• Revenue was $816.5 million in 3Q19, an increase of 3.2% QoQ from $790.9 million in 2Q19, compared to $850.7 million in 3Q18. Excluding the contribution from the Avezzano 200mm fab, revenue was $802.8 million in 3Q19, an increase of 6.1% QoQ from $756.6 million in 2Q19, compared to $799.6 million in 3Q18.
• Gross profit was $169.8 million in 3Q19, an increase of 12.3% QoQ from $151.2 million in 2Q19, compared to $174.5 million in 3Q18. Excluding the contribution from the Avezzano 200mm fab, gross profit was $169.3 million in 3Q19, an increase of 7.8% QoQ from $157.1 million in 2Q19, compared to $170.0 million in 3Q18.
• Gross margin was 20.8% in 3Q19, compared to 19.1% in 2Q19, 20.5% in 3Q18. Excluding the contribution from the Avezzano 200mm fab, gross margin was 21.1% in 3Q19, compared to 20.8% in 2Q19, 21.3% in 3Q18.

Fourth Quarter 2019 Guidance: 

The following statements are forward looking statements based on current expectations and involved risks and uncertainties, some of which are set forth under "Forward-Looking Statements" below. The Company expects:

• Revenue to increase by 2% to 4% QoQ and to increase by 4% to 6% QoQ (excluding the contribution from the Avezzano 200mm fab).
• Gross margin to range from 23% to 25%.
• Non-IFRS operating expenses, excluding the effect of employee bonus accrual, government funding, impairment loss of tangible and intangible assets, gain or loss on the disposal of machinery and equipment, and gain from the disposal of living quarters, to range from $271 million to $277 million.
• Non-controlling interests of our majority-owned subsidiaries to range from positive $17 million to positive $19 million (losses to be borne by non-controlling interests).

Dr. Zhao Haijun and Dr. Liang Mong Song, SMIC's Co-Chief Executive Officers commented, "Over the past two years, we have not only narrowed the advanced technology gap, but also expanded comprehensive mature node technology platforms. We have confidence that with the wave of 5G applications, we will enter a new stage of development.

The Company's third quarter revenue exceeded guidance, as customer inventory digested, utilization rate increased, and advanced mask revenue rose. China-region customer demand was strong, contributing 60.5% to revenue in Q3 2019, a sequential increase of 10%. Consumer application revenue grew 16% quarter over quarter, with Internet of Things and smart home driving demand. We expect revenue in the fourth quarter will continue to grow.

FinFET technology development continues to push forward: the first generation of FinFET has already successfully begun mass production and will begin to contribute revenue in the fourth quarter; meanwhile, the development of second generation of FinFET is steady, and customer engagement is smooth. We believe that SMIC will benefit from the extensive business opportunities brought by the upcoming 5G product migration, and we will exit this period of transition and re-enter growth."

To see the complete results including financial tables, please click here: 

http://www.smics.com/uploads/5dca7a67/2019 Q3 Earnings Release_ENG.pdf

Conference Call / Webcast Announcement

Date: November 13, 2019

Time: 8:30 a.m. Beijing time

Dial-in numbers:

The call will be webcast live with audio at: 

http://www.smics.com/en/site/company_activity or https://edge.media-server.com/mmc/p/nz3ssas7.  

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"; SEHK: 981; OTCQX: SMICY), one of the leading foundries in the world, is Mainland China's most advanced and largest foundry, broadest in technology coverage, and most comprehensive in semiconductor manufacturing services. SMIC provides integrated circuit (IC) foundry and technology services on process nodes from 0.35 micron to 14 nanometer. Headquartered in Shanghai, China, SMIC has an international manufacturing and service base. In China, SMIC has a 300mm wafer fabrication facility (fab), a 200mm fab and a majority-owned joint-venture 300mm fab for advanced nodes (under construction) in Shanghai; a 300mm fab and a majority-owned 300mm fab for advanced nodes in Beijing; 200mm fabs in Tianjin and Shenzhen; and a majority-owned joint-venture 300mm bumping facility in Jiangyin. SMIC also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan, China, and a representative office in Hong Kong, China.

For more information, please visit www.smics.com.

Forward-Looking Statements

This press release contains, in addition to historical information, forward-looking statements. These forward-looking statements are based on SMIC's current assumptions, expectations, beliefs, plans, objectives, and projections about future events or performance. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project," "target, "going forward", "continue", "ought to", "may", "seek", "should", "plan", "could", "vision", "goals", "aim", "aspire", "objective", "schedules", "outlook" and similar expressions to identify forward looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessary estimates reflecting 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 in the semiconductor industry, SMIC's reliance on a small number of customers, 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, financial stability in end markets, orders or judgments from pending litigation, intensive intellectual property litigation in the semiconductor industry, general economic conditions and fluctuations in currency exchange rates.

In addition to the information contained in this press release, you should also consider the information contained in our other filings with The Hong Kong Stock Exchange Limited ("SEHK") from time to time. Other unknown or unpredictable factors also could have material adverse effects on our 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 applicable laws, SMIC undertakes no obligation and does not intend to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events after the date on which such statement is made or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or otherwise.

About Non-International Financial Reporting Standards ("non-IFRS") Financial Measures

To supplement SMIC's consolidated financial results presented in accordance with IFRS, SMIC uses in this press release non-IFRS measures of operating results that are adjusted to exclude finance cost, depreciation and amortization, income tax benefits and expenses, the effect of employee bonus accrual, government funding, impairment loss of tangible and intangible assets, gain or loss on the disposal of machinery and equipment and gain from the disposal of living quarters. This earnings release also includes fourth quarter 2019 guidance for non-IFRS operating expenses. The presentation of non-IFRS 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, EBITDA margin and non-IFRS operating expenses which consist of total operating expenses as adjusted to exclude the effect of employee bonus accrual, government funding, impairment loss of tangible and intangible assets, gain or loss on the disposal of machinery and equipment and gain from the disposal of living quarters. These non-IFRS 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-IFRS financial measures may be different from similarly-titled non-IFRS financial measures used by other companies.

SMIC believes that use of these non-IFRS financial measures facilitates investors' and management's comparisons to SMIC's historical performance. The Group's management regularly uses these non-IFRS 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-IFRS financial measure to its most directly comparable IFRS financial measure. A reconciliation of non-IFRS guidance measures to corresponding IFRS measures is not available on a forward-looking basis because the effect of these adjustment items excluded for the purpose of non-IFRS operating expenses guidance are subject to some unpredictable conditions that cannot be estimated with reasonable certainty.

SOURCE Semiconductor Manufacturing International Corporation