April 28, 2006 – China’s flagship foundry Semiconductor Manufacturing International Corp (SMIC) said it cut its net losses nearly in half to $8.7 million in 1Q06 from the previous quarter, on 5% higher revenues of $351.1 million.

Capacity and wafer shipments each slightly increased by about 3% during the quarter. Most of the 3% quarter-on-quarter ramp in capacity came from SMIC’s Fab 4 300mm facility, which added about 10% capacity to 30,220 wafers/month.

Manufacturing wafers with ?0.13-micron process technologies (logic, DRAM, and copper interconnect) accounted for nearly 47% of revenues in 1Q06, compared with 43% in 4Q05, and 29% a year ago. Logic-only revenues for ?0.13-micron processes increased to 13.3% from 10.9% in the prior quarter and 5.4% in 1Q05. Nearly three-quarters (72.2%) of the company’s logic processes are for >0.18-micron processes, but that’s down from ~80% in the prior quarter, and 92% a year ago.

The foundry said it successfully taped out a 3Gbit NAND flash product during 1Q, and plans to deliver samples in June and start commercial production by 4Q06. Richard Chang, president and CEO, noted the company also is on track to start solar power module production in the next quarter.

SMIC projects revenue growth to slow slightly to 2%-5% in 2Q06, with roughly flat gross margins and operating expenses, and capital expenditures doubling from 1Q06 to approximately $400-$450 million. The company currently plans total capital expenditures in 2006 will be approximately $1.1 billion, but left the door open for that number to be “adjusted based on market conditions.”