October 31, 2006 – Chinese flagship foundry Semiconductor Manufacturing International Corp. (SMIC) posted a net loss of $35.1 million in 3Q06 on 2.1% higher sales of $368.9 million, after posting a $2.2 million in the previous quarter.

During the quarter SMIC’s 300mm Beijing started mass production of its first 90nm logic product, with a 90nmn DRAM device for Qimonda slated for 4Q, and a push into 65nm “expected to bear fruit” in 2H07.

Company CEO Richard Chang noted that high customer inventories are expected to carry over into 4Q, but “this inventory situation is improving and depending on the holiday sell-through, it may continue to improve.”

For 4Q, SMIC projects a slight 1%-2% increase in sales, with gross margins improving from 8% in 3Q to 9%-11%. Capital expenditures are expected to double to $300-$320 million, from the $157.4 million spent in 3Q06. Total capex for 2006 remains as previously announced, at $1.0 billion.