SHANGHAI, Feb. 8, 2018 /PRNewswire/ -- Semiconductor
Manufacturing International Corporation (NYSE: SMI; SEHK: 981)
("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 December 31, 2017.
Fourth Quarter 2017 Highlights
- Revenue was $787.2 million in
4Q17, an increase of 2.3% QoQ from
$769.7 million in 3Q17 and a decrease
of 3.4% YoY from $814.8 million in
4Q16.
- Gross profit was $148.5 million in
4Q17, compared to $177.3
million in 3Q17 and $246.0
million in 4Q16.
- Gross margin was 18.9% in 4Q17, compared to 23.0% in 3Q17
and 30.2% in 4Q16.
First Quarter 2018
Guidance:
The following statements are forward looking statements based on
current expectations and involved risks and uncertainties, some of
which are set forth under "Safe Harbor Statements" below. The
Company expects:
- Revenue to increase by 7% to 9% QoQ, including the forecast to
recognize the technology licensing revenue estimated at
$150 million.
- Gross margin to range from 25% to 27%.
- Non-GAAP operating expenses, excluding the effect of employee
bonus accrual, government funding, gain or loss on the disposal of
machinery and equipment and gain from the disposal of living
quarters, to range from $212 million
to $218 million.
- Non-controlling interests of our majority-owned subsidiaries to
range from positive $15 million to
positive $17 million (losses to be
borne by non-controlling interests).
Dr. Zhao HaiJun and Dr. Liang Mong
Song, SMIC's co-Chief Executive Officers commented, "Looking
back at 2017, we increased annual revenue 6.4% YoY, in line with
the foundry industry growth rate. We also successfully ramped up
our 28nm technology portfolio and have seen more than 10% revenue
contribution in the fourth quarter of 2017. Meanwhile, we have
continued to enrich our technology offerings to diversify our
revenue streams; for example, our auto and industrial revenue
doubled in 2017 compared to 2016.
SMIC is in transition to align to customers' fast technology
migration in today's dynamic foundry environment, and we have great
opportunities in front of us as the largest and most advanced
foundry in China. At the same
time, the overall industry dynamic has become more volatile with
increased competition and pricing pressure. However, we are
confident in our team's capability to utilize this time to prepare,
develop and recalibrate our technology, to create greater value for
the future."
Conference Call / Webcast Announcement
Date: February 9, 2018
Time: 8:30 a.m. Beijing time
Dial-in numbers and pass code:
China
|
+86
400-620-8038
|
(Pass code:
SMIC)
|
Hong Kong
|
+852
3018-6771
|
(Pass code:
SMIC)
|
Taiwan
|
+886
2-2650-7825
|
(Pass code:
SMIC)
|
United States, New
York
|
+1
845-675-0437
|
(Pass code:
SMIC)
|
The call will be webcast live with audio at
http://www.smics.com/eng/investors/ir_presentations.php or
https://edge.media-server.com/m6/p/hnx3rwog.
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. SMIC provides integrated
circuit (IC) foundry and technology services on process nodes from
0.35 micron to 28 nanometer. Headquartered in Shanghai, China, SMIC has an international
manufacturing and service base. In China, SMIC has a 300mm wafer fabrication
facility (fab) and a 200mm fab in Shanghai; a 300mm fab and a 200mm fab in
Shenzhen; a 300mm fab and a
majority-owned 300mm fab for advanced nodes in Beijing; a 200mm fab in Tianjin and a majority-owned joint-venture
300mm bumping facility in Jiangyin; additionally, in Italy SMIC has a majority-owned 200mm fab.
SMIC also has marketing and customer service offices in the U.S.,
Europe, Japan, and Taiwan, and a representative office in
Hong Kong.
For more information, please visit 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 under "First Quarter 2018 Guidance", "CapEx Summary" and
the statements contained in the quotes of our co-Chief Executive
Officers are based on SMIC's current assumptions, expectations and
projections about future events. SMIC uses words like "believe,"
"anticipate," "intend," "estimate," "expect," "project," "target"
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 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 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 SEC, including our annual report on Form 20-F
filed with the SEC on April 27, 2017,
especially in the "Risk Factors" section and such other documents
that we may file with the SEC or The Hong Kong Stock Exchange
Limited ("SEHK") from time to time, including current reports on
Form 6-K. 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 may be 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.
About Non-Generally Accepted Accounting Principles
("non-GAAP") Financial Measures
To supplement SMIC's consolidated financial results presented in
accordance with IFRS, SMIC uses in this press release non-GAAP
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,
gain or loss on the disposal of machinery and equipment and gain
from the disposal of living quarters. This earnings release also
includes first quarter 2018 guidance for non-GAAP operating
expenses. The presentation of non-GAAP 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-GAAP operating expenses which consist of total operating
expenses as adjusted to exclude the effect of employee bonus
accrual, government funding, gain or loss on the disposal of
machinery and equipment and gain from the disposal of living
quarters. These non-GAAP 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-GAAP financial measures may be different from similarly-titled
non-GAAP financial measures used by other companies.
SMIC believes that use of these non-GAAP financial measures
facilitates investors' and management's comparisons to SMIC's
historical performance. The Group's management regularly uses these
non-GAAP 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-GAAP financial measure to its most directly comparable
GAAP financial measure. A reconciliation of non-GAAP guidance
measures to corresponding GAAP measures is not available on a
forward-looking basis because the effect of these adjustment items
excluded for the purpose of non-GAAP operating expenses guidance
are subject to some unpredictable conditions that cannot be
estimated with reasonable certainty.
Contact:
Investor Relations
+86-21-3861-0000 ext. 12804
ir@smics.com
Summary of Fourth Quarter 2017
Operating Results
Amounts in US$ thousands, except for EPS and operating data
|
4Q17
|
|
3Q17
|
QoQ
|
4Q16
|
YoY
|
Revenue
|
787,174
|
|
769,723
|
2.3%
|
814,802
|
-3.4%
|
Cost of
sales
|
(638,678)
|
|
(592,426)
|
7.8%
|
(568,790)
|
12.3%
|
Gross
profit
|
148,496
|
|
177,297
|
-16.2%
|
246,012
|
-39.6%
|
Operating
expenses
|
(145,323)
|
|
(154,592)
|
-6.0%
|
(196,994)
|
-26.2%
|
Profit from
operations
|
3,173
|
|
22,705
|
-86.0%
|
49,018
|
-93.5%
|
Other income
(expense), net
|
(6,086)
|
|
7,290
|
-
|
473
|
-
|
(Loss) profit before
tax
|
(2,913)
|
|
29,995
|
-
|
49,491
|
-
|
Income tax
benefit
|
1,217
|
|
595
|
104.5%
|
8,547
|
-85.8%
|
(Loss)
profit for the period
|
(1,696)
|
|
30,590
|
-
|
58,038
|
-
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
Exchange differences
on translating foreign operations
|
8,458
|
|
5,686
|
48.8%
|
(11,250)
|
-
|
Change in value of
available-for-sale financial assets
|
(67)
|
|
(455)
|
-85.3%
|
617
|
-
|
Cash flow
hedges
|
(595)
|
|
5,620
|
-
|
(34,912)
|
-98.3%
|
Actuarial gains and
losses on defined benefit plans
|
(556)
|
|
32
|
-
|
1,438
|
-
|
Share of other
comprehensive income of joint ventures accounted for using equity
method(4)
|
11,755
|
|
5,891
|
99.5%
|
-
|
-
|
Total
comprehensive income for the period
|
17,299
|
|
47,364
|
-63.5%
|
13,931
|
24.2%
|
|
|
|
|
|
|
|
Profit (loss) for the
period attributable to:
|
|
|
|
|
|
|
SMIC
|
47,718
|
|
25,899
|
84.2%
|
104,008
|
-54.1%
|
Non-controlling
interests
|
(49,414)
|
|
4,691
|
-
|
(45,970)
|
7.5%
|
(Loss)
profit for the period
|
(1,696)
|
|
30,590
|
-
|
58,038
|
-
|
|
|
|
|
|
|
|
Gross
margin
|
18.9%
|
|
23.0%
|
|
30.2%
|
|
|
|
|
|
|
|
|
Earnings per ordinary
share(1)
Basic
|
$0.01
|
|
$0.01
|
|
$0.02
|
|
Diluted
|
$0.01
|
|
$0.01
|
|
$0.02
|
|
Earnings per
ADS(2)
Basic
|
$0.05
|
|
$0.03
|
|
$0.12
|
|
Diluted
|
$0.05
|
|
$0.03
|
|
$0.11
|
|
Wafers shipped (in 8"
equivalent wafers)
|
1,124,821
|
|
1,076,039
|
|
1,096,011
|
|
Capacity
utilization(3)
|
85.8%
|
|
83.9%
|
|
96.5%
|
|
Note:
(1) Based on weighted average ordinary
shares of 4,729million (basic) and 5,159
million (diluted) in 4Q17,
4,651million (basic) and 4,690 million
(diluted) in 3Q17, and 4,239 million (basic) and
5,055 million (diluted) in 4Q16. The basic
and diluted earnings per share for 4Q16 have been
adjusted to reflect the impact of the share consolidation, on the
basis that every ten ordinary shares of par value of $0.0004 each
consolidated into one consolidated share of par value of $0.004
each, which was accounted for as a reverse stock split effective on
December 7, 2016 ("Share Consolidation")
(2) Each ADS represents 5
ordinary shares.
(3) Based on total
equivalent wafers out divided by estimated total quarterly
capacity.
(4) The comparative figure of 3Q17 has
been revised to conform the current period's presentation. Such
revision reflected the increase of US$5.9 million in the "share of
other comprehensive income of joint ventures accounted for using
equity method" in the 3Q17 Condensed Consolidated Statements of
Profit or Loss and Other Comprehensive Income, and both the
"reserves" and "investment in joint ventures" in the Condensed
Consolidated Statements of Financial Position as of September 30,
2017.
|
|
- Revenue increased by 2.3% QoQ from $769.7 million in 3Q17 to $787.2 million in 4Q17 mainly due to an increase
of wafer shipment in 4Q17.
- Cost of sales was $638.7 million
in 4Q17, an increase of 7.8% QoQ from $592.4
million in 3Q17.
- Gross profit was $148.5 million
in 4Q17, a decrease of 16.2% QoQ from $177.3
million in 3Q17.
- Gross margin was 18.9% in 4Q17, as compared to 23.0% in 3Q17,
primarily due to a product-mix change in 4Q17.
- Operating expenses were $145.3
million in 4Q17, a decrease of 6.0% QoQ from $154.6 million in 3Q17, mainly due to the reasons
stated in Operating Expenses (Income) Analysis below.
- Other income (expense), net was $6.1
million loss in 4Q17, as compared to $7.3 million gain in 3Q17. The change was mainly
due to the reasons stated in Other Income (Expense), Net
below.
- Share of other comprehensive income of joint ventures accounted
for using equity method was $11.8
million in 4Q17, compared to $5.9
million in 3Q17. The amount was recognized as the Group's
share of the change in value of available-for-sale financial assets
of the joint ventures, which are all unlisted companies invested
indirectly through China IC Capital Co., Ltd (a wholly-owned
investment fund company of the Company).
- Non-controlling Interests were $49.4
million losses in 4Q17, as compared to $4.7 million gains in 3Q17, mainly due to the
allocation of the annual advanced technology R&D expenses to
Semiconductor Manufacturing North China (Beijing) Corporation (the Company's
majority-owned subsidiary in Beijing) in 4Q17.
Analysis of Revenue
Revenue
Analysis
|
|
|
|
By
Application
|
4Q17
|
3Q17
|
4Q16
|
Computer
|
6.6%
|
5.8%
|
3.9%
|
Communications
|
42.5%
|
45.3%
|
44.3%
|
Consumer
|
37.6%
|
37.0%
|
37.4%
|
Auto/Industrial
|
8.8%
|
8.1%
|
7.0%
|
Others
|
4.5%
|
3.8%
|
7.4%
|
By Service
Type
|
4Q17
|
3Q17
|
4Q16
|
Wafers
|
99.7%
|
98.4%
|
96.4%
|
Mask making, testing,
others
|
0.3%
|
1.6%
|
3.6%
|
By
Geography
|
4Q17
|
3Q17
|
4Q16
|
North
America
|
38.1%
|
41.9%
|
33.2%
|
China(1)
|
51.3%
|
45.7%
|
47.8%
|
Eurasia(2)
|
10.6%
|
12.4%
|
19.0%
|
Wafer Revenue
Analysis
|
|
|
|
By
Technology
|
4Q17
|
3Q17
|
4Q16
|
28 nm
|
11.3%
|
8.8%
|
3.5%
|
40/45 nm
|
23.6%
|
20.6%
|
23.6%
|
55/65 nm
|
16.0%
|
20.2%
|
19.8%
|
90 nm
|
1.8%
|
1.4%
|
1.6%
|
0.11/0.13
µm
|
6.3%
|
8.1%
|
14.8%
|
0.15/0.18
µm
|
37.8%
|
37.8%
|
34.2%
|
0.25/0.35
µm
|
3.2%
|
3.1%
|
2.5%
|
Note:
(1)
Including Hong Kong, but excluding Taiwan
(2)
Excluding China and Hong Kong
|
Capacity*
Fab
|
4Q17
|
3Q17
|
Shanghai 200mm
Fab
|
109,000
|
114,000
|
Shanghai 300mm
Fab
|
38,250
|
40,500
|
Beijing 300mm
Fab
|
103,500
|
112,500
|
Tianjin 200mm
Fab
|
50,000
|
47,000
|
Shenzhen 200mm
Fab
|
30,000
|
32,075
|
Shenzhen 300mm
Fab
|
6,750
|
-
|
Majority-Owned
Beijing 300mm Fab
|
65,250
|
61,875
|
Majority-Owned
Avezzano 200mm Fab
|
40,000
|
40,000
|
Total monthly wafer
fabrication capacity
|
442,750
|
447,950
|
Note:
* Wafers
per month at the end of the period in 8" equivalent
wafers, calculated on a 30-day basis for comparison
purposes
- Monthly capacity decreased to 442,750 8-inch
equivalent wafers in 4Q17 from 447,950 8-inch equivalent wafers in
3Q17, primarily because of a product-mix change in 4Q17.
|
Shipment and Utilization
8" equivalent
wafers
|
4Q17
|
3Q17
|
QoQ
|
4Q16
|
YoY
|
Wafer
shipments
|
1,124,821
|
1,076,039
|
4.5%
|
1,096,011
|
2.6%
|
Utilization
rate(1)
|
85.8%
|
83.9%
|
-
|
96.5%
|
-
|
Note:
(1)
Based on total equivalent wafers out divided by
estimated total quarterly capacity.
|
Detailed Financial Analysis
Gross Profit Analysis
Amounts in US$
thousands
|
4Q17
|
3Q17
|
QoQ
|
4Q16
|
YoY
|
Cost of
sales
|
638,678
|
592,426
|
7.8%
|
568,790
|
12.3%
|
Depreciation
|
210,385
|
178,302
|
18.0%
|
159,778
|
31.7%
|
Other manufacturing
costs
|
427,262
|
413,089
|
3.4%
|
407,870
|
4.8%
|
Share-based
compensation
|
1,031
|
1,035
|
-0.4%
|
1,142
|
-9.7%
|
Gross
profit
|
148,496
|
177,297
|
-16.2%
|
246,012
|
-39.6%
|
Gross
margin
|
18.9%
|
23.0%
|
-
|
30.2%
|
-
|
- Cost of sales was $638.7 million
in 4Q17, an increase of 7.8% QoQ from $592.4
million in 3Q17 mainly due to higher wafer shipments and a
product-mix change in 4Q17.
- Depreciation within the cost of sales increased by 18.0% to
$210.4 million in 4Q17, compared to
$178.3 million in 3Q17.
- Other manufacturing costs within the cost of sales increased by
3.4% to $427.3 million in 4Q17,
compared to $413.1 million in
3Q17.
- Gross profit was $148.5 million
in 4Q17, a decrease of 16.2% QoQ from $177.3
million in 3Q17.
- Gross margin was 18.9% in 4Q17, as compared to 23.0% in 3Q17,
primarily due to a product-mix change in 4Q17.
Operating Expenses (Income)
Analysis
Amounts in US$
thousands
|
4Q17
|
3Q17
|
QoQ
|
4Q16
|
YoY
|
Operating
expenses
|
145,323
|
154,592
|
-6.0%
|
196,994
|
-26.2%
|
Research and
development, net
|
101,300
|
106,848
|
-5.2%
|
118,325
|
-14.4%
|
General and
administrative
|
58,201
|
46,104
|
26.2%
|
60,934
|
-4.5%
|
Selling and
marketing
|
6,393
|
9,587
|
-33.3%
|
9,087
|
-29.6%
|
Other operating
(income) loss
|
(20,571)
|
(7,947)
|
158.9%
|
8,648
|
-
|
- R&D expenses decreased by $5.5
million QoQ to $101.3 million
in 4Q17, compared to $106.8 million
in 3Q17. Excluding the funding of R&D contracts from the
government, R&D expenses increased by $4.1 million QoQ to $135.1
million in 4Q17. The change was mainly due to higher level
of R&D activities in 4Q17. Funding of R&D contracts from
the government was $33.8 million in
4Q17, compared to $24.2 million in
3Q17.
- General and administrative expenses increased by 26.2% to
$58.2 million in 4Q17, compared to
$46.1 million in 3Q17. The change was
mainly due to an increase in the government tax surcharges, accrued
employee bonus and the patent expenses in 4Q17.
- The increase in other operating (income) loss was mainly due to
the government funding received in 4Q17.
Other Income (Expense),
Net
Amounts in US$
thousands
|
4Q17
|
3Q17
|
QoQ
|
4Q16
|
YoY
|
Other income
(expense), net
|
(6,086)
|
7,290
|
-
|
473
|
-
|
Interest
income
|
8,297
|
6,545
|
26.8%
|
4,674
|
77.5%
|
Finance
costs
|
(9,420)
|
12,906
|
-
|
(9,253)
|
1.8%
|
Foreign exchange gains
or losses
|
9,192
|
(11,685)
|
-
|
481
|
1811.0%
|
Other gains or losses,
net
|
(11,132)
|
(1,657)
|
571.8%
|
5,984
|
-
|
Share of (loss) profit
of investment using equity method
|
(3,023)
|
1,181
|
-
|
(1,413)
|
113.9%
|
- The change in finance costs was mainly due to the interest
subsidies received from the government in 3Q17 and no interest
subsidies in 4Q17.
- Foreign exchange gains were mainly due to an appreciation of
RMB against USD. Foreign monetary assets mainly consist of cash and
cash equivalent and trade and other receivables in RMB. Foreign
monetary liabilities mainly consist of borrowings, medium-term
notes and trade and other payables in RMB.
- The change in other gains or losses, net was mainly due to a
potential cash compensation accrued at about $12.5 million in 4Q17 that may be incurred
depending on the profit of Suzhou Changjiang Electric Xinke
Investment Co., Ltd during the three years of 2017, 2018 and 2019.
The potential cash compensation was deemed as the terms of the
supplemental agreement entered by SilTech Semiconductor
(Shanghai) Corporation Limited (an
indirectly wholly-owned subsidiary of the Company) and Jiangsu
Changjiang Electronics Technology Co., Ltd on December 9, 2016.
Depreciation and Amortization
Amounts in US$
thousands
|
4Q17
|
3Q17
|
QoQ
|
4Q16
|
YoY
|
Depreciation and
amortization
|
251,741
|
243,196
|
3.5%
|
215,586
|
16.8%
|
Liquidity
Amounts in US$
thousands
|
4Q17
|
3Q17
|
Cash and cash
equivalent
|
1,838,300
|
1,119,149
|
Restricted
cash
|
336,043
|
339,596
|
Other financial
assets – current (1)
|
683,812
|
607,258
|
Trade and other
receivables
|
616,308
|
609,849
|
Prepayment and
prepaid operating
expenses
|
34,371
|
37,545
|
Inventories
|
622,679
|
625,283
|
Assets classified as
held-for-sale
|
37,471
|
38,942
|
Total current
assets
|
4,168,984
|
3,377,622
|
|
|
|
Current tax
liabilities
|
270
|
780
|
Other financial
liabilities
|
744
|
-
|
Accrued
liabilities
|
180,912
|
170,735
|
Deferred government
funding
|
193,158
|
178,293
|
Short-term
Borrowings
|
440,608
|
437,375
|
Trade and other
payables
|
1,050,460
|
1,019,153
|
Other
liabilities
|
40,627
|
-
|
Total current
liabilities
|
1,906,779
|
1,806,336
|
|
|
|
Cash
Ratio(2)
|
1.0x
|
0.6x
|
Quick
Ratio(3)
|
1.9x
|
1.5x
|
Current
Ratio(4)
|
2.2x
|
1.9x
|
Note:
(1) Other financial assets – current
mainly contains financial products sold by bank and bank deposits
over 3 months.
(2) Cash and cash equivalent divided
by total current liabilities.
(3) Current assets excluding
inventories divided by total current liabilities
(4) Total current assets divided by
total current liabilities.
|
Capital Structure
Amounts in US$
thousands
|
4Q17
|
3Q17
|
Cash and cash
equivalent
|
1,838,300
|
1,119,149
|
Restricted cash -
current
|
336,043
|
339,596
|
Restricted cash - non
current
|
13,438
|
13,228
|
Other financial
assets - current (1)
|
683,812
|
607,258
|
|
|
|
Short-term
borrowings
|
440,608
|
437,375
|
Long-term
borrowings
|
1,743,939
|
1,573,150
|
Medium-term
notes
|
228,483
|
224,755
|
Convertible
bonds
|
403,329
|
406,357
|
Corporate
bonds
|
496,689
|
496,234
|
Total debt
|
3,313,048
|
3,137,871
|
|
|
|
Net
debt(2)
|
790,936
|
1,411,464
|
Equity
|
6,721,335
|
5,996,429
|
Total debt to equity
ratio(3)
|
49.3%
|
52.3%
|
Net debt to equity
ratio(4)
|
11.8%
|
23.5%
|
Note:
(1) Other financial assets –
current mainly contains financial products sold by bank and bank
deposits over 3 months.
(2)
Net debt is total debt minus cash and cash equivalent, and other
financial assets.
(3) Total debt divided by
equity.
(4) Net debt divided by
equity.
|
Cash Flow
Amounts in US$
thousands
|
4Q17
|
3Q17
|
Net cash from
operating activities
|
323,698
|
419,540
|
Net cash used in
investing activities
|
(467,541)
|
(399,015)
|
Net cash from
financing activities
|
847,250
|
217,493
|
Effect of exchange
rate changes
|
15,744
|
5,013
|
Net change in cash
and cash equivalent
|
719,151
|
243,031
|
Capex Summary
Recent Highlights and Announcements
- Capital
expenditures were $498.7 million in 4Q17, compared to $451.1
million in 3Q17.
- The 2017 capital
expenditures for foundry operations were $2,458.4 million, of which
$948.0 million and $510.5 million were spent for the expansion of
capacity in our majority-owned Beijing 300mm fab and in our new
Shenzhen 300mm fab respectively. The 2017 capital expenditures for
non-foundry operations were $29.5 million primarily for the
construction of employees' living quarters.
- The planned 2018
capital expenditures for foundry operations are approximately $1.9
billion, of which approximately $0.5 billion and $0.4 billion are
expected to be spent for the expansion of capacity in our
majority-owned Beijing 300mm fab and in our new project in Tianjin
respectively. The planned 2018 capital expenditures for non-foundry
operations are approximately $47.7 million, mainly for the
construction of employees' living quarters.
|
- Discloseable Transaction and Connected Transaction Proposed
Capital Contribution and Deemed Disposal of Equity Interest in SMSC
(2018-1-30)
- Notification of Board Meeting (2018-1-18)
- Notice of Extraordinary General Meeting (2018-1-17)
- Closure of Register of Members (2018-1-17)
- Circulars - Notification Letter for Registered Shareholders
(2018-1-17)
- Circulars - Notification Letter and Request Form for
Non-registered Shareholders (2018-1-17)
- Form of Proxy for Use at the Extraordinary General Meeting to
be Held on 8 February 2018
(2018-1-17)
- Circulars – (1) Discloseable and Continuing Connected
Transactions in Relation to Framework Agreement and (2) Notice of
Extraordinary General Meeting (2018-1-17)
- Connected Transaction Disposal of Assets (2018-1-2)
- Non-exempt Connected Transactions - Exercise of Pre-emptive
Rights and Additional Subscriptions by Datang and China IC Fund
(2017-12-15)
- Completion of the Issue of US$65
Million Perpetual Subordinated Convertible Securities
(2017-12-15)
- SMIC and Efinix™ Quickly Deliver the First Quantum™-Accelerated
Silicon Product (2017-12-13)
- Continuing Connected Transactions and Discloseable Transactions
in Relation to Framework Agreement (2017-12-07)
- Completion of Placing of New Shares under General Mandate
(2017-12-06)
- (1) Placing of New Shares under General Mandate (2) Proposed
Issue of US$65 Million Perpetual
Subordinated Convertible Securities (3) Pre-emptive Right of Datang
(4) Pre-emptive Right of China IC Fund and (5) Pre-emptive Right of
Country Hill (2017-11-29)
- Potential Non-exempt Connected Transactions - Potential
Exercise of Pre-emptive Rights by Datang and China IC Fund
(2017-11-28)
- SMIC Reports Unaudited Results for the Three Months Ended
September 30, 2017 (2017-11-14)
- Invensas DBI Technology Now Available at SMIC (2017-11-08)
- Notification of Board Meeting (2017-10-24)
- List of Directors and Their Roles and Functions
(2017-10-16)
- Appointment of Co-Chief Executive Officer and Executive
Directors (2017-10-16)
- ACTT's Complete IoT Solution Now Available on SMIC 55nm eFlash
Platform (2017-10-10)
Please visit SMIC's website at
http://www.smics.com/eng/press/press_releases.php and
http://www.smics.com/eng/investors/ir_filings.php
for further details regarding the recent
announcements.
|
|
For the three
months ended
|
|
|
December
31, 2017
|
|
September
30, 2017
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
Revenue
|
|
787,174
|
|
769,723
|
Cost of
sales
|
|
(638,678)
|
|
(592,426)
|
Gross
profit
|
|
148,496
|
|
177,297
|
Research and
development expenses, net
|
|
(101,300)
|
|
(106,848)
|
General and
administration expenses
|
|
(58,201)
|
|
(46,104)
|
Sales and marketing
expenses
|
|
(6,393)
|
|
(9,587)
|
Other operating income
(expense), net
|
|
20,571
|
|
7,947
|
Operating
expenses
|
|
(145,323)
|
|
(154,592)
|
Profit from
operations
|
|
3,173
|
|
22,705
|
Other income
(expense), net
|
|
(6,086)
|
|
7,290
|
(Loss) profit before
tax
|
|
(2,913)
|
|
29,995
|
Income tax
benefit
|
|
1,217
|
|
595
|
(Loss)
profit for the period
|
|
(1,696)
|
|
30,590
|
Other comprehensive
income (loss)
|
|
|
|
|
Item that may be
reclassified subsequently to profit or loss
|
|
|
|
|
Exchange differences
on translating foreign operations
|
|
8,458
|
|
5,686
|
Change in value of
available-for-sale financial assets
|
|
(67)
|
|
(455)
|
Cash flow
hedges
|
|
(595)
|
|
5,620
|
Share of other
comprehensive income of joint ventures accounted for using the equity
method(3)
|
|
11,755
|
|
5,891
|
Items that will not
be reclassified to profit or loss
|
|
|
|
|
Actuarial gains and
losses on defined benefit plans
|
|
(556)
|
|
32
|
Total comprehensive
income for the period
|
|
17,299
|
|
47,364
|
Profit (loss) for the
period attributable to:
|
|
|
|
|
Owners of the
Company
|
|
47,718
|
|
25,899
|
Non-controlling
interests
|
|
(49,414)
|
|
4,691
|
|
|
(1,696)
|
|
30,590
|
Total comprehensive
income (loss) for the period attributable to:
|
|
|
|
|
Owners of the
Company
|
|
66,335
|
|
41,903
|
Non-controlling
interests
|
|
(49,036)
|
|
5,461
|
|
|
17,299
|
|
47,364
|
|
|
|
|
|
Earnings per share
attributable to Semiconductor Manufacturing
International Corporation ordinary
shareholders
|
|
|
|
|
Basic
|
|
$0.01
|
|
$0.01
|
Diluted
|
|
$0.01
|
|
$0.01
|
Earnings per ADS
attributable to Semiconductor Manufacturing
International Corporation ordinary ADS
holders
|
|
|
|
|
Basic
|
|
$0.05
|
|
$0.03
|
Diluted
|
|
$0.05
|
|
$0.03
|
|
|
|
|
|
Shares used in
calculating basic earnings per share
|
|
4,728,773,273
|
|
4,651,304,338
|
Shares used in
calculating diluted earnings per share
|
|
5,159,200,254
|
|
4,690,039,191
|
|
|
|
|
|
Reconciliations of
Non-GAAP Financial Measures to
Comparable GAAP Measures
|
|
|
|
|
Non-GAAP operating
expenses(1)
|
|
(200,561)
|
|
(189,097)
|
EBITDA(2)
|
|
258,248
|
|
260,285
|
EBITDA
margin(2)
|
|
32.8%
|
|
33.8%
|
Note:
(1)
Non-GAAP operating expenses are defined as operating expenses
adjusted to exclude the effect of employee bonus accrual,
government funding, gain or loss on the disposal of machinery and
equipment and gain from the disposal of living quarters. SMIC
reviews non-GAAP operating expenses together with operating
expenses to understand, manage and evaluate its business and make
financial and operational decisions. The Group also believes it is
useful supplemental information for investors and analysts to
assess its operating performance. However, the use of non-GAAP
financial measures has material limitations as an analytical tool.
One of the limitations of using non-GAAP financial measures is that
they do not include all items that impact our net profit for the
period. In addition, because non-GAAP financial measures are not
calculated in the same manner by all companies, they may not be
comparable to other similarly titled measures used by other
companies. In light of the foregoing limitations, you should not
consider the non-GAAP operating expenses in isolation from or as an
alternative to operating expenses prepared in accordance with
IFRS.
The following table
sets forth the reconciliation of the non-GAAP operating expenses to
its most directly comparable financial measure presented in
accordance with IFRS, for the periods indicated.
|
|
|
For the three
months ended
|
|
|
December
31, 2017
|
|
September
30, 2017
|
|
December
31, 2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Operating
expenses
|
|
(145,323)
|
|
(154,592)
|
|
(196,994)
|
Employee bonus
accrued
|
|
776
|
|
-
|
|
28,644
|
Government
funding
|
|
(46,833)
|
|
(28,459)
|
|
(23,635)
|
(Gain) loss on the
disposal of
machinery and equipment
|
|
(5,913)
|
|
(4,972)
|
|
9,936
|
Gain from the disposal
of living
quarters
|
|
(3,268)
|
|
(1,074)
|
|
(1,246)
|
Non-GAAP operating
expenses
|
|
(200,561)
|
|
(189,097)
|
|
(183,295)
|
(2)
EBITDA is defined as profit for the period excluding the impact of
the finance cost, depreciation and amortization, and income tax
benefit and expense. EBITDA margin is defined as EBITDA divided by
revenue. SMIC uses EBITDA margin as a measure of operating
performance; for planning purposes, including the preparation of
the Group's annual operating budget; to allocate resources to
enhance the financial performance of the Group's business; to
evaluate the effectiveness of the Group's business strategies; and
in communications with SMIC's board of directors concerning the
Group's financial performance. Although EBITDA is widely used by
investors to measure a company's operating performance without
regard to items, such as net finance cost, income tax benefit and
expense and depreciation and amortization that can vary
substantially from company to company depending upon their
respective financing structures and accounting policies, the book
values of their assets, their capital structures and the methods by
which their assets were acquired, EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of the Group's results of operations as
reported under IFRS. Some of these limitations are: it does not
reflect the Group's capital expenditures or future requirements for
capital expenditures or other contractual commitments; it does not
reflect changes in, or cash requirements for, the Group's working
capital needs; it does not reflect finance cost; it does not
reflect cash requirements for income taxes; that, although
depreciation and amortization are non-cash charges, the assets
being depreciated or amortized will often have to be replaced in
the future, and these measures do not reflect any cash requirements
for these replacements; and that other companies in SMIC's industry
may calculate these measures differently than SMIC does, limiting
their usefulness as comparative measures.
The following table
sets forth the reconciliation of EBITDA and EBITDA margin to their
most directly comparable financial measures presented in accordance
with IFRS, for the periods indicated.
|
|
|
For the three
months ended
|
|
|
December
31, 2017
|
|
September
30, 2017
|
|
December
31, 2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
(Loss) profit for the
period
|
|
(1,696)
|
|
30,590
|
|
58,038
|
Finance
costs
|
|
9,420
|
|
(12,906)
|
|
9,253
|
Depreciation and
amortization
|
|
251,741
|
|
243,196
|
|
215,586
|
Income tax
benefit
|
|
(1,217)
|
|
(595)
|
|
(8,547)
|
EBITDA
|
|
258,248
|
|
260,285
|
|
274,330
|
Profit
margin
|
|
-0.2%
|
|
4.0%
|
|
7.1%
|
EBITDA
margin
|
|
32.8%
|
|
33.8%
|
|
33.7%
|
|
|
|
|
|
|
|
(3) The
comparative figure of 3Q17 has been revised to conform the current
period's presentation. For further details, please refer to Note
(4) on Page 5 and the analysis on Page 6.
|
|
|
As
of
|
|
|
December
31, 2017
|
|
September
30, 2017
|
|
|
(Unaudited)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Property, plant and
equipment
|
|
6,523,403
|
|
6,289,743
|
Land use
right
|
|
97,477
|
|
98,040
|
Intangible
assets
|
|
219,944
|
|
228,072
|
Investments in
associates
|
|
758,241
|
|
740,931
|
Investments in joint
ventures(2)
|
|
31,681
|
|
20,907
|
Deferred tax
assets
|
|
44,875
|
|
42,027
|
Other financial
assets
|
|
17,598
|
|
10,448
|
Restricted
cash
|
|
13,438
|
|
13,228
|
Other
assets
|
|
42,810
|
|
33,359
|
Total non-current
assets
|
|
7,749,467
|
|
7,476,755
|
Current
assets
|
|
|
|
|
Inventories
|
|
622,679
|
|
625,283
|
Prepayment and prepaid
operating expenses
|
|
34,371
|
|
37,545
|
Trade and other
receivables
|
|
616,308
|
|
609,849
|
Other financial
assets
|
|
683,812
|
|
607,258
|
Restricted
cash
|
|
336,043
|
|
339,596
|
Cash and cash
equivalent
|
|
1,838,300
|
|
1,119,149
|
|
|
4,131,513
|
|
3,338,680
|
Assets classified as
held-for-sale
|
|
37,471
|
|
38,942
|
Total current
assets
|
|
4,168,984
|
|
3,377,622
|
TOTAL
ASSETS
|
|
11,918,451
|
|
10,854,377
|
|
|
|
|
|
EQUITY AND
LIABILITIES
|
|
|
|
|
Capital and
reserves
|
|
|
|
|
Ordinary shares,
$0.004 par value, 10,000,000,000 shares authorized, 4,916,106,889
and 4,651,624,748 shares issued and outstanding at December 31,
2017 and September 30, 2017,
respectively(1)
|
|
19,664
|
|
18,606
|
Share
premium(1)
|
|
4,827,619
|
|
4,475,807
|
Reserves(2)
|
|
134,669
|
|
119,791
|
Retained
earnings
|
|
187,008
|
|
131,961
|
Equity attributable to
owners of the Company
|
|
5,168,960
|
|
4,746,165
|
Perpetual subordinated
convertible
securities(3)
|
|
64,073
|
|
-
|
Non-controlling
interests
|
|
1,488,302
|
|
1,250,264
|
Total
equity
|
|
6,721,335
|
|
5,996,429
|
Non-current
liabilities
|
|
|
|
|
Borrowings
|
|
1,743,939
|
|
1,573,150
|
Convertible
bonds
|
|
403,329
|
|
406,357
|
Bonds
payable
|
|
496,689
|
|
496,234
|
Medium-term
notes
|
|
228,483
|
|
224,755
|
Deferred tax
liabilities
|
|
16,412
|
|
13,280
|
Deferred government
funding
|
|
299,749
|
|
291,894
|
Other financial
liabilities
|
|
1,919
|
|
15,633
|
Other
liabilities(4)
|
|
99,817
|
|
30,309
|
Total non-current
liabilities
|
|
3,290,337
|
|
3,051,612
|
Current
liabilities
|
|
|
|
|
Trade and other
payables
|
|
1,050,460
|
|
1,019,153
|
Borrowings
|
|
440,608
|
|
437,375
|
Deferred government
funding
|
|
193,158
|
|
178,293
|
Accrued
liabilities
|
|
180,912
|
|
170,735
|
Other financial
liabilities
|
|
744
|
|
-
|
Current tax
liabilities
|
|
270
|
|
780
|
Other
liabilities(4)
|
|
40,627
|
|
-
|
Total current
liabilities
|
|
1,906,779
|
|
1,806,336
|
Total
liabilities
|
|
5,197,116
|
|
4,857,948
|
TOTAL EQUITY AND
LIABILITIES
|
|
11,918,451
|
|
10,854,377
|
Note:
(1) On
December 6, 2017, pursuant to the terms and conditions of the
placing agreement entered by the Company and joint placing agents,
the Company allotted and issued 241,418,625 placing shares,
representing approximately 4.92% of the issued share capital of the
Company as enlarged by the issue of the placing shares, to not less
than six independent placees at the price of HK$10.65 per placing
share. The gross proceeds of the placing are approximately HK$2.57
billion (approximately US$329.1 million) and the net proceeds of
the placing (after deduction of fees, commissions and expenses) are
approximately HK$2.55 billion (approximately US$326.4
million).
(2) Both
reserves and investments in joint ventures included an accumulated
amount of $17.6 million in 4Q17 (3Q17: $5.9 million). The amount
was recognized as the Group's share of the change in value of
available-for-sale financial assets of the joint ventures, which
are all unlisted companies invested indirectly through China IC
Capital Co., Ltd (a wholly-owned investment fund company of the
Company).
(3) On
December 14, 2017, the Company fulfilled all conditions set out in
the placed perpetual subordinated convertible securities (the
"PSCS") subscription agreement and completed the issue of the PSCS
in the principal amount of US$65.0 million. The net proceeds (after
deduction of fees, commissions and expenses) are approximately
US$64.1 million. Assuming full conversion of the PSCS at the
initial conversion price of HK$12.78, the PSCS will be convertible
into 39,688,654 paced conversion shares.
(4) Other
liabilities including the non-current and current portion of
long-term payables for the new purchased tangible and intangible
assets were classified into the non-current and current liabilities
respectively in 4Q17. Additionally, other liabilities included a
potential cash compensation accrued in 4Q17 that may be incurred
depending on the profit of Suzhou Changjiang Electric Xinke
Investment Co., Ltd during the three years of 2017, 2018 and 2019.
The potential cash compensation was deemed as the terms of the
supplemental agreement entered by SilTech Semiconductor (Shanghai)
Corporation Limited (an indirectly wholly-owned subsidiary of the
Company) and Jiangsu Changjiang Electronics Technology Co., Ltd on
December 9, 2016.
|
|
|
For the three
months ended
|
|
|
December 31,
2017
|
|
September 30,
2017
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash flow from
operating activities
|
|
|
|
|
(Loss) profit for the
period
|
|
(1,696)
|
|
30,590
|
Depreciation and
amortization
|
|
251,741
|
|
243,196
|
Share of loss (gain)
of investment using equity method
|
|
3,023
|
|
(1,181)
|
Changes in working
capital and others
|
|
70,630
|
|
146,935
|
Net cash
from operating activities
|
|
323,698
|
|
419,540
|
|
|
|
|
|
Cash flow from
investing activities:
|
|
|
|
|
Payments for property,
plant and equipment
|
|
(410,945)
|
|
(691,170)
|
Payments for
intangible assets
|
|
(7,410)
|
|
(7,217)
|
Net proceeds after
netting off land appreciation tax from disposal of
property, plant and equipment and
assets classified as held for
sale(1)
|
|
10,182
|
|
418,956
|
Changes in restricted
cash relating to investing activities
|
|
26,732
|
|
-
|
Payments to acquire
financial assets
|
|
(86,233)
|
|
(99,668)
|
Proceeds on sale of
financial assets
|
|
14,200
|
|
9,871
|
Payment to acquire
long-term investment
|
|
(15,095)
|
|
(30,042)
|
Proceeds from disposal
of equity investment
|
|
1,028
|
|
-
|
Distributions received
from associates
|
|
-
|
|
255
|
Net cash
used in investing activities
|
|
(467,541)
|
|
(399,015)
|
|
|
|
|
|
Cash flow from
financing activities:
|
|
|
|
|
Proceeds from
borrowings
|
|
389,547
|
|
275,554
|
Repayment of
borrowings
|
|
(240,076)
|
|
(58,417)
|
Proceeds from exercise
of employee stock options
|
|
13,078
|
|
356
|
Proceeds from issuance
of perpetual subordinated convertible securities
|
|
64,350
|
|
-
|
Proceeds from
non-controlling interest – capital contribution
|
|
294,000
|
|
-
|
Proceeds from issuance
of shares
|
|
326,351
|
|
-
|
Net cash
from financing activities
|
|
847,250
|
|
217,493
|
|
|
|
|
|
Effects of
exchange rate changes on the balance of cash held in
foreign
currencies
|
|
15,744
|
|
5,013
|
|
|
|
|
|
Net
increase in cash and cash
equivalent
|
|
719,151
|
|
243,031
|
Cash and
cash equivalent, beginning of period
|
|
1,119,149
|
|
876,118
|
|
|
|
|
|
Cash and
cash equivalent, end of period
|
|
1,838,300
|
|
1,119,149
|
Note:
(1) In
3Q17, there were seven financing arrangements in total
consideration of US$410.8 million entered into by the Group with
Xincheng Leasing (Tianjin) Co., Ltd, Xindian Leasing (Tianjin) Co.,
Ltd and Xinlu Leasing (Tianjin) Co., Ltd. (the three leasing
companies are wholly-owned subsidiaries of Sino IC Leasing Co.,
Ltd., an associate of the Group) respectively, in the form of a
sale and leaseback transaction with a repurchase option. A batch of
production equipment of the Group was sold and leased back under
these financing arrangements. As the repurchase prices are set at
the expected fair value and the Group is not reasonably certain
that it will exercise the repurchase options, the above
transactions have been accounted for a disposal of property, plant
and equipment followed with an operating lease.
|
As at the date of this announcement, the directors of the
Company are:
Executive Directors
Zhou Zixue (Chairman)
Zhao HaiJun (Co-Chief Executive Officer)
Liang Mong Song (Co-Chief Executive
Officer)
Gao Yonggang (Chief Financial Officer and Joint Company
Secretary)
Non-executive Directors
Tzu-Yin Chiu (Vice Chairman)
Chen Shanzhi
Zhou Jie
Ren Kai
Lu Jun
Tong Guohua
Independent Non-executive Directors
William Tudor Brown
Lip-Bu Tan
Carmen I-Hua Chang
Shang-yi Chiang
Jason Jingsheng Cong
By order of the Board
Semiconductor Manufacturing International Corporation
Dr.
Gao Yonggang
Executive Director, Chief Financial Officer and Joint Company
Secretary
Shanghai, PRC
February 8, 2018
* For identification purposes only
View original
content:http://www.prnewswire.com/news-releases/smic-reports-2017-fourth-quarter-results-300595710.html
SOURCE Semiconductor Manufacturing International Corporation