SMIC Reports Unaudited Results for the Three Months Ended June

SMIC Reports Unaudited Results for the Three Months Ended June 30, 2013

Capacity*

Fab / (Wafer Size)	2Q13	1Q13
Shanghai Mega Fab (8")	90,000	90,000
Shanghai 12-inch Fab (12")	18,000	14,150
Beijing Mega Fab (12")	81,000	81,000
Tianjin Fab (8")	34,500	34,450
Total monthly wafer fabrication capacity	223,500	219,600

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 increased to 223,500 8-inch equivalent wafers in 2Q13 from 219,600 8-inch equivalent wafers in 1Q13, primarily due to the expansion of capacity in our Shanghai 12-inch fab.

Shipment and Utilization

8" equivalent wafers	2Q13	1Q13	QoQ	2Q12	YoY
Wafer shipments	687,651	631,776	8.8%	557,683	23.3%
Utilization rate⁽¹⁾	98.5%	89.0%	-	95.2%	-

Note:
(1) Based on total equivalent wafers out divided by estimated total quarterly capacity.

Detailed Financial Analysis

Gross Profit Analysis

Cost of sales was $406.1 million in 2Q13, up 0.7% QoQ from $403.3 million in 1Q13.
Depreciation within the cost of sales decreased in 2Q13 relative to 1Q13 primarily due to significantly higher fab utilization; as a result, depreciation expense was distributed to a greater number of wafers produced and to inventory costs as of the period end.
Other manufacturing costs within the cost of sales increased in 2Q13 relative to 1Q13 primarily due to an increase in wafer shipments.
Gross profit was $135.2 million in 2Q13, an increase of 37.6% QoQ from $98.3 million in 1Q13.
Gross margin was 25.0% in 2Q13, up from 19.6% in 1Q13 primarily due to significantly higher fab utilization in 2Q13.

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