Amounts in US$ thousands

4Q17

3Q17

Net cash from operating activities

323,698

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

• 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.

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) p rofit   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 3 1 ,   201 7

September 3 0 ,   201 7

December 31 ,   201 6

(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 3 1 ,   201 7

September 3 0 ,   201 7

December 3 1 ,   201 6

(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.

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 i nvesting 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 f inancing 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

N et increase in   cash and cash equivalent

719,151

243,031

C ash and cash equivalent, beginning of period

1,119,149

876,118

C ash 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.