/SECOND AND FINAL ADD -- CNTU009 -- SMIC Annual Results/ 5.
Acquired intangible assets, net 2004 2003 2002 Cost: Technology
$5,782,943 $5,817,442 $6,677,500 Licenses 85,719,858 34,702,500
4,997,500 Patent licenses 4,062,500 4,062,500 4,062,500 $95,565,301
$44,582,442 $15,737,500 Accumulated Amortization: Technology
(2,451,817) (1,218,750) (990,000) Licenses (13,637,114) (870,536) -
Patent licenses (1,741,071) (1,372,691) - (17,830,002) (3,461,977)
(990,000) Acquired intangible assets, net $77,735,299 $41,120,465
$14,747,500 2004 The Company issued 4,285,714 Series D convertible
preference shares and a warrant to purchase 428,571 Series D
convertible preference shares at $0.01 per share in exchange for
certain licenses from Motorola, which was valued at $15,000,000.
The Company issued 914,285 Series D convertible preference shares
to a strategic technology partner in exchange for certain software
licenses, which was valued at $5,060,256. The Company entered into
various other license agreements with third parties whereby the
Company purchased licenses for $28,217,249. 2003 The Company issued
a warrant to purchase 57,143 Series B convertible preference shares
for an intellectual property development license which was valued
at $129,942 as of December 31, 2003. In conjunction with the
intellectual property development license agreement, the Company
would redeem the warrant in increments when the contractual party
("service provider") meets certain predetermined milestones
stipulated in the agreement. In 2004, upon attaining certain
milestones, the Company issued 12,343 shares of Series B
convertible preference shares valued at $45,090 and 136,640
ordinary shares valued at $17,965, respectively, to the service
provider. As of December 31, 2004, the warrant to purchase 359,300
ordinary shares was valued at $32,387. The Company issued 7,142,857
Series D convertible preference shares and a warrant to purchase
714,286 Series D convertible preference shares at $0.01 per share
in exchange for certain licenses from Motorola, which was valued at
$25,000,000. The Company entered into various other license
agreements with strategic partners whereby the Company purchased
licenses $4,705,000. 2002 The Company entered into a technology
agreement with a strategic partner. The Company paid $110,000 for
the rights to certain software products. The Company entered into a
technology agreement with a strategic partner. The Company issued
600,000 Series B convertible preference shares with an estimated
fair value of $990,000 in exchange for development of process
technology by the strategic partner and expensed this amount over
the development period in 2002. The Company entered into a
technology license transfer agreement with a strategic partner. The
Company paid $4,750,000 and issued 83,333 Series B convertible
preference shares valued at $137,500 in exchange for certain
licenses. Upon the earlier to occur of (i) achievement of
accumulated sales of an agreed upon number of wafers using this
technology or (ii) the Company's filing of its registration
statement relating to its initial public offering, the Company is
required under the technology license transfer agreement to pay the
strategic partner an additional $250,000 and issue 750,000 Series B
convertible preference shares with an exercise price of $3.00 per
share. Upon the achievement of accumulated sales of an additional
number of wafers using this technology, the Company is further
required under the agreement to issue the strategic partner 833,334
Series B convertible preferences shares with an exercise price of
$3.00 per share. In March 2004, the Company paid $250,000 and
issued 750,000 shares of Series B convertible preference shares
with a fair value of $2,739,853 upon attaining certain milestones.
The Company entered into an agreement with a strategic partner
whereby the Company purchased equipment and technology and patent
licenses in exchange for a cash payment of $15,000,000, 1,666,667
shares of Series B convertible preference shares valued at
$2,750,000 and a $15,000,000 redeemable convertible promissory
note. All acquired technology intangible assets are generally
amortized over a period of 5 years. Occasionally, licenses for
advanced technologies are amortized over longer periods up to 10
years. The Company recorded amortization expense of $14,368,025,
$3,461,977 and $990,000 in 2004, 2003 and 2002, respectively. The
Company will record amortization expenses related to the acquired
intangible assets of $40,037,998, $39,737,241, $38,557,574,
$35,044,013 and $24,680,575 for 2005, 2006, 2007, 2008 and 2009,
respectively. 6. Accounts payable An aged analysis of the accounts
payable is as follows: 2004 2003 2002 Current $307,396,991
$184,834,802 $140,368,129 Overdue: Within 30 days 38,803,625
17,666,570 3,194,757 Between 31 to 60 days 4,351,844 3,397,082
6,764,627 Over 60 days 13,781,153 5,863,880 3,881,002 $364,333,613
$211,762,334 $154,208,515 7. Indebtedness Short-term and long-term
debt is as follows: 2004 2003 2002 Short-term borrowings from
commercial bank (a) $91,000,000 $- $- Short-term borrowings from
government (b) - - 3,624,597 $91,000,000 $- $3,624,597 Long-term
debt (c): 2005 $191,986,372 $191,984,230 $156,490,723 2006
265,267,355 191,984,230 156,490,723 2007 169,273,861 95,992,115
78,245,362 2008 73,280,572 - - 2009 36,640,286 - - 736,448,446
479,960,575 391,226,808 Less: current maturities of long-term debt
191,986,372 - - Non-current maturities of long-term debt
$544,462,074 $479,960,575 $391,226,808 (a) Short-term borrowings
from commercial bank As of December 31, 2003, the Company had five
short-term agreements that provided borrowings totalling up to
$210,615,750 on a revolving credit basis. At December 31, 2003, the
Company has not borrowed under these agreements. Borrowings under
the credit agreements are unsecured. The interest expense incurred
in 2003 was $111,533, which was capitalized as additions to assets
under construction. The average interest rate on the loan was 2.47%
in 2003. As of December 31, 2004, the Company had seven short-term
credit agreements that provided total credit facilities up to
$253,000,000 on a revolving credit basis. As of December 31, 2004,
the Company had drawn down $91,000,000 under these credit
agreements and $162,000,000 is available for future borrowings. The
outstanding borrowings under the credit agreements are unsecured.
The interest expense incurred in 2004 was $360,071. The interest
rates on the loan ranged from 1.77% to 3.57% in 2004. (b)
Short-term borrowings from government In 2002, the Company entered
into an interest free short-term loan with Beijing Economic
Technological Investment Development Corp., in an amount of
$3,624,597. As of December 31, 2003, the loan has been repaid. The
Company has not recorded a discount resulting from the imputed
interest on the non-interest bearing short-term borrowings as
management believes it does not materially impact the Company's
financial position, cash flows and results of operations. (c)
Long-term debt In December 2001, the Company entered into a
long-term debt agreement for $432,000,000. The withdrawal period of
the facility was 18 months starting from the loan agreement date.
As of December 31, 2004, the Company has fully utilized the loan
amount. In 2004, the interest rate on the loan ranges from 2.82% to
4.34%. The interest payment is due on a semi-annual basis. The
principal amount is repayable starting in March 2005 in five
semi-annual installments of $86,400,000. The interest expense
incurred in 2004, 2003 and 2002 was $14,014,698, $12,326,043 and
$6,618,541, respectively, of which $6,396,254, $11,921,430 and
$6,618,541 was capitalized as additions to assets under
construction in 2004, 2003 and 2002, respectively. The Company had
a RMB denominated line of credit of RMB396,960,000 ($47,966,446) in
2001, with the same financial institutions. As of December 31,
2004, the Company has fully drawn on the line of credit. The
interest rate for the loan is calculated based on the basic rate of
a five-year term loan published by the People's Bank of China. The
principal amount is repayable starting in March 2005 in five
semi-annual installments of $9,593,289. The annual interest rate on
the loan was 5.02% in 2004. The interest expense incurred in 2004,
2003 and 2002 was $2,451,885, $2,354,741 and $428,334,
respectively, of which $1,134,784, $2,277,672 and $428,334 was
capitalized as additions to assets under construction in 2004, 2003
and 2002, respectively. In January 2004, the Company entered into
the second phase long-term facility arrangement for $256,482,000
with the same financial institutions. As of December 31, 2004, the
Company has fully utilized the loan. In 2004, the interest rate on
the loan ranged from 2.75% to 4.34%. The interest payment is due on
a semi-annual basis. The principal amount is repayable starting in
March 2006 in seven semi-annual installments of $36,640,286. The
interest expense incurred in 2004 was $3,890,105, of which nil was
capitalized as additions to assets under construction in 2004. In
connection with the second phase long-term facility arrangement,
the Company has a RMB denominated line of credit of RMB235,678,000
($28,476,030). As of December 31, 2004, the Company has no
borrowings on this line of credit. The long-term debt arrangements
contain financial covenants as defined in the loan agreement. The
Company has met these covenants at December 31, 2004. The total
outstanding balance of long-term debt is collateralized by certain
plant and equipment at the original cost of $2,024,799,202 at
December 31, 2004. 8. Income Taxes The Company is a tax exempted
company incorporated in the Cayman Islands. The subsidiaries
incorporated in the PRC are governed by the Income Tax Law of the
PRC Concerning Foreign Investment and Foreign Enterprises and
various local income tax laws (the "Income Tax Laws"). Pursuant to
the relevant regulation and upon approval by the governmental
agency, the Company's Shanghai, Beijing and Tianjin subsidiaries
are entitled to a full exemption from Foreign Enterprise Income Tax
("FEIT") for five years starting with the first year of positive
accumulated earnings and a 50% reduction for the following five
years. The Company's other subsidiaries are subject to respective
local country's income tax law, including those of Japan, the
United States of America, Taiwan and Europe. In 2004, the Company's
US subsidiary has recorded current income tax expense of $186,044
resulting from certain non-deductible stock-based compensation
being allocated to such entity. The Company had minimal taxable
income in Japan and Europe. The principal components of the
temporary differences are as follows: 2004 2003 2002 Temporary
differences may generate deferred tax assets are as follows:
Allowances and reserves $11,824,717 $328,558 $16,721,931 Warranty
reserve 1,875,476 - - Capitalized interest - - 892,210 Start-up
costs 32,490,503 6,878,762 6,441,242 Net operating loss carry
forwards 32,216,296 84,473,312 67,282,681 Other 56,622 - 326,917
$78,463,614 $91,680,632 $91,664,981 Temporary differences may
generate deferred tax liabilities are as follows: Capitalized
interest $(11,753,459) $(5,890,472) $- Unrealized exchange gain -
(275,783) - Other (146,767) (53,430) - $(11,900,226) $(6,219,685)
$- No deferred taxes have been recorded relating to these
differences as they are expected to reverse during the tax
exemption period. The tax losses carried forward as at December 31,
2004 amounted to $32,216,296 which were solely generated in the PRC
and will expire in 2009. 9. Income (loss) per share The following
table sets forth the computation of basic and diluted income (loss)
per share for the years indicated: 2004 2003 2002 Income (loss)
attributable to holders of ordinary shares $70,905,406
$(103,261,129) $(102,602,913) Basic and diluted: Weighted average
ordinary shares outstanding 14,441,917,246 241,594,670 219,117,580
Less: Weighted average ordinary shares outstanding subject to
repurchase (242,753,729) (150,611,470) (138,581,780) Weighted
average shares used in computing basic income (loss) per share
14,199,163,517 90,983,200 80,535,800 Effect of dilutive securities:
Weighted average preference shares outstanding 3,070,765,738 - -
Weighted average ordinary shares outstanding subject to repurchase
242,753,729 - - Warrants 102,323,432 - - Stock options 264,409,484
- - Restricted shares units 54,977,166 - - Weighted average shares
used in computing diluted income (loss) per share 17,934,393,066
90,983,200 80,535,800 Basic income (loss) per share $0.01 $(1.14)
$(1.27) Diluted income (loss) per share $0.00 $(1.14) $(1.27)
Ordinary share equivalents of warrant and stock options are
calculated using the treasury stock method. Under the treasury
stock method, the proceeds from the assumed conversion of options
and warrants are used to repurchase outstanding ordinary shares
using the average fair value for the periods. As of December 31,
2004, the Company had 75,769,953 ordinary share equivalents
outstanding that could have potentially diluted income per share in
the future, but which were excluded in the computation of diluted
income per share in the period, as their exercise prices were above
the average market values in such period. As of December 31, 2003
and 2002, the Company had 14,210,425,630 and 10,450,524,300 of
ordinary share equivalents outstanding, respectively, that could
have potentially diluted loss per share in the future, but which
were excluded in the computation of diluted loss per share in 2003
and 2002, as their effect would have been antidilutive due to the
net loss reported in these years. The following table sets forth
the securities comprising of these antidilutive ordinary share
equivalents for the years indicated: December 31 2004 2003 2002
Series A convertible preference shares - 9,549,773,740
9,537,507,860 Series A-2 convertible preference shares -
423,730,000 423,730,000 Series B convertible preference shares -
25,636,360 27,520,000 Series C convertible preference shares -
3,180,080,180 - Series D preference shares - 119,789,170 -
Convertible Promissory Note - - 42,857,140 Warrants to purchase
Series B convertible preference shares - 623,380 - Warrants to
purchase Series C convertible preference shares - 315,000,000 -
Warrants to purchase Series D convertible preference shares -
11,978,920 - Warrants to purchase ordinary shares 9,584,403 - -
Outstanding options to purchase ordinary shares 66,185,550
480,780,480 290,298,400 Outstanding options to purchase Series A
convertible preference shares - 103,033,400 128,610,900 75,769,953
14,210,425,630 10,450,524,300 10. Segment and geographic
information The Company is engaged primarily in the computer-aided
design, manufacturing, packaging, testing and trading of integrated
circuits and other semiconductor services, and manufacturing design
of semiconductor masks. In accordance with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information," the Company's chief operating decision maker has been
identified as the Chief Executive Officer, who reviews consolidated
results of manufacturing operations when making decisions about
allocating resources and assessing performance of the Company. The
Company believes it operates in one segment, and all financial
segment information required by SFAS No. 131 can be found in the
consolidated financial statements. 2004 2003 2002 Total sales:
United States $391,433,443 $134,080,431 $15,424,733 Asia Pacific
(Excluding Japan and Taiwan) 201,881,809 52,689,834 2,746,284 Japan
135,100,765 40,981,995 8,044,122 Europe 125,596,424 40,251,482
120,000 Taiwan 120,652,255 97,819,762 23,980,206 $974,664,696
$365,823,504 $50,315,345 Revenue is attributed to countries based
on headquarter of operation. Substantially all of the Company's
long lived assets are located in the PRC. 11. Litigation In
December 2003, the Company became the subject of a lawsuit in the
U.S. federal district court brought by TSMC relating to alleged
infringement of five U.S. patents and misappropriation of alleged
trade secrets relating to methods for conducting semiconductor fab
operations and manufacturing integrated circuits. After the
dismissal without prejudice of the trade secret misappropriation
claims by the U.S. federal district court on April 21, 2004, TSMC
refiled the same claims in the California State Superior Court and
alleged infringement of an additional 6 patents in the U.S. federal
district court lawsuit. In August 2004, TSMC filed a complaint with
the U.S. International Trade Commission ("ITC") alleging similar
trade secret misappropriation claims and asserting 3 new patent
infringement claims and simultaneously filed another patent
infringement suit in the U.S. federal district court on the same 3
patents as alleged in the ITC complaint. On January 31, 2005, the
Company entered into a settlement agreement which provides for the
dismissal of all pending legal actions without prejudice between
the two companies in the U.S. federal district court, the
California State Superior Court, the ITC, and the Taiwan District
Court. Under the terms of the settlement agreement, TSMC covenants
not to sue the Company for itemized acts of trade secret
misappropriation as alleged in the complaints, although the
settlement does not grant a license to use any of TSMC's trade
secrets. Furthermore, the parties also entered into a patent
cross-license agreement under which each party agreed to license
the other party's patent portfolio through December 2010. As a part
of the settlement, the Company also agreed to pay TSMC an aggregate
of $175 million, in installments of $30 million for each of the
first five years and $25 million in the sixth year. The Company
engaged an external valuation company to determine the fair market
value of the agreements relating to intellectual property with
respect to their pre-settlement and post-settlement values. Based
on the valuation study, the Company recorded $23.2 million of the
settlement amount as an expense in 2004 and $134.1 million of
intangible assets associated with the licensed patents and trade
secrets which will be recorded in the first quarter of 2005 and
amortized over the estimated remaining life of the technology. 12.
Income (loss) from operations 2004 2003 2002 Income (loss) from
operations is arrived at after charging (crediting): Auditors'
remuneration $695,990 $134,781 $34,210 Depreciation and
amortisation of property, plant and equipment 455,947,253
233,037,403 83,975,267 Amortisation of land use rights 1,013,269
867,463 561,494 Amortisation of intangible assets 14,368,025
3,461,977 990,000 Foreign currency exchange loss 1,446,113
3,418,619 2,325,473 Gain on disposal of plant and equipment
(733,822) (8,029) - (Reversal of) bad debt expense 990,692
(122,378) 236,851 Inventory write-down 10,506,374 - 16,485,080
Staff costs inclusive of directors' remuneration $88,417,658
$61,416,841 $36,142,401 13. Directors' remuneration and five
highest paid individuals Directors Details of emoluments paid by
the Company to the directors of the Company in 2004, 2003 and 2002
are as follows: Non-Executive Directors 2004 2003 2002 Fees - - -
Salaries and other benefits - - - Stock option benefits $221,464
$5,000 $3,000 Total emoluments $221,464 $5,000 $3,000 Executive
Director 2004 2003 2002 Fees - - - Stock option benefits - - -
Salaries and other benefits $190,343 $191,621 $179,579 Total
emoluments $190,343 $191,621 $179,579 The emoluments of the
directors were within the following bands: 2004 2003 2002 Number of
Number of Number of directors directors directors Nil to
HK$1,000,000 ($128,569) 6 11 9 HK$1,000,001 ($128,569) to
HK$1,500,000 ($192,894) 1 1 1 HK$1,500,001 ($192,894) to
HK$2,500,000 ($257,192) 1 - - The Company granted 5,100,000, nil
and 500,000 options to purchase ordinary shares of the Company to
the directors in 2004, 2003 and 2002, respectively. As of December
31, 2004, nil stock option was exercised and 500,000 stock options
were cancelled. Stock option benefits were generated from granting
stock options to an independent non-executive director of the
Company. Other than this, none of the non-executive directors
received fees or other remuneration in 2004, 2003 and 2002. Five
highest paid employees' emoluments The emoluments of the five
highest paid individuals of the Company, one (2003: one; 2002: one)
of which is a director, in 2004, 2003 and 2002 are as follows: 2004
2003 2002 Salaries and other benefits $573,662 $553,658 $553,658
Bonus 152,490 141,294 102,706 Stock option benefits 620,060 120,314
54,529 Total emoluments $1,346,212 $815,266 $710,893 Their
emoluments of the five highest paid individuals were within the
following bands: 2004 2003 2002 Number of Number of Number of
individuals individuals individuals Nil to HK$1,000,000 ($128,596)
- - 2 HK$1,000,001 ($128,596) to HK$1,500,000 ($192,894) 4 5 3
HK$4,500,001 ($578,681) to HK$5,000,000 ($642,979) 1 - - In 2004,
2003 and 2002, no emoluments were paid by the Company to any of the
directors or the five highest paid individuals as an inducement to
join or upon joining the Company or as compensation for loss of
office. Our director has declined an option to purchase 500,000
Ordinary Shares which the Board granted in November 2004. 14.
Dividend Deemed dividend represents the beneficial conversion
feature relating to the preferential price of certain convertible
equity instruments investor receives when the effective conversion
price of the equity instruments is lower than the fair market value
of the common stock to which the convertible equity instrument
would have converted at the date of issuance. Accordingly, the
deemed dividend on preference shares represents the price
difference between the effective conversion price of the
convertible equity instrument and the ordinary share. Other than
the deemed dividend on preference shares as described above, no
dividend has been paid or declared by the Company in 2004, 2003 and
2002. Closure of register of members Those shareholders whose names
appear on the register of the Company on Friday, 6 May, 2005 will
be qualified to attend and vote at the annual general meeting of
the Company to be held on Friday, 6 May, 2005. The Register of
Members of the Company will be closed from Tuesday, 26 April, 2005
to Friday, 6 May, 2005, both days inclusive, during which period no
transfer of shares will be registered. In order to qualify for
attending and voting at the annual general meeting of the Company
to be held on Friday, 6 May, 2005, all transfer documents,
accompanied by the relevant share certificates, must be lodged for
registration with the Company's Share Registrar, Computershare Hong
Kong Investor Services Limited at Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong by no
later than 4:00 p.m. on Monday, 25 April, 2005. Share Capital
During the year ended December 31, 2004, the Company issued the
following shares: -- 762,343 Series B convertible preference
shares, which were converted into 8,439,220 Ordinary Shares of the
Company (after giving effect to the 10-for-1 stock split
immediately prior to the Global Offering) ("Ordinary Shares") upon
the completion of the Company's initial public offering on the New
York Stock Exchange and The Hong Kong Stock Exchange Company
Limited (the "Global Offering"); -- 3,428,571 Series C convertible
preference shares, which were converted into 59,999,990 Ordinary
Shares upon the completion of the Global Offering; -- 96,628,571
Series D convertible preference shares, which were converted into
1,620,507,900 Ordinary Shares upon the completion of the Global
Offering; -- 3,030,303,000 Ordinary Shares including Ordinary
Shares represented by American Depositary Receipts, in connection
with the Global Offering; -- 487,499,990 Ordinary Shares to Beida
Microelectronics Investment Ltd. ("Beida") upon receipt of payment
for and conversion of Series C convertible preference shares
pursuant to a Second Amended and Restated Series C Preference Share
Purchase Agreement dated December 19, 2003 between the Company, the
majority of its existing Series C convertible preference
shareholders (including Beida) and an additional investor for the
subscription by such investors in Series C convertible preference
shares; -- 136,640 Ordinary Shares to a service provider upon
achievement of certain milestones pursuant to a warrant to purchase
our Series B convertible preference shares we issued to the service
provider; -- 23,957,830 Ordinary Shares to a technology partner in
exchange for machinery and equipment; and -- 20,766,689 Ordinary
Shares to customer of the Company's employees pursuant to the
Company's share option plans (the "Stock Option Plans"). During the
year ended December 31, 2004, the Company repurchased 54,750 Series
A convertible preference shares (equivalent to 547,500 Ordinary
Shares) from an employee and 13,367,500 Ordinary Shares from the
Company's employees pursuant to the terms of the Stock Option Plans
which repurchase has been reflected on the Company's share register
as at December 31, 2004. Number of Shares Outstanding Outstanding
Share Capital as at December 31, 2004 18,232,959,139* * This has
not included 780,000 Ordinary Shares the Company repurchased from
some of its employees pursuant to the Company's employee stock
option plans, but which, for accounting purposes have been
reflected in the Company's Consolidated Statement of Shareholders'
Equity and Comprehensive Income (Loss). Repurchase, Sale or
Redemption of Securities Other than repurchases by the Company of
Ordinary Shares from employees pursuant to the terms of the Stock
Option Plans, as disclosed in the paragraphs (Share Capital) above,
the Company has not repurchased, sold or redeemed any additional
shares since the date of the Company's prospectus dated March 8,
2004. Compliance with the Code of Best Practice None of the
Directors is aware of any information which would reasonably
indicate that the Company is not, or was not, beginning from the
completion of the Global Offering until December 31, 2004, in
compliance with the Code of Best Practice applicable during the
year ended December 31, 2004 as set out in Appendix 14 of the
Listing Rules. Compliance with Model Code on Securities
Transactions by Directors The Directors confirm that the Company
has adopted a code of conduct regarding securities transactions by
directors on terms no less exacting than required by Appendix 10 of
the Listing Rules applicable during the year ended December 31,
2004. After due inquiry of the Directors, the Company reasonably
believes that the Directors have complied with required standards
set out in the Model Code on Securities Transactions by Directors
throughout the financial period. Review by Audit Committee The
Audit Committee of the Company has reviewed with the management of
the Company, the accounting principles and practices accepted by
the Group and has discussed with the Directors matters concerning
internal controls and financial reporting of the Company, including
a review of the audited financial statements of the Company for the
year ended December 31, 2004. ANNUAL GENERAL MEETING It is proposed
that the Annual General Meeting of the Company will be held on May
6, 2005. For details of the Annual General Meeting please refer to
the Notice of Annual General Meeting which is expected to be
published on or about April 6, 2005. Annual Report The Annual
Report for the year ended December 31, 2004 containing all the
information required by paragraphs 6 to 34 inclusive of Appendix 16
of Appendix 16 of the Listing Rules will be published on website of
The Stock Exchange of Hong Kong Limited (http://www.hkex.com.hk/)
as well as the website of the Company (http://www.smics.com/) in
due course. As at the date of this announcement, the directors of
the Company are Richard R. Chang as Chairman and executive director
of the Company; Lai Xing Cai and Fang Yao (alternate director to
Lai Xing Cai) as non-executive directors of the Company; and Ta-Lin
Hsu, Yen-Pong Jou, Tsuyoshi Kawanishi, Henry Shaw, Lip-Bu Tan and
Yang Yuan Wang as independent non-executive directors of the
Company. By order of the Board Semiconductor Manufacturing
International Corporation Richard R. Chang Chairman Shanghai, PRC
March 29, 2005 * For identification only Investor Contacts: Jimmy
Lai Calvin Lau Investor Relations Department Investor Relations
Department Tel: 86-21-5080-2000, ext. 16088 Tel: 86-21-5080-2000,
ext. 16693 Fax: 86-21-5080-3619 Fax: 86-21-5080-3619 Evonne Hwang
Investor Relations Department Tel: 86-21-5080-2000, ext. 16275 Fax:
86-21-5080-3619 Safe Harbor Statement (Under the Private Securities
Litigation Reform Act of 1995) "This announcement may contain, 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 are based on the Company's current
assumptions, expectations and projections about future events. The
Company uses words like "believe," "anticipate," "intend,"
"estimate," "expect," "project" 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 the
Company's senior management and involve significant risks, both
known and unknown, uncertainties and other factors that may cause
the Company'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 cyclically and market conditions in the
semiconductor industry, intense competition, timely wafer
acceptance by the Company's customers, timely introduction of new
technologies, the Company'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 and financial
stability in end markets. Investors should consider the information
contained in the Company's filings with the U.S. Securities and
Exchange Commission (SEC), including its registration statement on
Form F-1, as amended, filed with the SEC on 11 March, 2004,
especially in the "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
sections, and its registration statement on Form A-1 as filed with
the Stock Exchange of Hong Kong (SEHK) on 8 March, 2004, and such
other documents that the Company may file with the SEC or SEHK from
time to time, including on Form 6-K. Other unknown or unpredictable
factors also could have material adverse effects on the Company's
future results, performance or achievements. In light of these
risks, uncertainties, assumptions and factors, the forward-looking
events discussed in this announcement 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 announcement. All currency
figures stated in this report are in US Dollars unless stated
otherwise. The financial statement amounts in this report are
determined in accordance with US GAAP. Except as required by law,
the Company undertakes no obligation and does not intend to update
any forward-looking statement, whether as a result of new
information, future events or otherwise." PRNewswire -- March 29
END SECOND AND FINAL ADD DATASOURCE: Semiconductor Manufacturing
International Corporation
Copyright