SMIC 3Q07 Comm Chip Update

Of the $391.4 million total revenues in 3Q 2007, communications chip manufacturing accounted for about 50%. Sequentially SMIC had a growth of 9.3% on q-o-q basis. Most of the communications chip revenues were generated from handset chips that it manufactures for chip vendors. Gross margins for the quarter stood at 10.8%. The company posted a net loss of $25.6 million during the period. However the loss was mainly due to severe price decline in the DRAM market which is the other focus area of SMIC.

During the quarter major customers continued to be Broadcom, TI and Qualcomm. SMIC entered into an agreement in 3Q07 with memory silicon manufacturer Qimonda for manufacturing DRAMs exclusively for them. Qimonda is a major supplier of memory chips for communication devices like cellular handsets. The quarter also saw collaboration with Cadence for RF Design Kit for Wireless IC.