Semiconductor Manufacturing International Corporation (SMI) announced its consolidated results of operations for the three months

ended June 30, 2006.

Sales increased 2.9% in the second quarter of 2006 to US$361.4 million from US$351.1 million in the prior quarter. The company

reported an increase in capacity to 167,251 8-inch equivalent wafers per month and a utilization rate of 93.5% in the second quarter of 2006.

Gross margins were 13.6% in the second quarter of 2006 compared to 12.4% in the first quarter of 2006. Net income was US$2.2 million in the second quarter of 2006, compared to a net loss of US$8.7 million in the first quarter of 2006.

"We continue to improve on our manufacturing core competency as we saw an increase in our revenues from 0.13 micron and below technologies contributing 47.5% of total revenues in the second quarter," said Dr. Richard Chang, Chief Executive Officer of SMIC. "Revenues generated from 0.13 micron logic products as a percentage of our logic revenues significantly increased to 22.5% from 13.3% in the first quarter. We expect this trend to continue as more of our customers migrate to our 0.13 micron and 90 nanometer logic processes."

The company recognized an income tax benefit of US$18.9 million in the second quarter as a result of strategic tax planning based on US GAAP FAS 109.


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