Semiconductor Manufacturing International Corporation's (SMI) results for the first quarter of 2007 show sales increased to US$388.3 million from US$383.8 million in the fourth quarter of 2006.

The company reported a decrease in capacity to 177,150 8-inch equivalent wafers per month and a utilization rate of 86.2% in the first quarter of 2007. Gross margins were 9.5% in the first quarter of 2007 compared to 5.1% in the fourth quarter of 2006. Net income of US$8.8 million in the first quarter of 2007, compared to a net loss of US$9.6 million in the first quarter of 2006 and a net income of US$0.1 million in the fourth quarter of 2006.

"SMIC posted quarterly revenues of US$388.3 million dollars during the first quarter of 2007," said Dr. Richard Chang, chief executive officer of SMIC. "Gross profit increased to US$36.9 million in 1Q07 up 89.2% QoQ from US$19.5 million in 4Q06. Management fees from the Wuhan and Chengdu managed projects contributed to the revenue while demonstrating our ability to continue to grow our business."

With effect from the first quarter of 2007, the company has changed the estimated useful life of fab-related machinery and equipment in the computation of annual depreciation. This change has an effect on the company's gross profit and gross margin. Previously, they used a five-year straight-line depreciation method and have now changed the useful life estimate to a five to seven year range, which is consistent with industry practice and more accurately reflect the economics associated with the ownership of the equipment.