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2021

Annual Report

IN CHINESE MAINLAND

EMPOWERED TECHNOLOGY

ENHANCED

COMPETITIVENESS

Section 1 Definitions

Section 2 Letter to Shareholders

Section 3 Corporate Profile and Principal Financial Indicators

Section 4 Management Discussion and Analysis

Section 5 Report of the Directors

Section 6 Corporate Governance

Section 7 Environmental, Social Responsibility and other Corporate Governance

Section 8 Significant Events

Section 9 Changes in Shares and Information of Shareholders

Section 10 Relevant Information on Bonds

Section 11 Financial Report

7 9 12 18 38
41
87
96
115
120
123

IMPORTANT NOTICE

Annual ReportSMIC2021

5

I. The Board of Directors and the Directors and senior management of the Company warrant that the content of

this annual report is true, accurate and complete and does not contain any false representations, misleading

statements or material omissions, and severally and jointly accept legal responsibility thereof. II. The Company was not profitable when it listed and has yet to become profitable No III.

Material risk alert

The Company has described in details the various risks it may face during its production and operation and the

countermeasures in this report. For further information, please refer to “IV. Risk Factors" in “Section 4 Management

Discussion and Analysis" of this report.

IV. All Directors of the Company attended the Board meeting. V. Ernst & Young has issued a standard unqualified auditors" report for the Company. VI.

Gao Yonggang, the person-in-charge of the Company and the person-in-charge of accounting affairs, and Liu

Chenjian, the head of the accounting department (person-in-charge of accounting), warrant the truthfulness,

accuracy and completeness of the financial report contained in this annual report. VII.

Plan for profit distribution or plan to convert capital reserves into share capital as approved by the Board in

the reporting period

The Company did not make profit distribution for 2021. The proposal still needs to be submitted to the 2022 annual

general meeting for approval. VIII. Any significant events such as special arrangements for corporate governance Special arrangements for corporate governance: The Company is a red-chip enterprise IX.

Risks associated with forward-looking statements

This report contains, in

addition to historical information, “forward-looking statements". These forward-looking statements

are based on SMIC"s current assumptions, expectations, beliefs, plans, objectives and projections about future events

or performance. SMIC uses words including but not limited to “believe", “anticipate", “intend", “estimate", “expect",

“project", “target", “going forward", “continue", “ought to", “may", “seek", “should", “plan", “could", “vision",

“goal", “aim", “aspire", “objective", “schedule", “outlook" and other similar expressions to identify forward looking

statements. These forward-looking statements are necessary estimates reflecting judgment of SMIC"s senior management

and involve significant risks, both known and unknown, uncertainties and other factors that may cause SMIC"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 cyclicality and market conditions in the semiconductor

industry, intense competition in the semiconductor industry, SMIC"s reliance on a small number of customers, timely

wafer acceptance by SMIC"s customers, timely introduction of new technologies, SMIC"s ability to ramp new products into

volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, parts, raw

materials and software, availability of manufacturing capacity, financial stability in end markets, orders or judgments from

pending litigation, intensive intellectual property litigation in the semiconductor industry, general economic conditions

and fluctuations in currency exchange rates. X.

Any appropriation of fund by the controlling shareholder and its related parties for non-operating purpose

None XI. Any provision of external guarantee in violation of the stipulated decision-making procedure None XII.

More than half of the Directors cannot warrant the truthfulness, accuracy and completeness of the annual

report disclosed by the Company No

Annual ReportSMIC2021

BEING

FOR OUR CUSTOMERS

Annual ReportSMIC2021

SECTION 1 DEFINITIONS

7

I. DEFINITIONS

In this report, unless the context requires otherwise, the following expressions shall have meanings as follows:

Definitions of common terms

Company or SMICforSemiconductor Manufacturing International Corporation

Group or Weforthe Company and its subsidiaries

SMIC HoldingsforSMIC Holdings Corporation

SMIS or SMIC ShanghaiforSemiconductor Manufacturing International (Shanghai) Corporation SMIB or SMIC BeijingforSemiconductor Manufacturing International (Beijing) Corporation SMIT or SMIC TianjinforSemiconductor Manufacturing International (Tianjin) Corporation SMIZ or SMIC ShenzhenforSemiconductor Manufacturing International (Shenzhen) Corporation SMNCforSemiconductor Manufacturing North China (Beijing) Corporation SMSCforSemiconductor Manufacturing South China Corporation CICTforChina Information and Communication Technology Group Co., Ltd. Datang HoldingsforDatang Telecom Technology & Industry Holdings Co., Ltd. Datang HKforDatang Holdings (Hongkong) Investment Company Limited China IC FundforChina Integrated Circuit Industry Investment Fund Co., Ltd.

Xinxin HKforXinxin (Hongkong) Capital Co., Ltd.

2021 AGMforthe Company"s annual general meeting held on June 25, 2021

Boardforthe board of directors of the Company

Director(s)forthe director(s) of the Company

China or the PRCforthe People"s Republic of China

CSRCforChina Securities Regulatory Commission

SEHK, HKSE or Hong Kong Stock ExchangeforThe Stock Exchange of Hong Kong Limited

SSEforThe Shanghai Stock Exchange

SSE STAR MarketforShanghai Stock Exchange Science and Technology Innovation Board

Hong Kong Listing Rulesforthe Rules Governing the Listing of Securities on the Hong Kong Stock Exchange, as amended from time to time

IFRSforthe International Financial Reporting Standards as issued by the International Accounting Standards Board

CASforthe China Accounting Standards for Business Enterprises as issued by the PRC Ministry of Finance

Ordinary Share(s)forthe ordinary share(s) of US$0.004 each in the share capital of the Company A Share(s)forthe Ordinary Shares issued by the Company on the SSE STAR Market Hong Kong Share(s)forthe Ordinary Shares issued by the Company on the Hong Kong Stock Exchange

RMB or yuanforRenminbi Yuan

Reporting period, this period or this yearforPeriod from January 1, 2021 to December 31, 2021

Corresponding period, previous period

or last yearforPeriod from January 1, 2020 to December 31, 2020

All references in this annual report to silicon wafer quantities are to 8-inch wafer equivalents, unless otherwise specified.

Conversion of quantities of 12-inch wafers to 8-inch wafer equivalents is achieved by multiplying the number of 12-

inch wafers by 2.25. References to key process technology nodes, such as 0.35 micron, 0.18 micron, 0.13 micron, 90

nanometer, 65 nanometer, 45 nanometer, 28 nanometer and 14 nanometer include the stated resolution of the process

technology, as well as resolutions down to, but not including, the next key process technology node of finer resolution.

For example, when we state “45 nanometer process technology", that includes 38 nanometer, 40 nanometer and 45

nanometer technologies.

Annual ReportSMIC2021

LETTER TO

SECTION 2 LETTER TO SHAREHOLDERS

9

Annual ReportSMIC2021

Dear Shareholders,

The year 2021 was an exceptional year in SMIC's development history. The global shortage of chips and

the strong demand for local and indigenous manufacturing brought the Company a rare opportunity,

while the restrictions of the entity list set many obstacles to the Company's development. Focused on

the primary task of ensuring operation continuity, meeting customer demand, and alleviating the supply

chain shortage, under the leadership of the Board of Directors and through the concerted efforts of all

employees, the Company continued to push forward, while marketing, sales, planning, procurement, and

operations proceeded in tandem, and the Company's operation continuity has been basically stabilized.

The Company has made persistent efforts to meet customer demands and alleviate shortages in the supply

chain. The Company has also maintained open communication and close cooperation with customers and suppliers, effectively understood the demands and development of end-user companies and the entire

industry ecosystem, and continued to launch the construction of capacity. At the same time, the Company

continues to improve customer satisfaction by meeting customers' needs, which has been broadly recognised

and supported by customers. The Company maintained full utilization for the whole year of 2021 and achieved solid growth in its revenue of US$5.4 billion from US$3.9 billion in the previous year.

In terms of mature technology, the eight major product platforms laid out by the Company in the past four

years have precisely penetrated the existing traditional markets such as mobile, consumer products, and

incremental markets such as IoT, panels, electric vehicles, new energy and so forth. In terms of advanced

technology, under the continuous efforts of the dual-preparation effect of cultivating a diversified customer

base and multi-product platforms, marginal benefits of output continually improves. The Company's development is inseparable from talent cultivation. Through multiple measures such as

multi- channel recruitment, expansion of talent development avenues and establishing medium- and long-

term incentive mechanisms, the Company further optimizes the structure of the talent pool, building a

dedicated and innovative team. The Company continues to uphold the concept of "caring for people, the environment and society" and

actively practises corporate social responsibility. The Company also won the "Outstanding CSR Award" from

Mirror Post Hong Kong again, and the first "Corporate Social Responsibility Award" from China IC Top

Award. The Company will continue to strengthen its governance and create long-term value for investors.

Facing the evolution of the epidemic, the complex external environment, and the rapidly changing industry

dynamics, 2022 will remain a year of challenges and opportunities. While the overall capacity in the

industry is still in short supply, demand has been slowing down in some application areas, and there is a

gradual shift from capacity shortage across the board to structural shortage. Following the development

trend of the industry, dynamically balancing the existing traditional and incremental demand, and filling

the structural gap of the supply chain are important tasks for the Company in 2022. The Company will

consistently adhere to compliant operations, continuing internationalization and deep integration into the

global supply chain, in order to serve customers across the globe; the Company will continue to strengthen

close cooperation with customers and suppliers, orderly advance capacity expansion projects, secure existing

volume, and expand incremental volume.

At last, we sincerely thank all employees for their efforts and dedication, and thanks to all our customers,

suppliers, shareholders and the community for their trust and support!

Chairman

Shanghai,PRC

March 30, 2022

Annual ReportSMIC2021

ON BEHALF OF SHAREHOLDERS

Annual ReportSMIC2021

11

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500

Others

20182017

2019
2020

Chinese Mainland and

Hong Kong

China

North America

Europe and Asia

0.35m 0.18m 0.13m 90nm

55/65nm

40/45nm

FinFET/28nm

To tal Revenue Re venue (US$ million) Sale s by Region

Wafer Sale

s by Application

Wafer Sales by Technology

Smart Phone

Smart Home

Consumer Electronics

64%
22%
14% 13% 32%
31%
24%
3% 15% 15% 29%
3% 6% 64%
23%
13% 17%

45%20%

18% 4%

33%16%

9% 30%
3% 5% 29%
SECTION 3 CORPORATE PROFILE AND PRINCIPAL FINANCIAL INDICATORS 12

Annual ReportSMIC2021

I. BASIC CORPORATE INFORMATION

Name of the Company in Chinese

Chinese abbreviation

Name of the Company in EnglishSemiconductor Manufacturing International Corporation

English abbreviationSMIC

Legal representative of the Company

(Note)

Gao Yonggang

Registered address of the CompanyCricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1 1111 Cayman Islands

Office address of the Company18 Zhangjiang Road, Pudong New Area, Shanghai, PRC Postal code of the office address of the Company201203

Website addresshttp://www.smics.com/

E-mailir@smics.com

Place of business in Hong KongSuite 3003, 30th Floor, No. 9 Queen"s Road Central, Hong Kong Authorized Representatives under Hong Kong Listing RulesGao Yonggang, Zhao Haijun Joint Company SecretariesGuo Guangli, Hoo Mei Fung Custodian of A SharesShanghai Branch of China Securities Depository and Clearing Corporation Limited

Hong Kong Share registrarComputershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen"s Road East, Wan Chai, Hong Kong

2021 annual results announcementMarch 30, 2022

2022 annual general meetingJune 24, 2022

Book closure period for 2022 annual general meeting (Hong Kong Shares)June 21, 2022 to June 24, 2022, both days inclusive

Record date for the 2022 annual general

meeting (A Shares)June 20, 2022

Financial year end dateDecember 31

Note: The Company is registered in the Cayman Islands, which does not have the concept of a legal representative,

though its person-in-charge is Gao Yonggang.

II. CONTACT PERSONS AND CONTACT METHODS

NameGuo GuangliWen JiehanContact address18 Zhangjiang Road, Pudong New Area, Shanghai, PRC18 Zhangjiang Road, Pudong New Area, Shanghai, PRCTelephone021-20812800021-20812800E-mailir@smics.comir@smics.com

III. INFORMATION DISCLOSURE AND PLACE OF INSPECTION

Media and website selected by the Company for information disclosureShanghai Securities News (www.cnstock.com), China Securities Journal (www.cs.com.cn), Securities Times (www.stcn.com) and Securities Daily (www.zqrb.cn)Website designated by Shanghai Stock Exchange for publishing the annual report of the Companyhttp://www.sse.com.cn

Website designated by Hong Kong Stock

Exchange for publishing the annual report of

the Companyhttp://www.hkexnews.hk

Place of inspection of the annual report of the CompanyBoard Affairs Office, 18 Zhangjiang Road, Pudong New Area, Shanghai, PRC

13

Annual ReportSMIC2021

SECTION 3 CORPORATE PROFILE AND PRINCIPAL FINANCIAL INDICATORS 13

Annual ReportSMIC2021

IV. INFORMATION ON THE COMPANY"S SHARES/DEPOSITORY RECEIPTS (I) INFORMATION ON THE COMPANY"S SHARES Class of sharesStock exchange and board on which shares are listedStock abbreviation Stock code

A SharesSSE STAR Market

Note: ADR programme has been terminated on March 4, 2021 (US Eastern Standard Time (“EST")).

V. OTHER RELEVANT INFORMATION

VI. PRINCIPAL ACCOUNTING DATA AND FINANCIAL INDICATORS FOR THE LAST THREE YEARS (I) PRINCIPAL ACCOUNTING DATA in USD'000

Year ended

12/31/21

Revenue5,443,112 1,701,803 825,285 3,011,895 3,819,769 As of

12/31/21

Equity attributable to owners of the Company17,149,664 36,110,941 14

Annual ReportSMIC2021

SECTION 3 CORPORATE PROFILE AND PRINCIPAL FINANCIAL INDICATORS 14

Annual ReportSMIC2021

(II) PRINCIPAL FINANCIAL INDICATORS

Year ended

12/31/2112/31/2012/31/21 as compared with 12/31/20 (%)12/31/19

Gross margin30.8%23.6%Increased by 7.2 percentage points20.6% Net margin32.6%17.1%Increased by 15.5 percentage points5.1% EBITDA margin70.2%54.3%Increased by 15.9 percentage points44.1%

Basic earnings per share$0.22$0.11100.0 $0.04Diluted earnings per share$0.21$0.1190.9 $0.04Basic earnings per share, net of non-recurring profit or loss$0.10$0.04150.0 -$0.02

Weighted average return on equity10.5%7.4%Increased by 3.1 percentage points4.2%

Weighted average return on equity, net of non-recurring profit or loss5.1%2.6%Increased by 2.5 percentage points-1.9%

Percentage of research and development (“R&D") expenses to revenue11.7%17.3%Decreased by 5.6 percentage points22.1%

Profit attributable to owners of the Company, net of non-recurring profit or loss was US$825.3 million for this year,

compared to US$246.3 million for last year. The increase was primarily due to the increase in wafer shipments, higher

average selling price and product-mix change during the period.

Percentage of research and development (“R&D") expenses to revenue decreased by 5.6%, mainly because the increase

in revenue for this year, and part of R&D capacity was put into production to ensure customers" demand in response to

tight capacity, resulting to lower percentage of R&D expenses. DISCREPANCIES IN ACCOUNTING DATA BETWEEN DIFFERENT ACCOUNTING STANDARDS

(I) DISCREPANCIES IN NET PROFIT AND NET ASSETS ATTRIBUTABLE TO OWNERS OF THE COMPANY IN THE FINANCIAL REPORT DISCLOSED UNDER IFRS AND UNDER CAS

in USD'000 Profit attributable to owners of the CompanyEquity attributable to owners of the Company Year ended 12/31/21Year ended 12/31/2012/31/2112/31/20

Prepared in accordance with CAS1,667,673626,65017,149,66415,174,594Adjustments to items and amounts prepared in accordance with IFRS:The equity method on one-quarter-lag basis to pick up the investment income or loss

(1) -6,300--The equity interest in an associate being passively diluted (2)

34,13082,600--Perpetual subordinated convertible bonds

(3) ---(299,388)Prepared in accordance with IFRS1,701,803715,55017,149,66414,875,206

Notes:

(1) In

2020, given that the financial information of the investees could be obtained in a timely manner, in the preparation of IFRS

financial statements, the Group recognised the investment income or loss and OCI based on accounting data of investees in the

same accounting period to maintain the consistency in the financial information under IFRS and CAS. (2)

Under CAS, gains or losses arising from dilution of investments in associates and joint ventures should be recorded in equity w

hile

adjusting the carrying amount of the long-term investment. Under IFRS, gains or losses of which should be recorded in profit or

loss, while adjusting the carrying amount of the long-term investment. (3)

Under CAS, perpetual subordinated convertible bonds are listed in the item of other equity instruments and incorporated into

the equity attributable to owners of the Company. Under IFRS, perpetual subordinated convertible bonds are not included in the

equity attributable to owners of the Company. 15

Annual ReportSMIC2021

SECTION 3 CORPORATE PROFILE AND PRINCIPAL FINANCIAL INDICATORS 15

Annual ReportSMIC2021

VIII. PRINCIPAL FINANCIAL DATA FOR THE YEAR OF 2021 BY QUARTER in USD"000

Revenue1,103,6491,344,1021,415,3021,580,059Profit attributable to owners of the Company158,876687,803321,351533,773Profit attributable to owners of the Company, net of non-recurring profit or loss104,569258,090215,348247,278Net cash flow generated from operating activities463,6371,039,344559,356949,558

IX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNTS in USD"000

12/31/2012/31/19

Gain on disposal of property, plant and equipment and assets classified as held-for-sale1,4964,004Government funding362,483293,305Gain on disposal of a subsidiary and some shares of an associate83,50481,377Net gain arising on financial instruments at FVPL53,96234,853Share of gains arising on financial instruments at FVPL of investment using equity method120,84254,751One-off adjustment to the tax expense under the new tax policy--Others(1,045)(752)

621,242467,538Effects of income tax(84,831)(76,243)Impact on non-controlling interests (after tax)(67,141)(53,882)

Total469,270337,413

According to Interpretative Announcement No. 1 [2008] of the Information Disclosure of the Companies Public Offering

Securities — Non-recurring Profit or Loss as issued by CSRC, non-recurring profit or loss refers to the profit and loss

arising from various transactions and events that have no direct relationship with the normal business of a company and

that are related to the normal business operation due to its special nature and contingency with affecting the statements

users to make a correct judgment on the company's operating performance and profitability.

X. ITEMS MEASURED AT FAIR VALUE

in USD"000

12/31/20

Investments in equity securities156,36766,65767,925Structured deposits and monetary funds111,477(33,293)766Cross currency swap contracts(112,544)179,549(4,595)Interest rate swap contracts(7,700)11,088(9,673)Foreign-currency forward exchange contracts(333)333(1,481)

Total147,267224,33452,942

16

Annual ReportSMIC2021

SECTION 3 CORPORATE PROFILE AND PRINCIPAL FINANCIAL INDICATORS 16

Annual ReportSMIC2021

XI. EBITDA

in USD"000

12/31/2012/31/19

Profit for the year669,098158,860Finance costs73,23463,460Depreciation and amortisation1,312,6941,127,756Income tax expense68,31023,416

EBITDA2,123,3361,373,492

XII. BUSINESS PERFORMANCE HIGHLIGHTS FOR THE PREVIOUS FIVE YEARS PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME DATA

For the year ended December 31,

20212020201920182017

(in US$ thousands, except per share, shares, percentages and piece)

Revenue3,906,975 3,115,672 3,359,984 3,101,175Cost of sales(2,986,062) (2,473,213) (2,613,307) (2,360,431)

Gross profit920,913 642,459 746,677 740,744Research and development expenses(677,413) (687,369) (663,368) (509,356)Sales and marketing expenses(29,466) (26,836) (30,455) (35,796)General and administration expenses(266,376) (254,924) (199,818) (198,036)Impairment losses on financial assets, net(199) (1,076)(937)137Other operating income364,487 376,656 162,541 127,202

Profit from operations311,946 48,910 14,640 124,895Interest income170,794 138,988 64,339 27,090Finance costs(73,234) (63,460) (24,278) (18,021)Foreign exchange gain/(loss)89,8189,495 (8,499) (12,694)Other gains, net50,741 42,981 24,282 16,499Share of gains/(losses) of investments accounted for using equity method187,3435,362 21,203 (9,500)

Profit before tax737,408 182,276 91,687 128,269Income tax expense(68,310) (23,416) (14,476) (1,846)

669,098 158,860 77,211 126,423

Item that may be reclassified subsequently to profit or lossExchange differences on translating foreign operations66,389 (16,769) (35,919) 23,213Change in value of available-for-sale financial assets-(2,381)-(2,381)Cash flow hedging(21,286) (26,524) 35,931 35,143Share of other comprehensive income of joint ventures accounted for using equity method---17,646Others---(131)

Items that will not be reclassified subsequently to profit or lossActuarial gains or losses on defined benefit plans-(1,532)129(436)

Total comprehensive income for the year714,201 114,035 77,352 199,477

Profit/(loss) for the year attributable to:Owners of the Company715,550 234,681 134,055 179,679Non-controlling interests(46,452) (75,821) (56,844) (53,256)

669,098 158,860 77,211 126,423

Total comprehensive income for the year attributable to:Owners of the Company760,639 188,831 133,977 251,135Non-controlling interests(46,438) (74,796) (56,625) (51,658)

714,201 114,035 77,352 199,477

Basic$0.11$0.04$0.03$0.04Diluted$0.11$0.04$0.03$0.04Shares issued and outstanding7,703,507,527 5,056,868,912 5,039,819,199 4,916,106,889

Gross margin23.6% 20.6% 22.2% 23.9%Net margin17.1%5.1%2.3%4.1% Wafers shipped (in piece)5,698,624 5,028,796 4,874,663 4,310,779 17

Annual ReportSMIC2021

SECTION 3 CORPORATE PROFILE AND PRINCIPAL FINANCIAL INDICATORS 17

Annual ReportSMIC2021

(II) MAJOR FINANCIAL POSITION DATA

As of December 31,

20212020201920182017

(In USD"000)

Total assets36,110,94131,320,575 16,437,820 14,424,320 11,918,451Total non-current assets20,893,07616,149,220 9,563,979 8,274,729 7,749,467Property, plant and equipment14,260,78312,138,021 7,757,247 6,777,970 6,523,403Investments in associates1,859,1511,440,976 1,139,317 1,135,442 758,241Financial assets at amortised cost-non-current3,725,9621,638,721---Total current assets15,217,86515,171,355 6,873,841 6,149,591 4,168,984Inventories1,193,811798,776 628,885 593,009 622,679Trade and other receivables1,215,473975,927 836,143 837,828 616,308Financial assets at amortised

cost - current3,838,1292,806,517 2,276,370 1,996,808 683,812Restricted cash - current214,191575,258 804,547 592,290 336,043Cash and cash equivalent8,581,7469,826,537 2,238,840 1,786,420 1,838,300Total liabilities10,672,7989,638,837 6,239,958 5,500,740 5,197,116Total non-current liabilities6,219,1785,746,127 3,034,759 2,641,512 3,290,337Total current liabilities4,453,6203,892,710 3,205,199 2,859,228 1,906,779Total equity25,438,14321,681,738 10,197,862 8,923,580 6,721,335Non-controlling interests8,288,4796,507,144 3,964,617 2,905,766 1,488,302

(III) MAJOR CASH FLOW DATAquotesdbs_dbs44.pdfusesText_44

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