SMIC Settles All Pending Lawsuits with TSMC: Anticipates No Disruption to Customers

    Key provisions of this settlement include:
    (a) mutual release of all claims that were or could have been brought in
        the pending lawsuits;
    (b) termination of SMIC's obligation to make remaining payments under the
        prior settlement agreement between the parties (approximately US$40
        million);
    (c) payment to TSMC of an aggregate of US$200 million (with US$15 million
        paid upon execution, funded from SMIC's existing cash balances, and
        the remainder to be paid in installments over a period of four years -
        US$15 million payable by 31 December, 2009, US$80 million payable by
        31 December, 2010, US$30 million payable by 31 December, 2011, US$30
        million payable by 31 December, 2012 and US$30 million payable by 31
        December, 2013);
    (d) grant to TSMC of 1,789,493,218 shares of SMIC (representing
        approximately 8% of SMIC's issued share capital as of October 31, 2009)
        and a warrant (exercisable within three years of issuance) to
        subscribe for 695,914,030 shares of SMIC, subject to adjustment, at a
        purchase price of HK$1.30 per share (which would allow TSMC to obtain
        total ownership of approximately 10% of SMIC's issued share capital
        after giving effect to the share issuances), subject to receipt of
        required government and regulatory approvals; and
    (e) certain remedies in the event of breach of this settlement.

    For more information, please contact:

    SMIC MEDIA CONTACTS

    For International Media:
     Matthew Szymanski
     Tel:   +86-21-3861-0000 x16100
     Email: Matthew_Szymanski@smics.com

    For Chinese Media:
     Joseph Xie
     Tel:   +86-21-3861-0000 x16102
     Email: Joseph_Xie@smics.com