AVANT CORP
EXHIBIT 10.10
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>2
<FILENAME>a2043644zex-10_10.txt
<DESCRIPTION>EXHIBIT 10.10
<TEXT>

<PAGE>
                                                                   Exhibit 10.10


                  SERIES A PREFERENCE SHARE PURCHASE AGREEMENT

                                     BETWEEN

              SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION

                                       AND

                 THE CERTAIN INVESTORS, INCLUDING THE COMPANY











                            dated as of March 8, 2001


<PAGE>

<TABLE>
<CAPTION>


                                TABLE OF CONTENTS

                                                                                                               PAGE

<S>               <C>                                                                                           <C>

Section 1.        Authorization and Sale of Preference Shares....................................................1

         1.1      Authorization..................................................................................1
         1.2      Sale of Series A Preference Shares.............................................................1

Section 2.        Closings; Closing Dates; Deliveries............................................................2

         2.1      Closings; Closing Dates........................................................................2
         2.2      Deliveries.....................................................................................2
         2.3      Default........................................................................................2

Section 3.        Representations and Warranties of the Company..................................................3

         3.1      Organization and Standing......................................................................3
         3.2      Corporate Power................................................................................3
         3.3      Capitalization.................................................................................4
         3.4      Authorization..................................................................................5
         3.5      Title to Properties and Assets; Liens..........................................................5
         3.6      Financial Statements...........................................................................5
         3.7      Intellectual Properties........................................................................6
         3.8      No Third Party Consent or Violation............................................................6
         3.9      Compliance with Other Instruments, Laws; No Instruments........................................7
         3.10     Litigation.....................................................................................7
         3.11     Employees......................................................................................7
         3.12     Compliance with Laws; Permits..................................................................8
         3.13     Compliance with the Securities Act.............................................................8
         3.14     No Material Changes............................................................................8
         3.15     Disclosure.....................................................................................9
         3.16     Transaction with Affiliates...................................................................10
         3.17     Taxes.........................................................................................10
         3.18     Corporate Records.............................................................................10
         3.19     Proprietary Information and Invention Agreements..............................................10
         3.20     Use of Proceeds...............................................................................10
         3.21     No Export or Import Restrictions..............................................................10
         3.22     Equal Terms...................................................................................11
         3.23     No Brokers or Finders.........................................................................11
         3.24     Employee Benefit Plans........................................................................11

Section 4.        Representations and Warranties of Investor....................................................11

         4.1      Investment Representations and Covenants of Investor..........................................11
         4.2      Authority; Enforceability.....................................................................12
         4.3      Compliance with Laws..........................................................................13
         4.4      No Public Market..............................................................................13
         4.5      Transfer Restrictions.........................................................................13
         4.6      Receipt of Information........................................................................13

Section 5.        Conditions to First Closing of Investor.......................................................13

         5.1      Representations and Warranties................................................................13


                                       i


<PAGE>


         5.2      Covenants.....................................................................................13
         5.3      Qualification.................................................................................14
         5.4      Officer's Certificate.........................................................................14
         5.5      PRC Counsel Opinion...........................................................................14
         5.6      Cayman Islands Counsel Opinion................................................................14
         5.7      U. S. Counsel Opinion.........................................................................14
         5.8      Shareholders Agreement and Registration Rights Agreement......................................14
         5.9      Amended and Restated Articles and Amended and Restated Memorandum.............................14
         5.10     Share Certificates............................................................................14
         5.11     Authorized Agent..............................................................................15

Section 6.        Conditions to Subsequent Closings of Investor.................................................15

         6.1      Covenants.....................................................................................15
         6.2      Qualification.................................................................................15
         6.3      Authorized Agent..............................................................................15
         6.4      Officer's Certificate.........................................................................15
         6.5      Share Certificates............................................................................16

Section 7.        Conditions to Closing of Company..............................................................16

         7.1      Representations and Warranties................................................................16
         7.2      Qualification.................................................................................16
         7.3      Shareholders Agreement and the Registration Rights Agreement..................................16

Section 8.        Miscellaneous.................................................................................16

         8.1      Termination...................................................................................16
         8.2      Governing Law, Venue and Service of Process...................................................17
         8.3      Survival......................................................................................17
         8.4      Successors and Assigns........................................................................17
         8.5      Delegation to Affiliates......................................................................17
         8.6      Further Assurance.............................................................................18
         8.7      Entire Agreement; Amendment...................................................................18
         8.8      Notices.......................................................................................18
         8.9      Delays or Omissions...........................................................................19
         8.10     Confidentiality...............................................................................19
         8.11     Expenses......................................................................................19
         8.12     Counterparts..................................................................................19
         8.13     Severability..................................................................................20


                                       ii


<PAGE>


                               TABLE OF CONTENTS
                                  (continued)

                                                                                                              Page


         Schedules

                  Schedule A -Funding Schedule .................................................................I-1

         Exhibits

                  Exhibit A - First Amended and Restated Articles of Association...............................II-1

                  Exhibit B - Shareholders Agreement..........................................................III-1

                  Exhibit C - Registration Rights Agreement....................................................IV-1

                  Exhibit D - Amended and Restated Memorandum of Association....................................V-1

                  Exhibit E - Termination, Release, Waiver and Indemnification Agreement.......................VI-1

                  Exhibit F - Release, Waiver and Indemnification Agreement...................................VII-1

                  Exhibit G - Financial Statements...........................................................VIII-1

                  Exhibit H - Business Plan....................................................................IX-1

                  Exhibit I - Confidential Information, Invention Assignment and Arbitration Agreement..........X-1

                  Exhibit J - PRC Counsel Opinion..............................................................XI-1

                  Exhibit K - Cayman Islands Counsel Opinion .................................................XII-1

                  Exhibit L - U. S. Counsel Opinion .........................................................XIII-1

                  Exhibit M - Certificate of President .......................................................XIV-1

</TABLE>
                                      iii


<PAGE>


                  SERIES A PREFERENCE SHARES PURCHASE AGREEMENT

         This Series A Preference Shares Purchase Agreement (the "Agreement") is
made  as of  March  o,  2001  among  Semiconductor  Manufacturing  International
Corporation,  a Cayman  Islands  company (the  "Company"),  and the investor set
forth below (the  "Investor"  and,  together  with the other  purchasers  of the
Series A Preference  Shares  pursuant to one or more Series A Preference  Shares
Purchase Agreements substantially identical to this Agreement, the "Investors").

         WHEREAS, the Company has established a wholly-foreign-owned enterprise,
Semiconductor Manufacturing International Corporation (Shanghai) (the "Operating
Entity"),  in the People's  Republic of China (the "PRC") for the  manufacturing
and marketing of advanced technology semiconductors;

         WHEREAS,  the Company wishes to issue and sell to Investor and Investor
wishes to purchase from the Company a certain equity interest in the Company;

         WHEREAS,  the  Company  wishes  to  issue  and  sell to  several  other
Investors,  which term includes certain entities associated with Goldman Sachs &
Co. (which entities are sometimes  hereinafter referred to individually as a "GS
Investor" and  collectively  as the "GS Investors") and the other Investors wish
to purchase from the Company a certain equity interest in the Company;

         NOW,  THEREFORE,  in  consideration of the foregoing and the respective
representations, warranties, covenants, agreements, undertakings and obligations
set forth herein and other  consideration  the sufficiency and adequacy of which
is hereby  acknowledged,  and intending to be legally bound hereby,  the parties
hereto agree as follows:


                                   SECTION 1.

                   AUTHORIZATION AND SALE OF PREFERENCE SHARES

         1.1      AUTHORIZATION.

         The Company has authorized the issuance and sale of up to [800,000,000]
of its Series A Preference Shares with a par value of US$1.1111 each (" Series A
Preference Shares"), having the rights, restrictions, privileges and preferences
as set forth in the Company's First Amended and Restated Articles of Association
attached hereto as EXHIBIT A (the "Amended and Restated Articles").

         1.2      SALE OF SERIES A PREFERENCE SHARES.

         Subject to the terms and conditions  hereof, the Company will issue and
sell to Investor,  and Investor will  purchase  from the Company,  the number of
Series A Preference Shares (the "Shares") set forth opposite  Investor's name on
SCHEDULE A at a purchase price of US$1.1111 per share (the "Purchase  Price") in
accordance  with the funding  schedule  contained  in  SCHEDULE A (the  "Funding
Schedule").


<PAGE>


                                   SECTION 2.

                       CLOSINGS; CLOSING DATES; DELIVERIES

         2.1      CLOSINGS; CLOSING DATES.

         The consummation of the sale and purchase of Series A Preference Shares
on each date specified in the Funding Schedule (the "Funding Dates") pursuant to
this  Agreement  shall be  referred to herein as a  "Closing".  The date of each
Closing shall be referred to herein as a "Closing Date". The consummation of the
sale and purchase of Series A  Preference  Shares on the first such Funding Date
shall be  referred to herein as the "First  Closing"  and the date of such First
Closing shall be referred to herein as the "First  Closing  Date".  The Closings
other than the First  Closing  shall be  referred  to herein as the  "Subsequent
Closings" and the dates of such Subsequent  Closings shall be referred to herein
as the  "Subsequent  Closing  Dates".  The place of each Closing  (including the
place of delivery to  Investor  by the  Company of the  certificates  evidencing
Series A  Preference  Shares  being  purchased  and the place of  payment to the
Company by Investor of the Purchase Price  therefor)  shall be at the offices of
the Company, or such other place as Investor and the Company may mutually agree.

         2.2      DELIVERIES.

         At each  Closing,  subject  to the terms  and  conditions  hereof,  the
Company will deliver to Investor a certificate or certificates  representing the
Shares to be purchased by Investor at such  Closing,  and Investor  will deliver
the  payment of the  Purchase  Price  therefor by wire  transfer of  immediately
available funds in accordance with the Company's  written  instructions.  At the
First  Closing  only,  Investor  shall pay the  Company an  aggregate  amount of
US$[________], in addition to the Purchase Price.

         2.3      DEFAULT.

         Investor   acknowledges  that  the  Company  has  or  will  enter  into
agreements  in respect of the  purchase of capital  equipment  and  know-how and
other  contractual  obligations  in  reliance  on the  agreement  by Investor to
purchase the Shares specified in the Funding Schedule,  subject to the terms and
conditions  of  this  Agreement.  Consequently,  Investor  agrees  that  if  the
conditions  precedent to its purchase of the Shares at the Closing have been met
and Investor nevertheless fails or refuses to purchase all or any portion of the
Shares which it would then be obligated to purchase,  then interest shall accrue
on the Purchase  Price  payable at the relevant  Closing at an interest  rate of
0.017% per day, without compounding.  If, within thirty (30) calendar days after
the conditions precedent have been fully satisfied, Investor fails or refuses to
purchase  all or any  portion of the Shares it is  obligated  to purchase at the
relevant  Closing,  then

                  (i) the  Company  shall be  entitled to maintain an action for
damages  against  Investor;

                  (ii)  Investor  shall forfeit any further right (but shall not
be relieved of any further  obligation for purposes of assessing  damages to the
Company  pursuant to clause (i) above) to purchase Shares  hereunder;

                                       2

<PAGE>


                  (iii) the  Company  may sell such Shares to any other buyer or
buyers at such price or prices as it may designate (subject to the provisions of
the  Shareholders  Agreement  dated the date hereof attached hereto as EXHIBIT B
(the  "Shareholders  Agreement");  and

                  (iv) any Shares  previously  purchased  by  Investor  shall be
subject to  mandatory  sale to one or more  other  Shareholders  of the  Company
designated by the Board of Directors of the Company at 50% of the price at which
the Shares were purchased by Investor.

                                   SECTION 3.

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY


         The  Company  hereby represents and warrants to Investor as of the date
hereof and as of the First Closing Date as follows:

         3.1      ORGANIZATION AND STANDING.

                  (a) The Company is a  corporation  duly  organized and validly
existing under,  and by virtue of, the laws of the Cayman Islands,  British West
Indies and is in good  standing  under such laws.  The Company has all requisite
corporate  power to own and operate its properties  and assets,  and to carry on
its  business  as  presently  conducted.  The  Company is duly  qualified  to do
business and is in good standing in each  jurisdiction in which the character of
the business  conducted by it or the location of the properties  owned or leased
by it make such qualification  necessary,  except for jurisdictions in which the
failure to so qualify would not have a material  adverse effect on the financial
condition  of  the  Company  as  a  whole.

                  (b) The Operating Entity is a wholly-foreign-owned  enterprise
duly  established  and  validly  existing  under the laws of the PRC and has all
requisite  power and  authority  (corporate  or other)  to own and  operate  its
properties  and  assets and to carry on its  business  as now  conducted  and as
presently proposed to be conducted.

         3.2      CORPORATE POWER.

         The Company has all requisite  legal and corporate power to execute and
deliver this Agreement,  the Shareholders  Agreement and the Registration Rights
Agreement attached hereto as EXHIBIT C (the "Registration Rights Agreement"), to
issue and sell the Series A Preference  Shares on the terms set forth herein and
its Ordinary  Shares (as defined below) issuable upon conversion of the Series A
Preference  Shares, and to carry out and perform its obligations under the terms
of this

         Agreement,  the Amended and Restated Articles, the Amended and Restated
Memorandum  of  Association  attached  hereto  as  EXHIBIT D (the  "Amended  and
Restated  Memorandum"),  the Shareholders  Agreement and the Registration Rights
Agreement.  The  Amended and  Restated  Articles  and the  Amended and  Restated
Memorandum have been duly adopted by the Company's Shareholders.

                                       3

<PAGE>


         3.3      CAPITALIZATION.

         As of the moment immediately prior to the First Closing, the authorized
capital stock of the Company will consist of (i)  2,000,000,000  ordinary shares
with  nominal or par value of  US$0.0004  each ("  Ordinary  Shares"),  of which
[8,000,000]  shares  will be  issued  and  outstanding  and  (ii)  [800,000,000]
Preference Shares with nominal or par value of US$1.1111 each, all of which have
been  designated  Series A Preference  Shares,  none of which will be issued and
outstanding.  The  Company  has  reserved  (i) [ ] million  Ordinary  Shares for
issuance upon  conversion of the Series A Preference  Shares to be sold pursuant
to this Agreement and other  purchase  agreements to be entered into between the
Company and other investors, (ii) [ ] million Ordinary Shares for issuance under
its 2001 Stock Plan,  (iii) [ ] million  Ordinary  Shares for issuance under its
2001  Regulation S Stock Plan,  (iv) [ ] million Series A Preference  Shares for
issuance under its 2001  Preference  Shares Stock Plan, (v) [ ] million Series A
Preference  Shares for issuance  under its 2001  Regulation S Preference  Shares
Stock Plan, (vi) [ ] million Ordinary Shares for issuance upon the conversion of
Series A Preference  Shares to be acquired upon the exercise of options  granted
under the 2001 Series A Preference Shares Stock Plan, (vii) [ ] million Ordinary
Shares  for  issuance  upon the  exercise  of  options  granted  under  the 2001
Regulation  S Series A Stock Plan.  The 2001 Stock Plan,  the 2001  Regulation S
Stock Plan,  the 2001  Preference  Shares  Stock Plan and the 2001  Regulation S
Preference  Shares Stock Plan are  hereinafter  referred to  collectively as the
"Incentive Stock Plans".

         Certain  rights  granted for the purchase of the  Company's  securities
have  been  terminated  pursuant  to  Termination,   Release,   Waiver  and  the
Indemnification  Agreements and Release, Waiver and Indemnification  Agreements,
in the forms attached hereto as EXHIBITS E AND F,  respectively.  Other than the
options  granted  pursuant  to  Incentive  Stock  Plans,  there are no any other
outstanding options, warrants, rights (including conversion or preemptive rights
and  rights of first  refusal or similar  rights)  or  agreements,  orally or in
writing,  for  the  purchase  or  acquisition  from  the  Company  of any of its
securities.  Except as provided in the Registration  Rights  Agreement,  (i) the
Company is presently not under any  obligation and has not granted any rights to
register  under the U. S.  Securities  Act of 1933, as amended (the  "Securities
Act") or the securities  laws of any other  jurisdiction  any of its securities;
and (ii) there are no existing voting trusts or similar  agreements to which the
Company is a party with respect to the voting of the  Company's  capital  stock.
The rights, privileges and preferences of the Series A Preference Shares and the
Ordinary  Shares are as stated in the Amended  and  Restated  Articles  and such
rights,  privileges  and  preferences  are valid,  binding  and  enforceable  in
accordance  with the laws of the Cayman  Islands.  All  issued  and  outstanding
Ordinary Shares have been duly authorized and validly issued, are fully paid and
nonassessable,  and were issued in  accordance  with the  Company's  Amended and
Restated  Memorandum and Articles of Association then in effect,  Cayman Islands
Companies Law and the  registration  or  qualification  provisions of applicable
securities laws  (including the Securities Act) or pursuant to valid  exemptions
thereunder. Except as otherwise provided in the Amended and Restated Articles or
as  contemplated  in  this  Agreement,   the   Shareholders   Agreement  or  the
Registration  Rights  Agreement,  the Company has no obligation  (contingent  or
other) to purchase,  redeem or otherwise  acquire any of its  securities  or any
interest  therein  or to pay any  dividend  or make any  other  distribution  in
respect thereof. When issued in compliance with the provisions of this Agreement
and the Amended and Restated  Articles,  the Series A Preference  Shares and the
Ordinary Shares to be issued upon  conversion of the Series A Preference  Shares
will be validly issued,  fully paid and  nonassessable,  and will be free of any
liens or  encumbrances  other than those  created  by or imposed  upon  Investor
through no act of the Company or the Operating Entity;  PROVIDED,  HOWEVER, that
such  Series  A  Preference  Shares  and  Ordinary  Shares  may  be  subject  to
restrictions  on  transfer  under  applicable  securities  laws  (including  the

                                       4

<PAGE>

Securities  Act). Other than the Operating  Entity,  the Company does not own or
control,  directly  or  indirectly,  any  interest  in  any  other  corporation,
partnership,  association or other business entity. The Company owns 100% of the
equity or other ownership interests in the Operating Entity.

         3.4      AUTHORIZATION.

         All  corporate  actions  on the  part  of the  Company,  its  officers,
directors and shareholders necessary for the authorization,  execution, delivery
and performance of the Amended and Restated  Articles,  the Amended and Restated
Memorandum,  this Agreement,  the  Shareholders  Agreement and the  Registration
Rights  Agreement,  and the  authorization,  sale,  issuance and delivery of the
Series A Preference  Shares and the Ordinary  Shares issuable upon conversion of
the Series A Preference  Shares have been taken and such actions are still valid
and  effective.  Each of this  Agreement,  the  Shareholders  Agreement  and the
Registration  Rights  Agreement  has been duly  executed  and  delivered  by the
Company  and  constitutes  the  valid  and  binding  obligation  of the  Company
enforceable  in accordance  with its  respective  terms,  subject to bankruptcy,
insolvency,  moratorium, fraudulent transfer and other laws affecting creditors'
rights and to general equity principles.

         3.5      TITLE TO PROPERTIES AND ASSETS; LIENS.

         Each of the Company and the  Operating  Entity has good and  marketable
title to or a valid  leasehold  interest in its properties and assets  including
the manufacturing  equipment and facilities of the Operating Entity and the land
necessary for the  construction  of the Company's  plant or housing  projects or
otherwise necessary for the operation of the Company or the Operating Entity, in
each case subject to no mortgage,  pledge,  lien, lease,  encumbrance or charge,
except such as do not materially and adversely affect the value of such property
or do not materially  interfere with the use made or proposed to be made of such
property  by the  Company  or the  Operating  Entity,  as the case  may be.  All
facilities,  machinery,  equipment,  fixtures, vehicles and other properties and
assets owned or leased by the Company or the Operating  Entity,  as the case may
be, that are, singly or in the aggregate, material to the business or operations
of the  Company  or the  Operating  Entity,  as the  case  may  be,  are in good
operating condition,  normal wear and tear excepted,  and are reasonably fit and
usable for the purposes for which they are being used.

         3.6      FINANCIAL STATEMENTS.

         The Company has  delivered  to the  Investor  its  unaudited  financial
statements  (balance sheet, cash flow and statement of operations)  covering the
period  of July 1, 2000 to  December  31,  2000  attached  hereto  as  EXHIBIT G
(collectively,  the "Financial Statements").  The Financial Statements are true,
complete and correct in all material  respects,  and are prepared in  accordance
with  United  States  generally  accepted  accounting  principles  applied  on a
consistent  basis throughout the periods  indicated,  subject to normal year-end
adjustments  (which are not expected to be material).  The Financial  Statements
fairly  present the  financial  condition  and position of the Company as of the
respective dates of the balance sheets contained therein,  and the statements of
operations  and cash flow  contained  therein  accurately  present the operating
results of the Company during the periods respectively  indicated therein. Since
December  31,  2000,  there has not been any event or condition of any type that
has materially and adversely affected the business,  properties,  prospects,  or
financial condition of the Company or the Operating Entity.

                                       5

<PAGE>



         3.7      INTELLECTUAL PROPERTIES.

         To the best knowledge of the Company and the Operating Entity after due
inquiry,  as the case may be, each of the Company and the Operating  Entity owns
or has the  right to use,  free and  clear of all  liens,  charges,  claims  and
restrictions,  all patents,  trade secrets,  trademarks,  service  marks,  trade
names,  copyrights,   licenses,  and  other  proprietary  rights  and  processes
necessary  to its  businesses  as now  conducted  except to the extent  that the
failure  to own or to  possess  any of the  foregoing  would not have a material
adverse effect on the Company and the Operating Entity,  taken as a whole. After
due inquiry,  neither the Company nor the Operating Entity knows of any facts or
circumstances that would prevent them from acquiring,  developing,  obtaining or
licensing  on  commercially   reasonable  terms  all  patents,   trade  secrets,
trademarks,  service  marks,  trade  names,  copyrights,   licenses,  and  other
proprietary  rights and  processes  necessary  to its  businesses  as  currently
proposed to be conducted in the future, except to the extent that the failure to
acquire any of the  foregoing  would not have a material  adverse  effect on the
Company and the Operating Entity,  taken a whole. To its knowledge,  neither the
Company  nor  the  Operating  Entity  is  infringing  upon or  otherwise  acting
adversely  to the right or claimed  right of any person under or with respect to
any of the foregoing.  Neither the Company nor the Operating Entity has received
any  communications  alleging  that the  Company  or the  Operating  Entity  has
violated  or, by  conducting  its  business as proposed  to be  conducted  would
violate,  any patent,  trademark,  service mark, trade name,  copyright or trade
secret or other proprietary right of any other person or entity,  which,  singly
or in the  aggregate,  if the  subject of any  unfavorable  decision,  ruling or
finding,  would have a material  adverse effect on the Company and the Operating
Entity,  taken as a whole.  Neither the Company nor the Operating Entity has any
knowledge of any  infringement or improper use by any third party of any patent,
trademark or copyright held by it, nor has the Company nor the Operating  Entity
instituted  any  action,  suit or  proceeding  in which an act  constituting  an
infringement of any such patent, trademark or copyright was alleged to have been
committed  by a  third  party.  To the  best  knowledge  of the  Company  or the
Operating  Entity (as the case may be),  after due inquiry,  neither the Company
nor the Operating Entity is aware that any of its employees (including directors
and officers) is obligated under any contract (including  license,  covenants or
commitments  of any  nature) or other  agreement,  or  subject to any  judgment,
decree or order of any court or administrative agency, that would interfere with
their  duties to the Company or the  Operating  Entity (as  applicable)  or that
would conflict with the business as now conducted or as proposed to be conducted
by the Company or the Operating  Entity (as  applicable).  Neither the execution
nor delivery of this Agreement,  the Shareholders  Agreement or the Registration
Rights  Agreement,  nor the conduct of the business now conducted or as proposed
to be conducted by the Company or the Operating  Entity,  nor the carrying on of
the  business  of the  Company or the  Operating  Entity by its  employees  will
conflict  with or result in a  material  breach  of, or  constitute  a  material
default under, any contract,  covenant or instrument under which any employee is
now obligated.

         3.8      NO THIRD PARTY CONSENT OR VIOLATION.

         No  third  party is in  violation  of or  default  under  any  material
contract or agreement  (meaning  contracts  or  agreements  with annual  payment
obligations  of US$50,000 or more) to which the Company or the Operating  Entity
is a party. The consummation of the transactions  contemplated  hereby and under
the  Registration  Rights Agreement does not require the consent of any party to
any  contract,  agreement or  instrument  to which the Company or the  Operating
Entity is a party.

                                       6

<PAGE>

         3.9      COMPLIANCE WITH OTHER INSTRUMENTS, LAWS; NO INSTRUMENTS.

         Neither the  Company nor the  Operating  Entity is in  violation  of or
default  under any term of its Amended and  Restated  Memorandum  or Amended and
Restated  Articles,  or in  violation of or default  under any material  term or
provision of any mortgage,  indenture,  contract,  indebtedness,  lease,  or any
other  material  contract or agreement  (meaning  contracts or  agreements  with
annual payment obligations of US$50,000 or more), or instrument to which it is a
party or by which it is bound or, of any judgment,  decree, order, statute, rule
or regulation  applicable to the Company or the Operating Entity. The execution,
delivery and performance of and compliance with this Agreement,  the Amended and
Restated  Articles,  the  Shareholders  Agreement  and the  Registration  Rights
Agreement  and the  consummation  of the  transactions  contemplated  hereby and
thereby will not result in any  violation  of, or default  under any term of the
Amended and  Restated  Memorandum  or its Amended and  Restated  Articles or the
organizational documents of the Operating Entity, or conflict with or constitute
a default  under any material  term of any  mortgage,  indenture,  indebtedness,
lease,  or any other  material  contract  or  agreement  (meaning  contracts  or
agreements with annual payment  obligations of US$50,000 or more) or instrument,
or result in the creation of any mortgage,  pledge, lien,  encumbrance or charge
upon any of the  properties or assets of the Company or the Operating  Entity or
the suspension,  revocation, impairment, forfeiture or nonrenewal of any permit,
license,  authorization  or approval  applicable to the Company or the Operating
Entity, their business or operations, or any of their assets or properties.

         3.10     LITIGATION.

         To the best  knowledge of the Company or the  Operating  Entity (as the
case may be) after due  inquiry,  there are no actions,  suits,  proceedings  or
investigations  pending or  threatened  against or affecting  the Company or the
Operating Entity or any of their  respective  employees,  assets,  or properties
before any court or governmental  agency.  Neither the Company nor the Operating
Entity is a party or subject to the provisions of any order,  writ,  injunction,
judgment or decree of any court or government agency or instrumentality. Neither
the Company nor the  Operating  Entity has  initiated,  or currently  intends to
initiate any action, suit, proceeding or investigation.

         3.11     EMPLOYEES.

         To the best  knowledge of the Company or the  Operating  Entity (as the
case may be) after due inquiry,  no employee of the Company or of the  Operating
Entity  is in  violation  of  any  material  term  of any  employment  contract,
proprietary information agreement or any other contract or agreement relating to
the relationship of any such employee with the Company or the Operating  Entity.
To the best  knowledge of the Company or the  Operating  Entity (as the case may
be) after due inquiry,  the continued  employment  of any such  employees by the
Company or the Operating  Entity will not result in any such violation.  Neither
the Company nor the Operating  Entity has received any notice  alleging that any
such violation has occurred.  No employee of the Company or the Operating Entity
has been  granted  the  right to  continued  employment  by the  Company  or the
Operating  Entity  or to any  material  compensation  following  termination  of
employment with the Company or the Operating Entity,  unless such is required by
law.  Neither the Company nor the Operating  Entity has received any notice that
any director,  officer,  key employee or group of employees intends to terminate
his,  her or their  employment  with the  Company or the  Operating  Entity.  No
director,  officer,  key employee or group of employees  has received any notice
from the  Company or the  Operating  Entity  that the  Company or the  Operating
Entity  intends to  terminate  the  employment  of any  director,  officer,  key
employee or group of employees. Neither the Company nor the Operating Entity has
any

                                       7


<PAGE>

collective bargaining agreements covering any of its employees.  The Company
and the  Operating  Entity each has complied in all material  respects  with all
applicable laws related to labor and employment.

         All Ordinary  Shares and other  securities  of the  Company,  including
options to acquire  Ordinary  Shares or Series A Preference  Shares,  granted to
directors,  officers and other employees of the Company or the Operating  Entity
have been granted in accordance with the Company's Incentive Stock Plans and the
Amended and Restated Articles and the Shareholders Agreement then in effect.

         3.12     COMPLIANCE WITH LAWS; PERMITS.

                  (a) To the Company's best knowledge after due inquiry, neither
the Company nor the Operating is in violation of any applicable statutes,  rule,
regulation,  order or  restriction  of any  government  or any of its  agency or
instrumentality that is material to its business and operations;

                  (b)  Each of the  Company  and the  Operating  Entity  has all
franchises, permits, licenses and any similar authority necessary or appropriate
for the  conduct  of its  business  as now being  conducted  or  proposed  to be
conducted by it.

                  (c)   No   consent,   approval,   qualification,    order   or
authorization of, or designation,  declaration or filing with, any local,  state
or federal  governmental  authority on the part of the Company or the  Operating
Entity is  required  in  connection  with the  execution  and  delivery  of this
Agreement,  the Shareholders Agreement or the Registration Rights Agreement,  or
the  consummation  of the  transactions  contemplated  hereunder and thereunder,
except  qualification  (or taking such action as may be  necessary  to secure an
exemption from qualification,  if available) of the offer and sale of the Shares
under the applicable securities laws.

         3.13     COMPLIANCE WITH THE SECURITIES ACT.

         Assuming the accuracy of Investor's  representations and warranties set
forth in Section 4.1 hereof,  the  offering,  sale and  purchase of the Series A
Preference Shares  contemplated  hereby are exempt from  registration  under the
Securities  Act. The issuance and sale of the  Company's  capital stock has been
and will be made in compliance with the Securities Act and all other  applicable
securities laws.

         3.14     NO MATERIAL CHANGES.

         Since December 31, 2000, there has not been:

                  (a) any material adverse change in the condition (financial or
otherwise),  assets,  liabilities,  operations or earnings of the Company or the
Operating Entity;

                  (b) any damage, destruction or loss (whether or not covered by
insurance)  affecting any asset of the Company or the Operating Entity in excess
of US$50,000;

                  (c) any liability or loss contingency  incurred by the Company
or the  Operating  Entity  that  would  have to be  disclosed  in its  financial
statements  (including  the notes  thereto) in accordance  with U. S.  generally
accepted  accounting  principles;

                                       8

<PAGE>


                  (d) any  commitment  to  borrow  money  or  provide  financial
support to any person entered into by the Company or the Operating  Entity;

                  (e) any payment or discharge  of any  liability by the Company
or the Operating Entity outside the ordinary course of business  consistent with
past practice;

                  (f) any sale, assignment, license, or other disposition of any
material  asset or right of the  Company or the  Operating  Entity  outside  the
ordinary course of business  consistent with past practice;

                  (g) any  declaration  or  payment  of any  dividend  or  other
distribution with respect to any shares of capital stock of the Company,  or the
direct or indirect  acquisition of any equity securities by the Company;

                  (h) any  material  labor  problem or grievance  affecting  the
business of the Company or the Operating Entity;

                  (i)  any  write-down  of the  value  of any  inventory  of the
Company or the  Operating  Entity,  or any  write-off  as  uncollectible  of any
accounts or notes  receivable  of the Company or the Operating  Entity,  in each
case outside the ordinary course of business consistent with past practice;

                  (j) any  general  uniform  increase  in the direct or indirect
compensation  of employees of the Company or the  Operating  Entity  (including,
without limitation, any increase pursuant to any bonus, pension, profit-sharing,
deferred compensation, or other plan or commitment);

                  (k) other than additions to plant or manufacturing  equipment,
any individual capital expenditure or commitment by the Company or the Operating
Entity in excess of US$50,000;

                  (l) any change in the accounting or tax methods, practices, or
assumptions  followed by the Company or the Operating  Entity;  or

                  (m) any other  material  transaction  or event relating to the
Company  or the  Operating  Entity  not  in  the  ordinary  course  of  business
consistent with past practice.

         3.15     DISCLOSURE.

         There is no  material  fact  which the  Company  has not  disclosed  to
Investor  in  writing  and of which the  Company is aware  which  would or could
reasonably be expected to have a material  adverse  effect on the Company or the
Operating Entity. The financial projections, estimates and other forward-looking
information  contained in the business plan (the "Business Plan") of the Company
and the  Operating  Entity  attached  hereto as EXHIBIT H, were  prepared by the
Company and the Operating  Entity in good faith based on the their experience in
the industry and on  assumptions  of fact and opinion as to future  events which
they,  at the  date  of  the  issuance  of the  Business  Plan,  believed  to be
reasonable,  but which they cannot and do not assure or guarantee the attainment
of in any manner.  As of the date hereof, no facts have come to the attention of
the  Company or the  Operating  Entity  which  would be  reasonably  expected to
require the revision of the assumptions  underlying such projections,  estimates
and other forward-looking information or the conclusions derived therefrom.

                                       9

<PAGE>

3.16     TRANSACTION WITH AFFILIATES.

         To  the  Company's  best  knowledge  after  due  inquiry,   except  for
compensation to regular employees and customary fees to directors of the Company
or the  Operating  Entity,  no Related  Party has been  directly or indirectly a
party to, or has had an  interest  in, any  transaction  with the Company or the
Operating  Entity,  or the direct or indirect  owner of an interest  (other than
non-affiliated holdings in publicly held companies) in any business organization
that is a  competitor,  supplier or  customer  of the  Company or the  Operating
Entity or with which the Company or the Operating  Entity has any other business
relationship. "Related Party" means (i) each current or former director, officer
or shareholder holding at least US$1 million worth of the Company's  securities,
(ii) each  parent,  grandparent,  sibling or spouse  thereof,  spouse or sibling
thereof,  or descendant of any of the foregoing,  and (iii) each entity of which
any of the foregoing is or was a director,  officer,  partner, or holder of more
than 5% of any class of capital stock.

         3.17     TAXES.

         Each of the Company and the Operating  Entity has filed all tax returns
when due and paid all taxes shown  thereon to be due, if any,  that are required
to have been filed with appropriate government agencies.

         3.18     CORPORATE RECORDS.

         The books and records of the Company and the Operating Entity have been
fully,  properly and accurately  maintained in all respects,  and such books and
records  are  true,  correct  and  complete  in  all  material  respects.

         3.19     PROPRIETARY INFORMATION AND INVENTION AGREEMENTS.

         Each employee and officer of the Company and the  Operating  Entity has
executed an  Confidential  Information,  Invention  Assignment  and  Arbitration
Agreement substantially in the form attached hereto as EXHIBIT I.

         3.20     USE OF PROCEEDS.

         The  proceeds  from the  issuance  and sale of the Series A  Preference
Shares  under  this  Agreement  will be used for:  (i) the  construction  of the
manufacturing   facilities  of  the  Operating  Entity;  (ii)  the  purchase  of
equipment,  technology,  information  system  and  know-how  necessary  for  the
manufacturing of advanced technology  semiconductors;  and (iii) working capital
and other general corporate purposes.

         3.21     NO EXPORT OR IMPORT RESTRICTIONS.

         After due inquiry,  neither the Company nor the Operating  Entity knows
of any facts or  circumstances  that would  prevent  applicable  suppliers  from
exporting  into the PRC,  or prevent the  Company or the  Operating  Entity from
importing into the PRC, all equipment,  process  know-how and any other hardware
or technology  necessary to conduct the business of the Company or the Operating
Entity as now conducted or as currently proposed to be conducted in the future.

                                       10

<PAGE>

         3.22     EQUAL TERMS.

         Other  than the terms and  conditions  applicable  to: (i) the sale and
purchase of securities  pursuant to the Incentive Stock Plans; (ii) the sale and
purchase of any Series A Preference Shares pursuant to the default provisions of
Section 2.3 hereof; and (iii) certain  information about the Company and certain
terms  and  conditions  of the  Purchase  Agreement  and the  Management  Rights
Agreement  entered  into  between  the  Company  and  the  GS  Investors  (which
information,  terms and conditions are disclosed in Section 3.22 of the Schedule
of  Exceptions  delivered  herewith),  no  term  or  condition,   including  any
registration  rights,  applicable  to  the  purchase  of  the  Company's  equity
securities  by any other  Investor  or other  shareholder  is, or shall be, more
favorable  to such  Investor  or  shareholder  than  the  terms  and  conditions
applicable to Investor under this Agreement.

         3.23     NO BROKERS OR FINDERS.

         Neither the  Company nor the  Operating  Entity has  incurred,  or will
incur,  directly or indirectly,  any liability for brokerage or finders' fees or
agents'  commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby or thereby.

         3.24     EMPLOYEE BENEFIT PLANS.

         The Company does not have  any  Employee Benefit Plan as defined in the
U. S. Employee Retirement Security Act of 1974.


                                   SECTION 4.

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR


         Investor hereby represents and warrants to the Company with respect to
its purchase of the Shares as follows:

         4.1      INVESTMENT REPRESENTATIONS AND COVENANTS OF INVESTOR.

                  (a) Investor  acknowledges  that this Agreement is made by the
Company with Investor in reliance upon Investor's  representations and covenants
made in this Section 4, which by its execution of this Agreement Investor hereby
confirms.  Investor  represents  that it is  acquiring  the Series A  Preference
Shares for  investment for its own account,  not as a nominee or agent,  and not
with a view to the sale or distribution of any part thereof,  and that it has no
present  intention  of  selling,  granting  any  participation  in or  otherwise
distributing  the same.  Investor  further  represents that it does not have any
contract,  undertaking,  agreement  or  arrangement  with  any  person  to sell,
transfer  or grant  participation  to such person or to any third  person,  with
respect  to any of the  Shares  (or the shares  issued  upon  conversion  of the
Shares).

                  (b) Investor understands and acknowledges that the offering of
the  Series  A  Preference  Shares  pursuant  to this  Agreement  has  not  been
registered under the Securities Act and that the Series A Preference  Shares are
being  offered and sold  pursuant to an exemption  from  registration  under the
Securities  Act, based in part on Investor's  representations  set forth herein.

                                       11

<PAGE>

                  (c)  Investor  covenants  that in no  event  shall it make any
disposition  of any of the Shares  except in  accordance  with the  Shareholders
Agreement  and  the  Registration   Rights  Agreement  and  in  compliance  with
applicable federal and state and local securities laws.

                  (d) Investor  represents  that it is experienced in evaluating
recently organized  companies such as the Company, is able to fend for itself in
transactions such as the one contemplated by this Agreement,  has such knowledge
and  experience  in  financial  and  business  matters  that  it is  capable  of
evaluating  the merits and risks of its  prospective  investment in the Company,
and has the ability to bear the economic risks of the  investment.

                  (e) Investor  acknowledges  and understands  that the Series A
Preference Shares and the Ordinary Shares issuable upon conversion of the Series
A  Preference  Shares must be held  indefinitely  unless  they are  subsequently
registered  under the Securities Act or the securities laws of another  relevant
jurisdiction  or an exemption  from such  registration  is available,  and that,
except as otherwise provided in the Registration  Rights Agreement,  the Company
is under no  obligation  to  register  the  Series A  Preference  Shares (or the
Ordinary Shares issuable upon conversion of the Series A Preference Shares).

                  (f) Investor  acknowledges that Rule 144 promulgated under the
Securities Act, which permits limited public resales of securities acquired in a
non-public  offering,  is subject  to the  satisfaction  of certain  conditions,
including,  among other things: (i) certain current public information about the
Company is available, (ii) the sale must occur at least one year after the party
has  purchased and paid for the  securities  to be sold,  (iii) the sale must be
made in an unsolicited  broker's  transaction and (iv) the number of shares sold
must not exceed  certain volume  limitations.  If,  however,  the sale occurs at
least two years after the party has purchased and paid for the  securities to be
sold,  and if the selling party is not an "affiliate" of the Company (as defined
in the  Securities  Act),  certain of the foregoing  conditions  will not apply.
Investor  understands that the current public  information  referred to above is
not now available and the Company has no present plans to make such  information
available.

         4.2      AUTHORITY; ENFORCEABILITY.

         Investor  has all  requisite  power and  authority  to enter  into this
Agreement,  the  Accession  Agreement,  dated the date  hereof  (the  "Accession
Agreement"),  under which Investor has acceded to the Shareholders Agreement and
the  Registration  Rights  Agreement,  to perform its obligations  hereunder and
thereunder,  and to consummate the transactions contemplated hereby and thereby;
Investor  has  taken  all  requisite  corporate,  partnership  or  other  action
necessary  to  authorize  the  execution  and  delivery of this  Agreement,  the
Accession  Agreement and the Registration  Rights Agreement,  its performance of
its obligations  hereunder and thereunder and under the  Shareholders  Agreement
and its consummation of the transactions  contemplated hereby and thereby;  each
of this Agreement, the Accession Agreement and the Registration Rights Agreement
has been duly authorized, executed and delivered by Investor and constitutes the
valid and binding  obligation of Investor,  enforceable  in accordance  with its
respective terms, subject to applicable bankruptcy, reorganization,  insolvency,
and similar laws affecting creditors' rights generally and to general principles
of equity.

                                       12

<PAGE>

         4.3      COMPLIANCE WITH LAWS.

         The execution,  delivery and  performance  of and compliance  with this
Agreement,  the  Accession  Agreement  and the  Shareholders  Agreement  and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in any violation of or constitute  any conflicts  under any judgment,
decree, order, statute, rule or regulation applicable to Investor,  its business
or operations or any of its assets or properties.

         4.4      NO PUBLIC MARKET.

         Investor  understands  that no public  market now exists for any of the
securities issued by the Company.

         4.5      TRANSFER RESTRICTIONS.

         Investor acknowledges and agrees that the Series A Preference Shares to
be sold hereunder are subject to  restrictions  on transfer as set forth in this
Agreement,  the Shareholders Agreement,  the Registration Rights Agreement,  the
Amended and Restated  Articles and  applicable  securities  laws  (including the
Securities Act).

         4.6      RECEIPT OF INFORMATION.

         Investor  has received and  reviewed  this  Agreement  and all Exhibits
hereto;  Investor, its legal counsel and its accountants have had access to, and
an opportunity  to review,  all documents and other  materials  requested of the
Company; it and they have been given an opportunity to ask any and all questions
of, and  received  answers  from,  the  Company  concerning  the Company and the
Operating Entity and the terms and conditions of the offering and sale hereunder
and to obtain all  information  it or they believe  necessary or  appropriate to
evaluate the suitability of an investment in the Series A Preference Shares.


                                   SECTION 5.

                    CONDITIONS TO FIRST CLOSING OF INVESTOR


         Investor's  obligation  to purchase the Shares at the First Closing is,
at the option of Investor,  subject to the  fulfillment or waiver on or prior to
the First  Closing Date of the following  conditions:

         5.1      REPRESENTATIONS  AND WARRANTIES.

         The  representations  and  warranties  made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct on the
First  Closing  Date with the same  force and effect as if they had been made on
and as of such date.

         5.2      COVENANTS.

         All covenants, agreements and conditions contained in this Agreement to
be  performed  by the Company on or prior to the First  Closing  Date shall have
been performed or complied with.

                                       13

<PAGE>


         5.3      QUALIFICATION.

         The Company shall have obtained all necessary federal or state or local
authorizations,  approvals, permits and qualifications,  or secured an exemption
thereunder,  required for the offer and sale of the Series A  Preference  Shares
and the Ordinary  Shares issuable upon the conversion of the Series A Preference
Shares, and such authorizations,  approvals, permits or qualifications are still
effective as of the First Closing Date.

         5.4      OFFICER'S CERTIFICATE.

         The  President of the Company  shall have  delivered to Investor at the
First Closing a certificate certifying that the conditions specified in Sections
5.1, 5.2 and 5.3 have been fulfilled.

         5.5      PRC COUNSEL OPINION.

         The  Company  shall have  caused  Shanghai  Dong Xin Law Firm,  the PRC
counsel to the  Company,  to furnish  Investor  with  their  written  opinion or
opinions, dated the date of First Closing, in a form satisfactory to Investor to
the effect set forth in EXHIBIT J hereto.

         5.6      CAYMAN ISLANDS COUNSEL OPINION.

         The  Company  shall have  caused  Hunter & Hunter,  the Cayman  Islands
counsel to the  Company,  to furnish  Investor  with  their  written  opinion or
opinions, dated the date of First Closing, in a form satisfactory to Investor to
the effect set forth in EXHIBIT K hereto.

         5.7      U. S. COUNSEL OPINION.

         The Company  shall have caused  Baker & McKenzie,  the U. S. counsel to
the Company,  to furnish Investor with their written opinion or opinions,  dated
the date of First Closing,  in a form satisfactory to Investor to the effect set
forth in EXHIBIT L hereto.

         5.8      SHAREHOLDERS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT.

         The Company  shall have duly  authorized,  executed and  delivered  the
Shareholders Agreement and the Registration Rights Agreement.  The Company shall
have delivered to Investor a certificate to the effect that all of the Company's
shareholders  required  to be parties to the  Shareholders  Agreement  have duly
executed and  delivered  an Accession  Agreement in the form of EXHIBIT A to the
Shareholders  Agreement (the "Accession  Agreement") and that all Investors have
executed  and  delivered  the  Registration  Rights  Agreement  and an Accession
Agreement.

         5.9      AMENDED AND RESTATED ARTICLES AND AMENDED AND RESTATED
                  MEMORANDUM.

         The Amended and Restated  Memorandum  and Amended and Restated Articles
shall remain in full force and effect.

         5.10     SHARE CERTIFICATES.

         The  Company  shall  have  delivered  to  Investor  (i)  a  certificate
evidencing  and  representing  the Shares  purchased  by  Investor  and (ii) the
Company's  amended  register of members  evidencing  Investor  as a member.  The
Company shall have also delivered to Investor a certificate  confirming

                                       14


<PAGE>

that all other  Investors  paid the same $1.111 per share purchase price for the
Series A  Preference  Shares and that all share  certificates  in respect of the
Company's  outstanding shares have been affixed with a legend as contemplated in
Section   7.2  of   the   Shareholders   Agreement.

         5.11     AUTHORIZED AGENT.

         The Company  shall have  delivered to Investor at the First  Closing an
agreement between the Company and CT Corporation  confirming that CT Corporation
has agreed to act as the  Company's  authorized  agent upon whom  process may be
served  in  any  action  arising  out  of or  based  upon  this  Agreement,  the
Shareholders Agreement and the Registration Rights Agreement or the transactions
contemplated hereby or thereby which may be instituted in any New York Court (as
defined below) by Investor.


                                   SECTION 6.

                 CONDITIONS TO SUBSEQUENT CLOSINGS OF INVESTOR


         Investor's  obligation to purchase the Shares at any Subsequent Closing
is, at the option of  Investor,  subject to the  fulfillment  on or prior to the
relevant Subsequent Closing Date of the following conditions:

         6.1      COVENANTS.

         All covenants, agreements and conditions contained in this Agreement to
be performed by the Company on or prior to the relevant  Subsequent Closing Date
shall have been performed or com-plied with.

         6.2      QUALIFICATION.

         The Company shall have obtained all necessary federal or state or local
authorizations,  approvals, permits and qualifications,  or secured an exemption
thereunder,  required for the offer and sale of the Series A  Preference  Shares
and the Ordinary  Shares issuable upon the conversion of the Series A Preference
Shares, and such authorizations,  approvals, permits or qualifications are still
effective as of the relevant Subsequent Closing Date.

         6.3      AUTHORIZED AGENT.

         The agreement  between the Company and CT  Corporation  shall remain in
full force and effect  pursuant to which CT Corporation has agreed to act as the
Company's authorized agent upon whom process may be served in any action arising
out of or  based  upon  this  Agreement,  the  Shareholders  Agreement  and  the
Registration Rights Agreement or the transactions contemplated hereby or thereby
which may be instituted in any New York Court (as defined below) by Investor.

         6.4      OFFICER'S CERTIFICATE.

         The President of the Company  shall have  delivered to Investor at such
Subsequent  Closing a  certificate  in the form  attached  hereto  as  EXHIBIT M
certifying,  among other things, that the conditions  specified in Sections 6.1,
6.2 and 6.3 have been fulfilled.

                                       15

<PAGE>

         6.5      SHARE CERTIFICATES.

         The  Company  shall  have  delivered  to  Investor  (i)  a  certificate
evidencing  and  representing  the Shares  purchased by Investor at the relevant
Subsequent Closing and (ii) the Company's amended register of members evidencing
Investor as a member.


                                   SECTION 7.

                        CONDITIONS TO CLOSING OF COMPANY


         The  Company's  obligation to issue and sell the Shares at each Closing
is, at the option of the Company,  subject to the  fulfillment  of the following
conditions:

         7.1      REPRESENTATIONS AND WARRANTIES.

         The representations and warranties made by Investor in Section 4 hereof
shall be true and  correct  when  made,  and  shall be true and  correct  on the
Closing  Date with the same  force and effect as if they had been made on and as
of such date.

         7.2      QUALIFICATION.

         The Company shall have obtained all necessary federal or state or local
authorizations,  approvals, permits and qualifications,  or secured an exemption
therefrom,  required  for the offer and sale of the  Shares  hereunder  and such
authorizations,  approvals, permits and qualifications shall remain in effect as
of the Closing.

         7.3      SHAREHOLDERS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.

         Investor  shall have executed and delivered to the Company an Accession
Agreement and the Registration Rights Agreement.

                                   SECTION 8.

                                 MISCELLANEOUS

         8.1      TERMINATION.

         Notwithstanding  anything  in  this  Agreement  to the  contrary,  this
Agreement and the transactions  contemplated herein may, by written notice given
at any time prior to the Closing, be terminated:

                  (a) by either party upon their mutual written consent; or

                  (b) by either  party,  without  liability  to the  terminating
party on account of such termination if the Closing has not occurred (other than
through the failure of any party  seeking to

                                       16


<PAGE>

terminate this Agreement to fully comply with its  obligations  hereunder) on or
before May o, 2001 [60 calendar days from date of the Agreement].

         8.2      GOVERNING LAW, VENUE AND SERVICE OF PROCESS.

         This  Agreement  shall be governed and construed in all respects by the
laws of the State of New York without  reference to conflict of laws  principles
thereof.  Each of the parties hereto irrevocably (i) agrees that any legal suit,
action  or  proceeding  arising  out of or  based  upon  this  Agreement  or the
transactions contemplated hereby may be instituted in any state or federal court
in the State of New York (" New York Court"), (ii) waives, to the fullest extent
it may  effectively  do so, any objection  which it may now or hereafter have to
the laying of venue of any such  proceeding  and (iii)  submits to the exclusive
jurisdiction of such courts in any such suit, action or proceeding.  The Company
has appointed CT Corporation at 111 Eighth Avenue,  New York, New York 10011, as
its authorized agent (the "Authorized Agent") upon whom process may be served in
any such action  arising out of or based on this  Agreement or the  transactions
contemplated  hereby which may be  instituted in any New York Court by Investor,
expressly  consents to the jurisdiction of any such court in respect of any such
action,  and  waives  any  other  requirements  of  or  objections  to  personal
jurisdiction with respect thereto.  Such appointment shall be irrevocable unless
and  until  the  Board  of  Directors  appoints  another  entity  to  act as the
Authorized  Agent of the Company.  The Company  represents and warrants that the
Authorized  Agent has  agreed to act as such agent for  service  of process  and
agrees to take any and all action, including the filing of any and all documents
and  instruments,  that may be necessary to continue  such  appointment  in full
force and effect as aforesaid.  Service of process upon the Authorized Agent and
written notice of such service to the Company shall be deemed, in every respect,
effective service of process upon the Company.

         8.3      SURVIVAL.

         The representations,  warranties,  covenants and agreements made herein
shall  survive  any  investigation  made  by  Investor  and the  closing  of the
transactions contemplated hereby.

         8.4      SUCCESSORS AND ASSIGNS.

         Except as otherwise  provided herein, the provisions hereof shall inure
to the  benefit  of,  and be  binding  upon,  the  successors,  assigns,  heirs,
executors and  administrators of the parties hereto,  PROVIDED,  HOWEVER,  that,
except as otherwise  provided in Section 8.5, the rights of Investor to purchase
Series A Preference  Shares shall not be  assignable  without the consent of the
Company.

         8.5      DELEGATION TO AFFILIATES.

         Notwithstanding the provisions of Section 8.4 or any other provision of
this  Agreement  to the  contrary,  Investor  may  designate  one or more of its
affiliates  as the  purchaser of the Series A Preference  Shares  hereunder  and
Investor may also assign any or all of its rights,  benefits or  obligations  to
one or more of its affiliates; PROVIDED, that such affiliate or affiliates shall
have agreed to be subject to the terms and  conditions  of this  Agreement  with
respect to such  purchase,  and shall have agreed to be subject to the terms and
conditions of the Shareholders  Agreement.  Thereafter,  the Series A Preference
Shares shall be subject to the registration  rights provided in the Registration
Rights Agreement;  PROVIDED,  that only the initial Investor  hereunder,  or its
successor or  permitted  assign,  may  exercise  such rights with respect to the
Series A Preference  Shares. The Company and Investor agree to make from time to
time such  amendments  to this  Agreement,  the  Shareholders

                                       17


<PAGE>

Agreement and the Registration  Rights Agreement as may be reasonably  necessary
to  accomplish  the  foregoing.  For  the  purposes  of  this  Section  8.5,  an
"affiliate" of Investor means any other person which, directly or indirectly, is
in control of, is controlled by, or is under common  control with Investor.

         8.6      FURTHER ASSURANCE.

         In connection  with any offering of the  Company's  securities in which
any of Investor's shares are offered,  the Company shall use its best efforts to
procure  that  no  underwriter(s)   require(s)  any  of  Investor  to  make  any
representations or warranties to, or agreements with, such underwriter(s)  other
than customary representations, warranties and agreements relating to Investor's
title to the Shares and the authority to enter into and deliver the underwriting
agreements.  This Section 8.6 shall survive the  termination of this  Agreement.

         8.7      ENTIRE AGREEMENT; AMENDMENT.

         This Agreement and the exhibits  hereto  constitute the full and entire
understanding  and  agreement  between the parties  with regard to the  subjects
hereof and thereof and supersede all prior  discussions and agreements.  Neither
this  Agreement  nor any term  hereof  may be  amended,  waived,  discharged  or
terminated  other  than  by a  written  instrument  signed  by the  Company  and
Investor.

         8.8      NOTICES.

         All notices  which either party is required or may desire to serve upon
any other party shall be in writing and  addressed  to the party to be served as
follows:

                  (a) if to Investor:

                      Address:

                      Attention:

                      Tel:

                      Fax:

                      With copy to:

                      Telephone:

                      Facsimile:

                  (b) if to the Company:

                      Semiconductor Manufacturing International Corporation

                      18 Zhangjiang Road, Pudong New Area, Shanghai, China

                      Attention:       Richard Chang

                      Telephone:       86-21-5855-5000

                      Facsimile:       6-21-5895-8810

                      With a copy to: Samuel Liu

                                       18

<PAGE>


                      Telephone:       86-21-5855-5000

                      Facsimile:       6-21-5895-8810

         Any such notice may be served personally or by mail (postage  prepaid),
facsimile  (provided  confirmation of receipt is immediately  obtained or a hard
copy is concurrently sent by internationally  commercially  recognized overnight
delivery service),  internationally  commercially  recognized overnight delivery
service or  courier  (such as Federal  Express or DHL).  Notice  shall be deemed
served upon personal delivery or upon the date sent.

         8.9      DELAYS OR OMISSIONS.

         No delay or omission to exercise any right, power or remedy accruing to
either party upon any breach or default of the other party under this Agreement,
the Shareholders  Agreement,  the Registration Rights Agreement,  or the Amended
and  Restated  Articles,  shall  impair any such  right,  power or remedy of the
non-breaching or  non-defaulting  party nor shall it be construed to be a waiver
by the non-breaching or non-defaulting  party of any such breach or default,  or
an acquiescence  therein,  or of or in any similar breach or default  thereafter
occurring;  nor shall any  waiver of any  single  breach or  default be deemed a
waiver of any other breach or default theretofore or thereafter  occurring.  Any
waiver,  permit, consent or approval of any kind or character on the part of the
non-breaching  or  non-defaulting  party of any  breach or  default of the other
party under this Agreement,  the Shareholders Agreement, the Registration Rights
Agreement  and the Amended and Restated  Articles,  or any waiver on the part of
the  non-breaching  or  non-defaulting  party of any provisions or conditions of
this Agreement,  the Shareholders  Agreement,  the Registration Rights Agreement
and the Amended and Restated Articles, must be in writing and shall be effective
only with respect to the non-breaching or  non-defaulting  party and only to the
extent specifically set forth in such writing.  All remedies,  either under this
Agreement, the Shareholders Agreement, the Registration Rights Agreement and the
Restated  Articles,  or  by  law  or  otherwise  afforded  to  non-breaching  or
non-defaulting   party,   shall  be  cumulative   and  not   alternative.

         8.10     CONFIDENTIALITY.

         No party shall divulge or communicate to any person (unless required by
law or by any regulatory or governmental authority or to its officers,  advisors
or  employees  on a  need-to-know  basis)  or use or  exploit  for  any  purpose
whatsoever any trade secrets,  patents,  intellectual  property or  confidential
and/ or proprietary  knowledge or information of the other party which the party
may  receive or obtain as a result of  entering  into this  Agreement,  and each
party shall use its reasonable  endeavors to prevent its employees or agents (if
any) from so doing.  The  obligations set out in this Section 8.10 shall survive
the termination of this Agreement.

         8.11     EXPENSES.

         The  Company  and  Investor  each shall bear  their own  expenses  with
respect  to  this  Agreement  and the  transactions  contemplated  hereby.

         8.12     COUNTERPARTS.

         This Agreement may be  executed  in one or more counterparts and all of
which together shall constitute one instrument.

                                       19

<PAGE>

         8.13     SEVERABILITY.

         In the  event  that  any  provision  of this  Agreement  becomes  or is
declared by a court of competent  jurisdiction to be illegal,  unenforceable  or
void,  this  Agreement  shall  continue  in full force and effect  without  said
provision;  PROVIDED  that  no  such  severability  shall  be  effective  if  it
materially changes the economic benefit of this Agreement to any party.

                            [SIGNATURE PAGE FOLLOWS]








                                       20

<PAGE>



         IN WITNESS WHEREOF,  the parties have executed this Series A Preference
Shares Purchase Agreement as of the date first written above.


                            SEMICONDUCTOR MANUFACTURING
                            INTERNATIONAL CORPORATION

                            By:
                               -------------------------------------------------
                               Name:        Richard Chang
                               Title:       President & CEO



                            [INVESTOR]

                            By:
                               -------------------------------------------------
                               Name:
                               Title:









                                       21


</TEXT>
</DOCUMENT>
