Financial Performance - Semiconductor Manufacturing International Corporation reported a revenue of approximately $3.5 billion for the year 2021, representing a year-over-year increase of 29% compared to 2020[28]. - In 2021, the company's sales revenue increased from $3.9 billion to $5.4 billion, achieving a robust growth of approximately 38%[31]. - Total revenue for 2021 reached $5,443,112 thousand, a 39.3% increase from $3,906,975 thousand in 2020[40]. - The company achieved a revenue of $5,443.1 million in 2021, representing a year-on-year increase of 39.3%[58]. - The wafer foundry business revenue was $4,982.2 million, reflecting a growth of 43.4% year-on-year[58]. - The company reported a net profit attributable to shareholders for 2021 was $1,701,803 thousand, up 137.8% from $715,550 thousand in 2020[40]. - The company's net profit for 2021 reached $1,775,158 thousand, a significant increase from $669,098 thousand in 2020, representing a growth of approximately 165.7%[51]. - Operating cash flow for 2021 was $3,011,895 thousand, an increase of 81.4% compared to $1,660,410 thousand in 2020[40]. - The total comprehensive income for the year was $1,823,173 thousand, compared to $714,201 thousand in 2020, reflecting a growth of 155.5%[52]. Operational Efficiency - The company achieved a gross margin of 24.5% in 2021, up from 20.1% in the previous year, indicating improved operational efficiency[28]. - Gross margin improved to 30.8% in 2021, up 7.2 percentage points from 23.6% in 2020[42]. - The company maintained a full capacity utilization rate throughout 2021, indicating strong demand and operational efficiency[31]. - The company has a diversified customer base and product platforms, which have improved marginal benefits in advanced processes[31]. - The company maintained a high capacity utilization rate and expanded production capacity to address market demand[59]. Research and Development - Research and development expenses for 2021 were approximately $600 million, accounting for 17% of total revenue, reflecting the company's commitment to innovation[28]. - Research and development expenses for 2021 were $638,842 thousand, reflecting the company's commitment to innovation and technology advancement[52]. - Research and development expenses as a percentage of sales decreased by 5.6 percentage points to 11.7% in 2021 due to increased sales revenue[43]. - The company is focused on enhancing its R&D capabilities to support advanced process technologies and maintain competitive advantages[61]. - The company is focusing on developing low-power and high-performance technology platforms, with applications in IoT products and high-end display technologies[76][78]. Market Strategy and Expansion - The company plans to expand its production capacity by 30% over the next two years to meet increasing demand in the semiconductor market[28]. - The company plans to continue expanding production capacity and enhancing cooperation with customers and suppliers to meet market demands[32]. - The company aims to address structural shortages in the supply chain and balance existing and incremental demand in 2022, amidst a challenging external environment[32]. - The company is actively expanding its customer base through various marketing strategies, including direct communication and collaboration with design service companies and industry associations[65]. - The company aims to maintain its leading position in the semiconductor industry by investing in sustainable talent and capital resources[73]. Challenges and Risks - The company has faced export restrictions from the US, which may introduce uncertainty into its future performance[89]. - The company is at risk of technological obsolescence if it fails to keep pace with industry advancements and market demands[91]. - Supply chain risks are present due to reliance on a limited number of qualified suppliers for critical materials and equipment, which could impact production if shortages or delays occur[96]. - The ongoing COVID-19 pandemic poses risks to normal operations, with potential supply chain disruptions and increased procurement costs if the situation worsens[107]. - The company has been affected by ongoing US-China trade tensions, which have led to restrictions on its securities and related derivatives trading by US individuals[108]. Corporate Governance - The company has maintained a high level of corporate governance to protect shareholder interests[180]. - The company has adopted a set of corporate governance policies since January 25, 2005, which are regularly updated to comply with the corporate governance code[181]. - The board of directors includes a mix of executive and non-executive members, with a total of 8 directors, including 4 independent non-executive directors[199]. - The company emphasizes the importance of timely communication with shareholders and investors, committing to quarterly financial performance announcements approximately 45 days after each quarter-end[193]. - The company is committed to maintaining compliance with the Shanghai Stock Exchange's regulations regarding related party transactions[196].

Financial Data and Key Metrics Changes - In Q4 2021, the company achieved a record revenue of $1.58 billion, representing a sequential growth of 11.6% and a year-over-year growth of 61.1% [4] - The gross margin for Q4 2021 was 35%, up 1.9 percentage points sequentially and 17 percentage points year-over-year [4] - For the full year 2021, total revenue reached $5.443 billion, a year-over-year increase of 39.3% [5] - The operating margin for 2021 was 25.6%, up 17.6 percentage points year-over-year, while the net margin attributable to the company was 31.3%, up 13 percentage points year-over-year [5][6] Business Line Data and Key Metrics Changes - The company reported significant growth in mature technology platforms, particularly in high-voltage drivers, microcontrollers, ultra-low power logic, and specialty memory, which saw the fastest revenue growth [9][10] - The company added a monthly capacity of 100,000 wafers, equivalent to eight-inch wafers, and completed the main structure of the Beijing project in October 2021 [9] Market Data and Key Metrics Changes - The semiconductor industry faced a chip shortage in 2021, driven by structural incremental growth from industry upgrades and increased demand for remote connectivity due to the pandemic [7][8] - The company noted that while overall demand outstripped production capacity, some application areas experienced a slowdown in demand [3][8] Company Strategy and Development Direction - The company aims to dynamically balance existing and incremental demand while filling structural gaps in the supply chain, emphasizing compliance and deep integration into the global supply chain [3][4] - In 2022, the company plans to continue its capital expenditure at a peak level, with an estimated capital expenditure of over $5 billion [6][7] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2022 will present both challenges and opportunities, with a focus on ensuring operational continuity and meeting customer demand amid a complex external environment [3][4] - The company expects revenue growth in 2022 to outperform the industry average, with gross margins projected to be higher than in 2021 [6][7] Other Important Information - The company’s total assets at the end of Q4 2021 were $36.1 billion, with total liabilities of $10.7 billion, including interest-bearing debt of $6.8 billion [4] - The company has maintained a negative net debt-to-equity ratio of 38% [5] Q&A Session Summary Question: What are the advantages and pricing trends for 2022? - Management discussed a forecasted revenue growth of 15% to 17% for Q1 2022, with ASP expected to increase due to a shift towards more advanced technologies [14][15] Question: How will the entity list impact production and future expansion? - The entity list has significantly impacted production operations, but the company has managed to maintain operational continuity through close collaboration with suppliers [21] Question: What measures are in place to ensure high capacity utilization amid rapid growth? - The company is focusing on flexible production capabilities across different nodes and maintaining a diverse product platform to adapt to market demands [29][30] Question: What is the expected depreciation pressure in relation to capacity expansion? - Management indicated that depreciation is expected to increase, but efforts are being made to balance this with revenue growth and margin stability [34][35]

SMIC 中芯國際集成電路製造有限公司* Semiconductor Manufacturing International Corporation ( 於 開 曼 群 島 註 冊 成 立 的有限公司) 股 份 代 號 : 00981 2021 中期報告 * 僅供識別 目錄 | --- | --- | --- | |-------|--------|------------------------| | | | | | 2 | 第一節 | 釋義 | | 3 | 第二節 | 公司簡介和主要財務指標 | | 6 | 第三節 | 管理層討論與分析 | | 24 | 第四節 | 公司治理 | | 33 | 第五節 | 環境與社會責任 | | 36 | 第六節 | 重要事項 | | 50 | 第七節 | 股份變動及股東情況 | | 62 | 第八節 | 債券相關情況 | | 63 | 第九節 | 財務報告 | 重要提示 一、 本公司董事會、董事及高級管理人員保證中期報告內容的真實、準確、完整，不存在虛假記載、誤導性陳述或重大遺 漏，並承擔個別和連帶的法律責任。 二、 重大風險提示 公司已在本報告中詳細闡述公司在生產經營 ...

Financial Performance - Semiconductor Manufacturing International Corporation (SMIC) reported its annual performance for 2019, with a focus on operational metrics and financial results[1]. - In 2019, Semiconductor Manufacturing International Corporation recorded total revenue of approximately $3.116 billion, with a gross margin of 20.6%[17]. - The net profit attributable to SMIC was $235 million, and EBITDA reached a historical high of $1.37 billion[17]. - The gross profit for 2019 was $642,459, resulting in a gross margin of 20.6%, down from 22.2% in 2018[31]. - The company reported a net profit of $158,860 for 2019, which is an increase of 105.5% compared to $77,211 in 2018[31]. - The total revenue growth rate for the company was 1.4%, despite a 3.2% decline in the global pure foundry market[22]. - The company aims for a revenue growth rate of 11% to 19% for 2020, with a target gross margin of 20%[27]. - The company reported a significant increase in revenue, achieving a total of RMB 300 billion in commitments for integrated circuit loans[58]. Customer Base and Market Position - The company emphasized its reliance on a limited number of customers, which poses risks to its revenue stability[7]. - Revenue contributions from different regions were 59.5% from mainland China and Hong Kong, 26.4% from the United States, and 14.1% from Eurasia[17]. - North American customers contributed 26.4% to total revenue in 2019, down from 31.6% in 2018[21]. - The company plans to deepen cooperation with Chinese customers while expanding relationships with global clients in emerging markets such as 5G and AI[22]. - The company aims to become the preferred foundry service provider in China, leveraging its local market advantages while serving international markets[27]. Technology and R&D - The company highlighted its ongoing development in advanced process technologies, including nodes down to 14nm[9]. - The first generation of 14nm FinFET technology entered mass production in Q4 2019, contributing approximately 1% to wafer revenue[17]. - The company successfully completed the R&D and customer introduction of its 14nm technology platform, which has now entered mass production[25]. - The company is focusing on expanding its advanced technology offerings to drive revenue growth, moving away from reliance on mature nodes[27]. - The management team emphasizes the importance of R&D in driving future growth and innovation in semiconductor technology[52]. Capital Expenditures and Investments - Capital expenditures for 2019 totaled $2.033 billion, an increase from $1.813 billion in 2018[20]. - The company plans to initiate a new round of capital expenditure in 2020 to expand production capacity[17]. - The planned capital expenditure for the foundry business in 2020 is approximately $3.1 billion, with $2 billion and $500 million allocated for the Shanghai and Beijing 300mm wafer fabs, respectively[40]. - The company aims to enhance its market position through strategic investments in technology and capacity expansion[7]. Corporate Governance and Management - The senior management team includes co-CEOs Zhao Haijun and Liang Mengsong, CFO Gao Yonggang, and VP of Technology R&D Zhou Meisheng[51]. - The management team is committed to maintaining financial discipline while pursuing growth strategies in the semiconductor sector[54]. - The company is committed to maintaining high standards of corporate governance and transparency in its operations[57]. - The board includes members with a strong background in finance and technology, enhancing the company's strategic decision-making capabilities[57]. Related Party Transactions - The independent non-executive directors confirmed that the transactions with Chip Xin Financing Leasing were conducted in the ordinary course of business and on normal commercial terms[100]. - The company has not exceeded the annual cap for transactions with Chip Xin Financing Leasing for the year ended December 31, 2019[100]. - The independent non-executive directors have reviewed and approved the ongoing connected transactions, confirming they are conducted in the ordinary course of business and on normal commercial terms[106]. - The company has established pricing principles for related party transactions, prioritizing government-regulated prices, industry guidance prices, and comparable local market prices[162]. Employee and Compensation - Total compensation for senior management in 2019 was $2,860,000, a decrease of 18% from $3,244,000 in 2018[186]. - The number of employees in 2019 was 15,946, down from 18,015 in 2018, representing a reduction of approximately 11.9%[190]. - The average training hours per employee in 2019 was 18.9 hours, aimed at supporting business development and talent acquisition[193]. - The company has established partnerships with several universities to provide specialized training for technical staff[193]. Financial Health and Risks - Cash and financial assets (excluding restricted cash) amounted to approximately $4.6 billion by the end of 2019, with a net debt-to-equity ratio of -6%[17]. - The company has significant exposure to currency risks, particularly with the Euro, Japanese Yen, and Renminbi, due to transactions in multiple currencies[46]. - The company may require additional financing for future acquisitions, mergers, strategic investments, or other developments due to the highly cyclical and rapidly changing semiconductor industry[40]. - The company has implemented internal controls and risk management measures to mitigate financial and operational risks[69].