2019-04-29 08:38Company Overview - Semiconductor Manufacturing International Corporation is the largest advanced wafer foundry in China[2]. - The company emphasizes the importance of new technology introduction and production capacity for future performance[12]. Financial Performance - In 2018, the company achieved a record revenue of approximately $3.36 billion, representing an 8.3% year-over-year growth[30]. - The company recorded EBITDA of $1.16 billion in 2018, reflecting a year-over-year increase of about 4.2%[30]. - Revenue for 2018 was $3,359,984, an increase of 8.3% from $3,101,175 in 2017[42]. - The group’s sales reached $3,360.0 million in 2018, up from $3,101.2 million in 2017, representing a growth of approximately 8.3%[93]. - The company reported a net profit of $77.2 million in 2018, compared to $126.4 million in 2017[52]. - The total profit for the year ended December 31, 2018, was $77.2 million, down from $126.4 million in 2017, representing a decrease of approximately 39%[61]. - Gross profit margin decreased to 22.2% in 2018 from 23.9% in 2017, reflecting a decline in profitability[43]. - Operating profit decreased significantly from $124.9 million in 2017 to $14.6 million in 2018, primarily due to changes in revenue, cost of sales, and gross profit[51]. Research and Development - The company invested over $600 million in R&D in 2018, significantly above the industry average, focusing on advanced process development[30]. - The company submitted over 600 patent filings related to its technology R&D activities in 2018[38]. - Research and development expenses increased to $558,110, up 30.6% from $427,111 in 2017, indicating a focus on innovation[42]. - Research and development expenses rose by 30.7% to $558.1 million in 2018, driven by advanced R&D activities[51]. Market and Customer Insights - Revenue from the China region (excluding technology licensing income) grew by 24.3% year-over-year in 2018[30]. - In 2018, revenue contribution from North American customers was 31.6%, down from 40.0% in 2017, while revenue from China increased to 59.1% from 47.3%[35]. - The revenue from communication applications contributed 41.2% to total revenue in 2018, down from 44.3% in 2017, while consumer applications contributed 34.4%, down from 37.4%[35]. - Revenue from automotive and industrial applications grew from $244.8 million in 2017 to $263.0 million in 2018, representing a year-on-year growth rate of 7.4%[35]. Capital Expenditures and Investments - Capital expenditures for 2018 totaled $1.81 billion, down from $2.49 billion in 2017[33]. - Capital expenditure for 2019 is planned at $2.2 billion, primarily for establishing a new advanced wafer fab in Shanghai[39]. - The total investment in the subsidiary "SMIC Beijing" is $7,200 million, with a registered capital of $4,800 million[96]. - The total investment in the subsidiary "SMIC Shanghai" is $5,880 million, with a registered capital of $2,190 million[96]. - The total investment in the subsidiary "SMIC Tianjin" is $2,600 million, with a registered capital of $1,290 million[96]. Financial Position and Liabilities - Total assets increased to $14,424,320 in 2018, up 21.1% from $11,918,451 in 2017[44]. - Total liabilities rose to $5,500,740, an increase of 5.8% from $5,197,116 in 2017[44]. - The company reported a basic earnings per share of $0.03 in 2018, compared to $0.04 in 2017[43]. - The net debt-to-equity ratio of the group as of December 31, 2018, was approximately -4.5%[58]. Management and Governance - The board of directors is composed of members elected by shareholders, ensuring governance and oversight[94]. - Dr. Liang Mengsong has over 33 years of experience in the semiconductor industry and holds more than 450 patents[72]. - Dr. Gao Yonggang has over 30 years of financial management experience and has been the Chief Financial Officer since February 2014[74]. Strategic Initiatives - The company plans to continue focusing on technology advancement, platform establishment, and building partnerships to enhance competitiveness[30]. - The company aims to maintain profitability and improve operational efficiency while providing top-tier customer service[33]. - The company aims to optimize existing asset efficiency and leverage its strong market position in China for sustained profitability[93]. Sustainability and Corporate Responsibility - The company is committed to sustainability initiatives, planning to invest $I million in eco-friendly technologies and practices[81]. - The company is committed to environmental protection and adheres to relevant laws and regulations, including the EU's RoHS directive[93]. Related Party Transactions - The financial services agreement allows the company to choose suitable financial service providers among other Chinese commercial banks[174]. - The independent non-executive directors confirmed that the transactions with Datang Holdings were conducted in the ordinary course of business and on normal commercial terms[179]. - The maximum expected revenue from transactions under the Continuing Connected Transactions Framework Agreement for the year ended December 31, 2017, was 66 million USD[176].