2019-09-04 09:56Financial Performance - The company recorded a total revenue of approximately $1.46 billion for the first half of the year, with a gross margin of 18.7% and EBITDA of $600 million[12]. - Sales for the six months ended June 30, 2019, were $1,459.8 million, down from $1,721.8 million for the same period in 2018, primarily due to changes in product mix and average selling price decline[14]. - Gross profit for the six months ended June 30, 2019, was $273.2 million, down from $438.0 million in the same period of 2018, with a gross margin of 18.7% compared to 25.4% in 2018[16]. - Operating loss for the six months ended June 30, 2019, was $18.4 million, a significant decline from a profit of $61.4 million in the same period of 2018[17]. - The company reported a net loss of $1.4 million for the six months ended June 30, 2019, compared to a profit of $58.7 million in the same period of 2018[18]. - Revenue for the six months ended June 30, 2019, was $1,459,781, a decrease of 15.2% compared to $1,721,757 for the same period in 2018[84]. - Gross profit for the same period was $273,228, down 37.5% from $438,009 in 2018[84]. - The company reported a comprehensive income of $1,084 thousand for the six months ended June 30, 2019[88]. Revenue Breakdown - Revenue from mainland China and Hong Kong accounted for 55.5%, North America 29.7%, and Eurasia 14.8%, with Eurasia revenue growing 43.9% year-over-year[12]. - Revenue from North America was $433.3 million, down 18.5% from $531.6 million in 2018; revenue from mainland China and Hong Kong was $810.3 million, down 22.1% from $1,039.9 million[101]. - Revenue from wafer sales was $1,372.5 million, a decrease of 8.2% from $1,495.1 million in the previous year[102]. Research and Development - Research and development expenses for the six months ended June 30, 2019, were $201.0 million, down from $270.2 million in the same period of 2018, reflecting increased advanced technology R&D activities[17]. - The company is experiencing significant growth in mature process platforms and continuous breakthroughs in advanced technology development[12]. - The first generation FinFET technology has entered risk production, expected to contribute significant revenue by the end of the year[12]. - The second generation FinFET N+1 technology platform has begun customer adoption, targeting opportunities in 5G, IoT, and automotive electronics[12]. Capital Expenditures and Investments - Capital expenditures for the six months ended June 30, 2019, were $1,347.7 million, compared to $880.9 million for the same period in 2018[20]. - The company plans approximately $2.1 billion in capital expenditures for its foundry business in 2019, subject to market conditions[19]. - The company has construction commitments of $188.7 million for facilities and $407.4 million for purchasing machinery and equipment as of June 30, 2019[24]. Cash Flow and Liquidity - Cash and cash equivalents as of June 30, 2019, amounted to $1,518.6 million, held in various currencies including USD, JPY, EUR, and RMB[20]. - Net cash generated from operating activities increased to $356.2 million for the six months ended June 30, 2019, from $205.4 million in the same period of 2018[20]. - Operating cash flow for the six months ended June 30, 2019, was $378.3 million, compared to $236.5 million for the same period in 2018, representing a 60% increase[93]. - The company reported a net cash outflow from investing activities of $1.81 billion for the first half of 2019, compared to $1.61 billion in the same period of 2018, indicating increased investment in growth initiatives[93]. Corporate Governance - The board of directors has undergone changes, with Dr. Jiang Shangyi retiring and Dr. Yang Guanglei appointed as an independent non-executive director[12]. - The board consists of 14 directors, with a structured rotation for re-election every three years[37]. - The company has adopted a set of corporate governance policies to ensure compliance with the Hong Kong Stock Exchange's standards[35]. - The audit committee consists of three members, including Mr. Fan Renda, Mr. Zhou Jie, and Mr. William Tudor Brown, all of whom have not served as executives or employees of the company[43]. Shareholder Information - The company did not declare an interim dividend for the six months ending June 30, 2019, compared to no dividend declared for the same period in 2018[60]. - Major shareholders holding 5% or more of the company's share capital as of June 30, 2019, include Datang Telecom Technology Industry Holdings Limited, the National Integrated Circuit Industry Investment Fund, Tsinghua University, and Zhao Weiguo[61][62]. Financial Risks and Liabilities - The debt-to-equity ratio was approximately 43.8% and the net debt-to-equity ratio was about 4.8% as of June 30, 2019[26]. - The company is exposed to foreign exchange risks primarily from transactions in euros, yen, and renminbi, and uses forward foreign exchange contracts to mitigate these risks[27]. - The company’s financial risk management remains unchanged since December 31, 2018, with exposure to market, foreign exchange, interest rate, price, credit, and liquidity risks[99]. Employee Compensation and Stock Options - The company has a structured approach to employee compensation through stock options, which is common in the semiconductor industry[79]. - The total number of unexercised stock options was 51,608,194 with a weighted average exercise price of $1.00, compared to 52,881,278 options at $0.83 as of June 30, 2018[142]. - The employee stock option plan allows for 25% of options to vest on the first anniversary of the vesting start date, with the remaining options vesting monthly over the next three years[75]. Environmental Compliance - The company’s subsidiaries must comply with various environmental laws and regulations, with environmental impact assessments required for construction projects[55]. - The company has received approvals for environmental impact assessments and emission registrations for its subsidiaries in China[56].