2024-08-29 09:22Financial Performance - The company reported a revenue of approximately $1.5 billion for the first half of 2024, representing a year-over-year increase of 15% compared to the same period in 2023[11]. - The company's operating revenue for the reporting period reached CNY 26,269,310, an increase of 23.2% compared to CNY 21,317,790 in the same period last year[16]. - The net profit attributable to shareholders decreased by 45.1% to CNY 1,646,285 from CNY 2,997,265 in the previous year[16]. - The net cash flow from operating activities dropped significantly by 70.4%, amounting to CNY 3,246,325 compared to CNY 10,953,307 in the prior year[16]. - The gross profit margin decreased by 8.5 percentage points to 13.9% from 22.4% in the same period last year[16]. - The basic earnings per share fell by 44.7% to CNY 0.21 from CNY 0.38 in the previous year[16]. - The company achieved a main business revenue of RMB 25,931.6 million, a year-on-year increase of 23.5%[47]. - The wafer foundry business revenue was RMB 24,107.7 million, reflecting a year-on-year growth of 25.7%[47]. - The company reported a net profit for the first half of 2024 of CNY 1,641,948 thousand, a decrease of 55.3% compared to CNY 3,676,449 thousand in the same period of 2023[192]. Research and Development - The company plans to invest $500 million in R&D for new technologies and product development in the next fiscal year[11]. - The total R&D expenditure for the first half of 2024 was RMB 2,620,859 thousand, an increase of 9.1% compared to RMB 2,401,699 thousand in the same period last year[36]. - Research and development expenses accounted for 10.0% of operating revenue, a decrease of 1.3 percentage points compared to the previous year[16]. - The company filed 354 new invention patent applications and obtained 224 patents during the reporting period, bringing the total to 17,956 applications and 11,865 granted patents[34]. - The company has established a comprehensive and efficient innovation mechanism, with a strict seven-stage R&D process to ensure successful project conversion[28]. - The company employed 2,300 R&D personnel, representing 12.2% of the total workforce, an increase from 11.1% last year[40]. - The average salary of R&D personnel rose to RMB 211 thousand, up from RMB 183 thousand in the previous year[40]. Market Strategy and Expansion - The company aims to expand its market presence in Europe and North America, targeting a 20% increase in market share by 2025[11]. - The company expects a revenue growth of 10-15% for the second half of 2024, driven by increased demand in the semiconductor market[11]. - The company is focusing on developing advanced 5nm and 7nm process technologies to meet customer demands[11]. - The company has established strategic partnerships with key players in the semiconductor industry to strengthen its supply chain[11]. - The company ranks fourth globally among pure-play foundries based on 2023 sales figures, and it is the leading foundry in mainland China[31]. Operational Efficiency - The gross margin for the first half of 2024 was 25%, up from 22% in the same period last year, indicating improved operational efficiency[11]. - The company maintains a mature supplier management system and a robust supply chain security system to enhance production efficiency and cost control[26]. - The company focuses on expanding production capacity and developing new processes to strengthen capital, technology, and industry ecosystem barriers[32]. Risks and Challenges - High customer concentration poses a risk; if major clients face operational issues, it could negatively impact the company's performance and operational efficiency[52]. - The company faces supply chain risks due to reliance on a limited number of global suppliers for critical materials and components, which could affect production if shortages or price increases occur[53]. - The company is exposed to performance volatility risks due to macroeconomic fluctuations and changes in industry demand, which could impact sales revenue and profit margins[54]. - There is a risk of asset impairment due to significant fixed asset investments; if market conditions change unfavorably, it could lead to losses[55]. - Changes in national industrial policies could adversely affect the company's development, given the strategic importance of the integrated circuit industry[56]. - The company operates in a highly competitive environment, with a significant technology gap compared to industry leaders, which could hinder market share growth[57]. Environmental Responsibility - The company invested 698,317 thousand yuan in environmental protection during the reporting period[120]. - The company has the capacity to treat 176,510 cubic meters of wastewater and 494,245,200 cubic meters of exhaust gas daily, with all pollution control facilities operating normally[122]. - SMIC reduced carbon emissions by 17,589 tons during the reporting period[128]. - The company implemented 40 projects aimed at carbon reduction, including upgrading refrigeration systems and optimizing humidification methods[128]. - The company emphasizes resource and energy efficiency, aiming to minimize harmful emissions and fulfill environmental responsibilities[128]. Corporate Governance and Compliance - The company has established a governance structure compliant with the Cayman Islands laws and Hong Kong listing rules, enhancing decision-making objectivity[94]. - The company has committed not to issue further restricted stock under the 2021 Sci-Tech Innovation Board Restricted Stock Incentive Plan after its termination on November 10, 2023[104]. - The company guarantees that the A-share issuance does not involve any fraudulent activities[136]. - The company will communicate with investors to determine the scope, order, amount, and method of compensation[144]. - The company has committed to adhere to applicable laws and regulations regarding disputes arising from the A-share issuance and listing[150]. Shareholder Information - The total number of shares issued as of June 30, 2024, was 7,956,207,028 shares[187]. - The largest shareholder, Datang Holdings (Hong Kong) Investment Co., Ltd., holds 1,116,852,595 shares, representing 14.04% of the total issued share capital[168]. - The top ten shareholders collectively hold 4,236,160,019 shares, which is 53.24% of the total issued shares[171]. - The company did not repurchase, sell, or redeem any ordinary shares during the reporting period, and as of June 30, 2024, it holds no treasury shares[165]. - The company’s shareholder structure includes a significant portion of shares held by HKSCC Nominees Limited, which accounts for 99.8% of the Hong Kong shares[170].