SMIC(00981)2024-08-29 09:53Financial Performance - Semiconductor Manufacturing International Corporation (SMIC) reported its unaudited interim results for the six months ended June 30, 2024[1]. - Revenue for the six months ended June 30, 2024, was 3,022,684 thousand for the same period in 2023[10]. - Net profit attributable to shareholders for the same period was 633,864 thousand in the prior year[10]. - The gross profit margin decreased to 13.8% from 20.6%, a decline of 6.8 percentage points year-over-year[11]. - The net profit margin fell to 6.5% from 24.2%, a decrease of 17.7 percentage points compared to the previous year[11]. - Basic earnings per share decreased to 0.08, reflecting a decline of 62.5%[11]. - Cash flows from operating activities decreased to 1,597,705 thousand in the same period last year[10]. - The company achieved revenue of 3,394.6 million, reflecting a year-on-year growth of 23.0%[38]. - Net profit for the period was 731.3 million in the previous year[62]. Research and Development - Research and development expenses accounted for 10.1% of revenue, down from 11.4% in the previous year, a reduction of 1.3 percentage points[11]. - R&D expenses totaled 30,000, up from 26,000 the previous year[30]. - The company has made progress in multiple R&D projects, including the 28nm ultra-low leakage platform, which has released PDK V1.0 and is in the process of customer product introduction[28]. - The R&D team consists of experienced professionals, enhancing the company's innovation capabilities and product performance[32]. - SMIC has developed various technology platforms for 8-inch and 12-inch wafer foundry services, providing a "one-stop" solution for customers[26]. - The company applied for 379 patents during the reporting period, with a total of 19,916 patents accumulated, including 11,865 invention patents[27]. Market and Industry Trends - In the first half of 2024, the global semiconductor industry showed signs of recovery, with a general upward trend in the industry chain being established[22]. - The semiconductor demand in the automotive sector is entering a cyclical adjustment phase, with inventory digestion gradually slowing down due to increasing competition in the electric vehicle market[22]. - The semiconductor industry remains characterized by high technical, talent, and capital intensity, with significant barriers to entry due to strict management and execution standards[23]. - Future trends indicate that wafer foundry companies will continue to expand capacity, develop new processes, and strengthen industry chain collaboration, leading to a more pronounced head effect in the industry[25]. - The semiconductor demand in various segments is showing differentiation, with leading industries rapidly growing while others face intense competition[22]. Operational Efficiency - The company has established a procurement management system to enhance production efficiency and cost control, maintaining long-term relationships with key suppliers while also integrating new suppliers[20]. - The company employs a multi-channel marketing strategy to expand its customer base, actively engaging in market research and direct communication with clients to tailor solutions[21]. - The company’s production model includes small-batch trial production, risk mass production, and bulk production stages, ensuring alignment with customer demand[20]. - The company is focused on enhancing its integrated circuit manufacturing capabilities and expanding its ecosystem services, including design services and IP support[18]. Financial Position and Risks - The company’s total interest-bearing debt amounted to 10,433.3 million, with cash and cash equivalents at 3,694.3 million[64][65]. - The company faces risks related to technology upgrades and R&D investment, which are critical in the capital-intensive semiconductor industry[39][42]. - There is a significant risk of talent shortages in the semiconductor industry, which could impact R&D progress[40]. - The company is exposed to supply chain risks due to reliance on a limited number of suppliers for critical materials and components[44]. - The company may experience performance volatility due to macroeconomic fluctuations and changes in customer demand[45]. - The company faces asset impairment risks due to potential significant declines in asset market values, which could adversely affect profits[46]. - Geopolitical tensions and export control policies from the US could create supply chain uncertainties and restrict access to essential production materials, adversely affecting operations[50]. Environmental Responsibility - The company invested 98 million in environmental protection during the reporting period[105]. - The company has constructed 22 sets of acidic gas treatment facilities, 6 sets of alkaline gas treatment facilities, 5 sets of organic gas treatment facilities, and 3 sets of arsenic-containing gas treatment facilities, along with 1 ammonia wastewater treatment system currently under construction[106]. - The company achieved compliance in all major pollutant emissions, with maximum wastewater discharge concentrations such as COD at 248.4 mg/L against a standard of 500 mg/L in Shanghai[106]. - The company has implemented carbon reduction measures, resulting in a reduction of 17,589 tons of CO2 equivalent through various projects, including the replacement of high GWP refrigerants with low GWP alternatives[109]. - The company received the "Waste-Free Star" certificate from the Beijing Economic and Technological Development Zone in the first half of 2024, highlighting its commitment to environmental responsibility[108]. Corporate Governance and Compliance - The company has maintained compliance with the corporate governance code and has a structured governance framework in place, including various specialized committees[83]. - The company will strictly follow the legal procedures for related party transactions and ensure fairness in pricing to protect shareholder interests[112]. - The company guarantees that the A-share issuance does not involve any fraudulent activities[116]. - The company commits to strictly adhere to the profit distribution policy as per the regulations set by the China Securities Regulatory Commission after the A-share issuance[120]. - The company will ensure that related party transactions are conducted based on fairness and transparency principles[113]. Shareholder Information - The number of registered shareholders as of the reporting period end is 246,030, with 234,147 holding A-shares and 11,883 holding Hong Kong shares[137]. - Major shareholders include China Information Technology Group Corporation, holding 1,189,323,450 shares, which is 14.95% of the total issued shares[139]. - The company has issued a total of 5,982,597,856 shares in Hong Kong, accounting for approximately 75.2% of the total share capital, and 1,973,609,172 shares on the Shanghai Stock Exchange, accounting for about 24.8%[141]. - The top ten shareholders collectively hold 4,236,160,019 shares, representing 53.24% of the total shares, with a notable increase of 9,222,461 shares during the reporting period[142].