韦尔股份(603501) - 2020 Q2 - 季度财报

Definitions This section provides essential definitions of company-specific and industry-related terms to facilitate report comprehension Definitions of Common Terms This section defines frequently used terms, including company names, semiconductor industry jargon, and business model terminology, to enhance report clarity - Defines the names of the company and its subsidiaries, such as Will Semiconductor, Hong Kong Huaqing, and Beijing OmniVision[8] - Explains key semiconductor industry technical terms, including IC (Integrated Circuit), TVS (Transient Voltage Suppressor), MOSFET (Metal-Oxide-Semiconductor Field-Effect Transistor), LDO (Low-Dropout Regulator), and CIS (CMOS Image Sensor)[9][12] - Elaborates on semiconductor industry business model terms, such as Fabless (fabless design), IDM (Integrated Device Manufacturer), OEM (Original Equipment Manufacturer), and ODM (Original Design Manufacturer)[10] Company Profile and Key Financial Indicators This section provides an overview of the company's fundamental information and highlights its key financial performance metrics Company Basic Information This section outlines the company's basic details, including its official names, legal representative, registered and operational addresses, contact information, and stock listing particulars - The company's Chinese name is Shanghai Will Semiconductor Co., Ltd., abbreviated as Will Semiconductor, with Wang Song as its legal representative[13] - The company's registered address is at Building C, 7th Floor, No. 3000 Longdong Avenue, China (Shanghai) Pilot Free Trade Zone, with its office at East Building, No. 88 Shangke Road, Pudong New Area, Shanghai[15] - The company's stock code is 603501, listed on the Shanghai Stock Exchange, with the stock abbreviation Will Semiconductor[17] Key Accounting Data and Financial Indicators The company achieved significant growth in operating revenue and net profit attributable to shareholders, primarily driven by asset restructuring including the acquisition of Beijing OmniVision, substantially enhancing profitability, with 2019 half-year financial data retrospectively adjusted for common control business combinations 2020 Half-Year Key Accounting Data (Year-on-Year) | Indicator | Current Period (Jan-Jun) | Prior Period (Adjusted) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 8,042,878,724.26 RMB | 5,703,421,495.10 RMB | 41.02 | | Net Profit Attributable to Listed Company Shareholders | 990,095,933.55 RMB | 75,801,380.95 RMB | 1,206.17 | | Net Profit Attributable to Listed Company Shareholders After Deducting Non-Recurring Gains and Losses | 927,745,680.60 RMB | 15,248,125.02 RMB | 5,984.33 | | Net Cash Flow from Operating Activities | 209,366,493.20 RMB | 46,156,748.33 RMB | 353.60 | 2020 Half-Year Key Financial Indicators (Year-on-Year) | Indicator | Current Period (Jan-Jun) | Prior Period (Adjusted) | Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 1.20 | 0.15 | 700.00 | | Diluted Earnings Per Share (RMB/share) | 1.19 | 0.14 | 750.00 | | Basic Earnings Per Share After Deducting Non-Recurring Gains and Losses (RMB/share) | 1.12 | 0.03 | 3,633.33 | | Weighted Average Return on Net Assets (%) | 11.30 | 2.81 | Increased by 8.49 percentage points | | Weighted Average Return on Net Assets After Deducting Non-Recurring Gains and Losses (%) | 10.59 | 0.57 | Increased by 10.02 percentage points | - The company retrospectively adjusted its 2019 half-year financial statement data due to the acquisition of Beijing OmniVision and other equity interests in August 2019, which constituted a business combination under common control[20][22] Non-Recurring Gains and Losses Items and Amounts Total non-recurring gains and losses for the period amounted to 62.35 million RMB, primarily comprising government subsidies, fair value changes, and other non-operating income and expenses, which had an impact on the company's net profit 2020 Half-Year Non-Recurring Gains and Losses Items and Amounts | Non-Recurring Gains and Losses Item | Amount (RMB) | | :--- | :--- | | Gains and losses from disposal of non-current assets | 1,160,606.95 | | Government grants recognized in current profit or loss | 21,064,246.82 | | Fair value changes and investment income from holding transactional financial assets, derivative financial assets, etc. | 31,337,330.65 | | Other non-operating income and expenses apart from the above | 17,895,131.25 | | Impact on minority interests | -111,569.01 | | Income tax impact | -8,995,493.71 | | Total | 62,350,252.95 | Company Business Overview This section provides a high-level summary of the company's core business activities, operational strategies, and the broader industry landscape Main Business, Operating Model, and Industry Overview The company primarily engages in semiconductor product design and distribution, with design focusing on image sensors and discrete devices using a Fabless model, while its distribution arm acts as a technical distributor offering a wide range of semiconductor products, navigating a market influenced by macroeconomics and the pandemic but driven by emerging applications like IoT, AI, and automotive electronics - The company operates in the computer, communication, and other electronic equipment manufacturing industry (C39), with integrated circuits forming the core of the global semiconductor market[26] - In the first half of 2020, the global semiconductor market is projected to decline by 4% to 345.8 billion USD due to US-China trade friction and the COVID-19 pandemic[26] - The company's main businesses include semiconductor product design (image sensors, discrete devices, power management ICs, RF devices, etc.) and semiconductor product distribution (passive components, structural components, discrete devices, ICs, etc.)[26][27] - The semiconductor design business adopts a Fabless model, focusing on R&D and sales, with wafer manufacturing and packaging/testing outsourced[27] - The semiconductor distribution business operates on a buy-out procurement model, providing technical support and solutions, and collaborating closely with original manufacturers and downstream customers[33] Industry Overview The company operates within the computer, communication, and other electronic equipment manufacturing sector, where integrated circuits are central to the semiconductor market, and despite anticipated global market decline in H1 2020 due to trade tensions and the pandemic, emerging applications like IoT, AI, and automotive electronics remain key growth drivers - The company's industry classification is Computer, Communication and Other Electronic Equipment Manufacturing (C39)[26] - Integrated circuit product sales accounted for 80.9% of the global semiconductor market in 2019, driven by the development of electronic systems such as IoT, AI, automotive electronics, and smartphones[26] - In the first half of 2020, the global semiconductor market is expected to decline by 4% to 345.8 billion USD due to US-China trade friction and the COVID-19 pandemic[26] Company's Main Business Operations The company's main business encompasses semiconductor product design and distribution, with design primarily focusing on image sensors (CMOS image sensor chips, LCOS, Camera Cube Chips) and other semiconductor devices (discrete devices, power management ICs, RF devices), while distribution involves various electronic components and ICs - The company's main business is semiconductor product design and distribution, with the main business structure remaining unchanged after the acquisition of Beijing OmniVision and Superpix in August 2019[26] - Semiconductor product design business is divided into image sensor products (primarily CMOS image sensor chips used in smartphones, automotive, security) and other semiconductor device products (discrete devices, power management ICs, RF devices, MEMS microphone sensors, etc.)[26][27] - The company's distribution business covers semiconductor products such as passive components, structural components, discrete devices, and ICs, and collaborates with supply chains of well-known domestic mobile phone brands[27] Company's Operating Model The company effectively integrates semiconductor design and distribution businesses, employing a Fabless model for design to focus on R&D and sales while outsourcing manufacturing, and operating its distribution arm as a technical distributor providing support and market insights for its design business - The company's operating model integrates semiconductor design and distribution businesses, leveraging distribution channel advantages to analyze customer needs and provide market information for product R&D[27] - The semiconductor design business adopts a Fabless model, focusing solely on integrated circuit R&D, design, and sales, with wafer manufacturing, packaging, and testing outsourced to professional manufacturers[27] - Designed products include CMOS image sensors (80,000 to 64 million pixels), Camera Cube Chips (miniature image module packaging), LCOS (Liquid Crystal On Silicon projection display), dynamic vision sensors, and ASIC (Application-Specific Integrated Circuit)[30] - Other semiconductor device products include TVS, MOSFET, Schottky diodes, LDO, DC-DC, LED backlight drivers, analog switches, live broadcast chips, RF chips, MEMS microphones, and TDDI[31][32] - The semiconductor distribution business operates as a technical authorized distributor, employing a buy-out procurement model and an experienced FAE (Field Application Engineer) team to provide technical support and after-sales service[33] - Distribution products cover electronic components (resistors, capacitors, inductors), structural components, discrete devices, ICs, and display modules, representing renowned domestic and international brands such as Panasonic, Yageo, and Samsung[34][35] Explanation of Significant Changes in Major Assets During the reporting period, the company experienced significant changes in its major assets, with overseas assets constituting 57.88% of total assets, and specific details of these changes are provided in "Section IV Discussion and Analysis of Operations," subsection "II. Key Operating Performance During the Reporting Period," part "(III) Analysis of Assets and Liabilities" - The book value of overseas assets at the end of the period was 12.51 billion RMB, accounting for 57.88% of total assets[36] Analysis of Core Competitiveness The company's core competitiveness is rooted in its semiconductor design and distribution businesses, with design leveraging strong R&D, core technology, brand recognition, diverse product lines, a light-asset model, and import substitution capabilities, while distribution relies on an extensive sales network, technical services, customer resources, and product advantages - The company's semiconductor design business invested 987 million RMB in R&D in the first half of 2020, representing 14.33% of design business sales revenue, and holds 4,397 patents, including 4,030 invention patents[37] - In CMOS image sensors, the company offers 0.8um 32MP/48MP/64MP products and launched a new 0.7um 64MP product, featuring core technologies like LED flicker suppression, global exposure, and Nyxel® near-infrared[38][39] - Other semiconductor device products (TVS, MOSFET, power management ICs, RF devices, MEMS microphones, etc.) possess leading technological and performance advantages, achieving import substitution for high-end models[38][40][41] - OmniVision Technologies is among the top three global CMOS image sensor suppliers, Superpix offers cost-effective solutions in mid-to-low pixel segments, and the company's TVS and MOSFET products have received multiple high-tech achievement transformation honors[42] - The company employs a Fabless light-asset model, establishing long-term partnerships with mainstream foundries to effectively control costs and enhance efficiency[44] - The semiconductor distribution business boasts an extensive sales network and a comprehensive "procurement, sales, and inventory" supply chain system, with its FAE team providing high-level technical services and customer resources covering mainstream domestic mobile phone brands and solution providers[48][49] Competitive Advantages of Semiconductor Design Business The company's semiconductor design business maintains a leading position through sustained high R&D investment, advanced core technologies (e.g., CMOS image sensors, TVS, power management ICs), strong brand influence, a rich product portfolio, an efficient Fabless light-asset model, and significant import substitution capabilities - In the first half of 2020, the semiconductor design business invested 987 million RMB in R&D, accounting for 14.33% of design business sales revenue, and holds 4,397 patents, including 4,030 invention patents[37] - CMOS image sensors for the mobile phone market include 0.8um 32MP, 48MP, and 64MP products, with a new 0.7um 64MP product launched, featuring core technologies such as LED flicker suppression, global exposure, Nyxel® near-infrared, and HDR[38][39] - Other semiconductor device products (TVS, MOSFET, Schottky diodes, power management ICs, RF devices, MEMS microphones, TDDI, etc.) possess leading advantages in performance, packaging technology, and low power consumption, achieving import substitution for high-end models[38][40][41] - OmniVision Technologies is one of the top three global CMOS image sensor suppliers, Superpix offers cost-effective advantages in mid-to-low pixel segments, and the company's TVS and MOSFET products have repeatedly received high-tech achievement transformation honors[42] - The company adopts a Fabless light-asset model, establishing long-term cooperative relationships with internationally renowned wafer foundries and packaging/testing factories to ensure production capacity and control costs[44][46] - The company boasts a high-caliber R&D and management team, with core members possessing deep industry experience and professional backgrounds[48] Competitive Advantages of Semiconductor Distribution Business The company's semiconductor distribution business maintains its leading position and competitive edge through an extensive sales network, a mature "procurement, sales, and inventory" supply chain system, a highly skilled FAE team, deep customer resources, and a rich product portfolio - The company's distribution business has established an extensive sales network and a comprehensive "procurement, sales, and inventory" supply chain system, ranking among the top in the industry by scale[48] - It possesses a highly skilled Field Application Engineer (FAE) team, providing product application consulting and solution design support to enhance customer loyalty[48] - The company has entered the supply chains of mainstream domestic mobile phone brands and solution providers, with customers widely distributed across consumer electronics, security monitoring, smart meters, industrial, and new energy sectors[49][50] - It distributes and sells products from renowned domestic and international semiconductor manufacturers in Taiwan, Japan, South Korea, and the United States, ensuring reliable product quality and a diverse range[50] Discussion and Analysis of Operations This section provides an in-depth discussion and analysis of the company's operational performance, strategic initiatives, and market positioning during the reporting period Overview of Operations During the reporting period, the company significantly enhanced its semiconductor design business's technological capabilities and profitability through acquisitions like Beijing OmniVision and Superpix, leading to substantial growth in total operating revenue and net profit attributable to the parent company, while also increasing R&D investment, optimizing supply chain management, and implementing equity incentives to stabilize its team - The company completed the acquisition of Beijing OmniVision and Superpix, expanding its presence in the CMOS image sensor field and enhancing its semiconductor design technology and profitability[51] 2020 Half-Year Operating Performance | Indicator | Amount (RMB) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Total Operating Revenue | 8,043,000,000 | 41.02 | | Net Profit Attributable to Listed Company Shareholders | 990,000,000 | 1,206.17 | | Net Profit Attributable to Listed Company Shareholders Excluding Equity Incentive Amortization | 1,077,000,000 | 565.92 | - Semiconductor design business revenue reached 6.89 billion RMB, accounting for 85.85% of the company's main business revenue, a 42.69% increase year-on-year[51] - Semiconductor distribution business revenue reached 1.14 billion RMB, accounting for 14.15% of the company's main business revenue, a 32.45% increase year-on-year[55] - Total R&D investment was approximately 987 million RMB, representing 14.33% of semiconductor design business sales revenue, and the company holds 4,397 patents[56] - Supply chain management was optimized by transferring some mature products to domestic foundries, leveraging business synergies[57] - The company continued to promote equity incentive plans, including the 2017 restricted stock incentive and 2019 stock option incentive, to enhance team cohesion and stability[57][58] Growth of Semiconductor Design Business The company's semiconductor design business experienced significant revenue growth, driven by the CMOS image sensor industry's boom and acquisition effects, launching high-pixel new products and upgrading Nyxel® technology in image sensors, while achieving technological breakthroughs and market progress in power management, signal interface, TDDI, TVS, MOSFET, RF chips, and MEMS microphones - The semiconductor design business achieved revenue of 6.89 billion RMB, accounting for 85.85% of the company's main business revenue in the first half of 2020, an increase of 42.69% compared to the retrospectively adjusted prior period[51] - In the image sensor field, benefiting from the CIS industry growth dividend and increased smartphone camera quantity and value, the company launched the 0.7um 64MP OV64B image sensor and released the first automotive Nyxel® technology image sensor OX03A2S[51][52] - In the dynamic vision sensor (Event-based Vision Sensor) field, subsidiary CeleX Technology's CeleX series products are industry-leading, being the first globally to launch a 1M resolution sensor[53] - In the power management chip field, LDO products with high-frequency, high-rejection ratio, and ultra-low power consumption were developed, and OVPIC with built-in surge protection was developed for overvoltage protection[53] - In the TDDI field, the TD4150 product has entered mass production, supporting a-Si Dual Gate Panels and enhancing competitiveness for full-screen smartphone designs[54] - In the TVS field, the company pioneered the development of deep-retrace ultra-low capacitance electrostatic protection chips, with capacitance as low as 0.1pF, achieving international leading technical levels[54] - MOSFET products are gradually entering the network communication and security markets, with the launch of 2mohm, CSP-packaged dual N-channel lithium battery protection MOSFETs, ranking among the domestic leaders[55] - In the RF chip field, R&D focuses on high-performance RF chips, with multiple high-end and low-end LNA products launched[55] - MEMS microphone products for the IoT and smart home markets have been developed into small-sized, low-power consumption products and adopted by well-known domestic brands[55] Semiconductor Distribution Business Operations During the reporting period, the company's semiconductor distribution business generated 1.14 billion RMB in revenue, a 32.45% year-on-year increase, achieved by optimizing product and market positioning, continuously expanding its代理 product lines, and leveraging distribution insights to support semiconductor design business development - The semiconductor distribution business achieved revenue of 1.14 billion RMB, accounting for 14.15% of the company's main business revenue in the first half of 2020, representing a 32.45% increase year-on-year[55] - The company established a stable and efficient marketing model through clear product and market positioning, continuously enriching its代理 product lines and achieving breakthroughs in new customer development[56] - The distribution business serves as a crucial source of market demand information, supporting the development of the semiconductor design business by diversifying代理 product types and customer groups[56] R&D Investment and Innovation The company consistently increases its R&D investment, totaling approximately 987 million RMB in the current reporting period, representing 14.33% of semiconductor design business sales revenue, with continuous investment in CMOS image sensor chips and 4,397 patents, establishing a customer-demand-oriented R&D model - In the current reporting period, the company's total R&D investment was approximately 987 million RMB, with semiconductor design business R&D investment accounting for 14.33% of its sales revenue[56] - The company continues to increase R&D investment in CMOS image sensor chips, holding 4,397 patents as of the end of the reporting period, including 4,030 invention patents[56] - The company has established a customer-demand-oriented R&D model and continuously innovates its R&D mechanisms to enhance core competitiveness[57] Supply Chain Optimization and Synergy The company, through its Fabless model, collaborates closely with major foundries and packaging/testing facilities to ensure stable product supply, and during the reporting period, it shifted some mature products to domestic foundries to secure capacity and control costs, while also coordinating business segment strategies to leverage technological advancements and shared customer resources for synergy - The company's semiconductor design business adopts a Fabless model, collaborating closely with major foundries and packaging/testing facilities to ensure stable product supply[57] - During the reporting period, the company transferred some relatively mature products to domestic foundries to secure production capacity and control costs[57] - The company coordinates the development strategies of its various business segments, leveraging Superpix's design capabilities under OmniVision Technologies' technological leadership and utilizing OmniVision Technologies' and Superpix's high-quality customer resources to expand existing product markets, thereby achieving synergistic effects[57] Management Innovation and Equity Incentives The company actively promotes management innovation and implements equity incentive plans, including the 2017 restricted stock incentive and 2019 stock option incentive, to attract and retain professional talent, enhance team motivation and stability, and ensure employees share in the company's growth - The company continuously promotes equity incentive plans, offering competitive compensation to employees and enabling them to share in the company's rapid development achievements[57] - In 2017, a restricted stock incentive plan was implemented, granting restricted shares to 192 employees[58] - In 2019, a stock option incentive plan was implemented, granting options to 926 employees, including those from Beijing OmniVision and Superpix, with an initial grant, and a reserved portion granted to 153 employees in March 2020, enhancing team belonging and stability[58] Key Operating Performance This section provides a detailed analysis of the reasons for changes in key financial statement items during the reporting period, along with an in-depth examination of the company's asset and liability situation, including period-end balances, change percentages, and explanations for variations in various assets and liabilities, as well as restrictions on major assets 2020 Half-Year Financial Statement Key Item Change Analysis | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 8,042,878,724.26 | 5,703,421,495.10 | 41.02 | Increase in sales volume | | Operating Cost | 5,441,843,749.78 | 4,140,317,315.42 | 31.44 | Increase in sales volume | | Selling Expenses | 166,468,471.11 | 176,952,133.54 | -5.92 | Impact of new revenue recognition standards on sales commissions | | Administrative Expenses | 343,635,527.10 | 273,124,452.46 | 25.82 | Increase in employee compensation | | Financial Expenses | 131,465,022.71 | 104,517,623.16 | 25.78 | Increase in bank borrowings | | R&D Expenses | 808,165,411.90 | 598,591,907.14 | 35.01 | Increase in depreciation, amortization, share-based payment expenses, and employee compensation | | Net Cash Flow from Operating Activities | 209,366,493.20 | 46,156,748.33 | 353.60 | Increase in sales volume and collection of receivables | | Net Cash Flow from Investing Activities | -1,783,208,726.35 | -946,502,664.04 | -88.40 | Increase in investment activities | | Net Cash Flow from Financing Activities | 1,143,542,963.14 | 246,271,751.72 | 364.34 | Increase in bank borrowings | 2020 Half-Year Asset and Liability Status Changes | Project Name | Current Period End Amount (RMB) | Current Period End % of Total Assets | Prior Period End Amount (RMB) | Prior Period End % of Total Assets | Current Period End vs Prior Period End Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Notes Receivable | 5,549,811.45 | 0.03 | 10,991,843.53 | 0.06 | -49.51 | Mainly due to maturity of notes | | Prepayments | 428,145,949.81 | 1.98 | 326,075,897.63 | 1.87 | 31.30 | Mainly due to increased prepayments for committed capacity expansion | | Other Receivables | 49,850,289.23 | 0.23 | 25,744,490.90 | 0.15 | 93.63 | Mainly due to increased deposits and guarantees | | Inventories | 6,445,290,108.99 | 29.82 | 4,366,449,569.25 | 24.99 | 47.61 | Mainly due to capacity expansion | | Other Equity Instrument Investments | 71,232,596.92 | 0.33 | 117,090,965.17 | 0.67 | -39.16 | Mainly due to partial disposal of other equity instrument investments | | Other Non-Current Financial Assets | 321,817,503.36 | 1.49 | 84,150,000.00 | 0.48 | 282.43 | Mainly due to fair value changes and new investments | | Construction in Progress | 405,650,660.12 | 1.88 | 91,964,084.45 | 0.53 | 341.10 | Mainly due to increased construction in progress and equipment | | Intangible Assets | 1,781,918,697.84 | 8.25 | 1,333,883,948.69 | 7.63 | 33.59 | Mainly due to increase from business combinations | | Other Non-Current Assets | 74,080,463.16 | 0.34 | 175,862,979.84 | 1.01 | -57.88 | Mainly due to decrease in prepayments | | Short-Term Borrowings | 2,923,218,793.98 | 13.53 | 1,654,183,276.49 | 9.47 | 76.72 | Mainly due to increased bank borrowings | | Accounts Payable | 2,526,268,798.01 | 11.69 | 1,881,586,859.99 | 10.77 | 34.26 | Mainly due to increased inventories | | Advances from Customers | 0 | 0 | 128,323,312.90 | 0.73 | -100.00 | Impact of new revenue recognition standards | | Contract Liabilities | 318,956,297.89 | 1.48 | 0 | 0 | 100.00 | Impact of new revenue recognition standards | | Non-Current Liabilities Due Within One Year | 308,590,000.00 | 1.43 | 2,446,569,373.95 | 14.00 | -87.39 | Mainly due to reclassification of bank borrowings | | Long-Term Borrowings | 3,050,864,431.95 | 14.12 | 928,000,000.00 | 5.31 | 228.76 | Mainly due to reclassification of bank borrowings | | Deferred Income | 24,520,808.67 | 0.11 | 8,593,713.94 | 0.05 | 185.33 | Mainly due to increased government grants | | Deferred Income Tax Liabilities | 128,504,971.72 | 0.59 | 91,481,318.89 | 0.52 | 40.47 | Mainly due to valuation appreciation from business combinations | 2020 Half-Year End Major Asset Restriction Status | Item | Period-End Book Value (RMB) | Reason for Restriction | | :--- | :--- | :--- | | Cash and Bank Balances | 71,563,752.51 | For obtaining loans, various deposits, and asset preservation freezes | | Fixed Assets | 122,117,550.99 | For obtaining loans | | Accounts Receivable | 58,773,648.28 | For obtaining loans | | Investment Properties | 24,685,448.24 | For obtaining loans | | Total | 277,140,400.02 | / | Other Disclosures This section discloses significant risks the company may face, including market and operational risks such as macroeconomic fluctuations, market changes, raw material supply and outsourcing, insufficient technological innovation, and changes in the political and economic environment of host countries, as well as financial risks like large inventory balances, goodwill impairment, exchange rate fluctuations, and changes in fundraising project expectations and tax incentives, in addition to the risk of a high pledge ratio for the actual controller's equity - The company faces market and operational risks including macroeconomic fluctuations, market changes (high proportion of sales in mobile communication), raw material supply and outsourcing (concentrated wafer and packaging/testing capacity), and inability to sustain technological innovation[73][74] - Financial risks include a large inventory balance (6.45 billion RMB at period-end, accounting for 29.82% of total assets), goodwill impairment (2.84 billion RMB at period-end, accounting for 13.13% of total assets), exchange rate fluctuations (many USD-denominated transactions), and risks of fundraising investment projects not meeting expected returns[75][76] - The actual controller, Mr. Yu Renrong, and his concerted parties have cumulatively pledged 254,839,009 shares, representing 70.50% of their total holdings and 29.51% of the company's total share capital, indicating a significant equity pledge ratio risk[76] Significant Events This section details important events concerning the company, including shareholder meetings, profit distribution plans, fulfillment of commitments, appointment of auditors, significant litigation, integrity status, equity incentive plans, related party transactions, major contracts, guarantees, and convertible bonds Shareholder Meeting Information The company held its 2019 Annual General Meeting on June 11, 2020, where the convening, procedures, and resolutions were all legal and valid, with no proposals rejected - The 2019 Annual General Meeting was held on June 11, 2020, and the resolution announcement was disclosed on June 12, 2020[78] - The convening, procedures, qualifications of conveners, attendees, and voting results of the shareholder meeting complied with laws, regulations, and the company's articles of association, being legal and valid, with no rejected proposals[79] Profit Distribution Plan During the reporting period, the company's board of directors approved a profit distribution plan or capital reserve to share capital plan of "none," meaning no distribution or transfer will be made - During the reporting period, the company had no profit distribution or capital reserve to share capital plan[80] Fulfillment of Commitments The company's actual controller, shareholders, related parties, and the company itself have timely and strictly fulfilled various commitments during or continuing into the reporting period, primarily concerning share lock-up, independence, related party transaction regulation, avoidance of horizontal competition, measures to mitigate immediate return dilution, and social insurance and housing provident fund contributions related to major asset restructuring and initial public offering - Multiple committing parties, including Ruidian Investment, Will Semiconductor directors, supervisors, senior management, the actual controller, and transaction counterparts, have timely and strictly fulfilled all commitments[82] - Commitments cover equity ownership of target companies, litigation, arbitration, and administrative penalties, non-participation in major asset restructuring, insider trading, related party relationships, and ensuring information is true, accurate, and complete[83][84][85][86][89][90] - Share lock-up commitments vary based on the type of transaction counterpart and holding period, such as Shaoxing Weihao's 36-month lock-up and phased unlocking for some transaction counterparts after 12 months[91][92][93][94][95] - The controlling shareholder and actual controller committed to maintaining the listed company's independence, regulating related party transactions, avoiding horizontal competition, and implementing measures to mitigate immediate return dilution[96][97][98][99][100][101][102] Appointment of Accounting Firm The company's board of directors approved, and the general meeting of shareholders subsequently ratified, the continued engagement of Lixin Certified Public Accountants (Special General Partnership) as the company's audit and internal control audit firm for 2020 - The company's 14th meeting of the Fifth Board of Directors approved, and the 2019 Annual General Meeting held on June 11, 2020, ratified, the continued engagement of Lixin Certified Public Accountants (Special General Partnership) as the company's audit and internal control audit firm for 2020[111] Significant Litigation and Arbitration Matters During the reporting period, the company was involved in overdue procurement payment lawsuits against Dongguan Jinming Electronics Co., Ltd. and Dongguan Jinzhuo Communication Technology Co., Ltd., having obtained favorable judgments, but the defendants have entered bankruptcy proceedings, and the company is currently awaiting bankruptcy distribution - The company's subsidiary filed lawsuits against Dongguan Jinming Electronics Co., Ltd. and Dongguan Jinzhuo Communication Technology Co., Ltd. for overdue procurement payments, involving an amount of 50.49 million RMB[113][115] - The company has obtained favorable court judgments, but the defendant companies were ruled to be in bankruptcy proceedings on November 6, 2019, and the company is currently awaiting bankruptcy distribution[113][115] Explanation of Integrity Status During the reporting period, neither the company nor its controlling shareholder and actual controller, Mr. Yu Renrong, had any adverse integrity records, such as failure to comply with effective court judgments or large overdue debts - Neither the company nor its controlling shareholder and actual controller, Mr. Yu Renrong, had any adverse integrity records during the reporting period, with no instances of failing to comply with effective court judgments or having large overdue debts[116] Equity Incentive Plan and Its Impact During the reporting period, the company completed the second unlocking of its 2017 restricted stock incentive plan and repurchased and canceled some restricted shares from departed incentive recipients, while also completing the registration for the reserved stock options under the 2019 stock option incentive plan, all aimed at enhancing team stability - The company processed the second unlocking for 182 incentive recipients under the 2017 Restricted Stock Incentive Plan[117] - 85,500 restricted shares granted to 6 departed incentive recipients but not yet unlocked were repurchased and canceled[117][119] - The company granted 2,353,374 reserved stock options under the 2019 Stock Option Incentive Plan to 153 incentive recipients, and the registration procedures have been completed[119] Significant Related Party Transactions During the reporting period, the company engaged in joint investments with related parties to establish new entities and monitored the performance commitments of major asset restructuring targets (Beijing OmniVision, Superpix, Vision Source), with Beijing OmniVision, Superpix, and Vision Source all exceeding their committed net profits after deducting non-recurring gains and losses - The company's wholly-owned subsidiary, Shanghai Weisi Microelectronics Co., Ltd., purchased wafers and chips from Jiangsu Weida Semiconductor Co., Ltd.[120] - The company plans to jointly invest with its actual controller, Mr. Yu Renrong, to establish Hangzhou Haoxin Equity Investment Partnership (Limited Partnership), with the company intending to contribute 306 million RMB (51% share)[123] Major Restructuring Target 2020 Half-Year Performance Commitment and Achievement | Target Asset | 2020 Annual Committed Net Profit (10,000 RMB) | 2020 Half-Year Achieved Net Profit (10,000 RMB) | | :--- | :--- | :--- | | Beijing OmniVision | 88,481.57 | 95,703.94 | | Superpix | 4,500 | 3,534.52 | | Vision Source | 2,423 | 1,903.34 | Significant Contracts and Guarantees During the reporting period, the company's external guarantees primarily involved guarantees for its subsidiaries, with a total guarantee amount of 589.95 million RMB, representing 5.97% of the company's net assets, including 235.77 million RMB in debt guarantees provided for guaranteed entities with an asset-liability ratio exceeding 70% Company Guarantees for Subsidiaries | Indicator | Amount (RMB) | | :--- | :--- | | Total guarantees provided to subsidiaries during the reporting period | 470,945,414.84 | | Total outstanding guarantees to subsidiaries at the end of the reporting period | 589,949,900.90 | | Total guarantees (including guarantees to subsidiaries) | 589,949,900.90 | | Total guarantees as a percentage of the company's net assets (%) | 5.97 | | Debt guarantees provided for guaranteed entities with an asset-liability ratio exceeding 70% | 235,770,000.00 | Convertible Corporate Bonds As of the disclosure date of this report, the company has approved a public issuance plan for convertible corporate bonds, which was accepted by the China Securities Regulatory Commission on August 12, 2020 - The company's shareholder meeting on July 6, 2020, approved the public issuance plan for convertible corporate bonds[127] - The company's application for public issuance of convertible corporate bonds was accepted by the China Securities Regulatory Commission on August 12, 2020[127] Changes in Common Shares and Shareholder Information This section details changes in the company's common share capital and provides an overview of its shareholder structure Changes in Share Capital During the reporting period, the company's total share capital slightly decreased, primarily due to the repurchase and cancellation of restricted shares granted to certain equity incentive recipients but not yet unlocked, while some restricted shares were also released from lock-up and became tradable 2020 Half-Year Share Capital Changes | Share Type | Quantity Before Change | Proportion (%) | Increase/Decrease in Current Change (+, -) | Quantity After Change | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 723,126,704 | 83.73 | -15,929,076 | 707,197,628 | 81.89 | | Of which: Shares held by domestic natural persons | 323,207,867 | 37.42 | -15,929,076 | 307,278,791 | 35.58 | | II. Unrestricted Tradable Shares | 140,535,394 | 16.27 | 15,843,576 | 156,378,970 | 18.11 | | III. Total Shares | 863,662,098 | 100.00 | -85,500 | 863,576,598 | 100.00 | - On February 12, 2020, the company processed the second unlocking for 182 incentive recipients under the 2017 Restricted Stock Incentive Plan, totaling 15,843,576 shares[133] - On March 13, 2020, the company completed the repurchase and cancellation of 85,500 restricted shares granted to 6 departed incentive recipients but not yet unlocked[133] - The 279.435 million shares held by the actual controller, Mr. Yu Renrong, which were subject to initial public offering restrictions, had their lock-up period extended to August 29, 2020, due to major asset restructuring commitments[137] Shareholder Information As of the end of the reporting period, the company had 30,499 common shareholders, with the actual controller, Yu Renrong, holding the largest proportion of shares, some of which are pledged, and Hong Kong Securities Clearing Company Limited being the largest holder among the top ten unrestricted shareholders - As of the end of the reporting period, the company had a total of 30,499 common shareholders[140] 2020 Half-Year End Top Ten Shareholders' Shareholdings | Shareholder Name | Period-End Shareholding | Proportion (%) | Number of Restricted Shares Held | Share Status | Pledged or Frozen Quantity | Shareholder Nature | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Yu Renrong | 279,435,000 | 32.36 | 279,435,000 | Pledged | 133,000,000 | Domestic Natural Person | | Shaoxing Weihao Equity Investment Partnership (Limited Partnership) | 80,839,009 | 9.36 | 80,839,009 | Pledged | 80,839,009 | Domestic Non-State-Owned Legal Person | | Qingdao Rongtong Minhe Investment Center (Limited Partnership) | 62,187,073 | 7.20 | 62,187,073 | Unrestricted | - | Domestic Non-State-Owned Legal Person | | Hong Kong Securities Clearing Company Limited | 31,774,445 | 3.68 | - | Unrestricted | - | Overseas Legal Person | | Seagull Strategic Investments (A3), LLC | 30,980,219 | 3.59 | 30,980,219 | Unrestricted | - | Overseas Legal Person | | Jiaxing Huaqing Ginkgo OmniVision Equity Investment Partnership (Limited Partnership) | 26,814,084 | 3.11 | 26,814,084 | Unrestricted | - | Domestic Non-State-Owned Legal Person | | Jiaxing Huaqing Longxin OmniVision Equity Investment Partnership (Limited Partnership) | 26,814,084 | 3.11 | 26,814,084 | Unrestricted | - | Domestic Non-State-Owned Legal Person | | Shanghai Tangxin Enterprise Management Partnership (Limited Partnership) | 22,997,032 | 2.66 | 22,997,032 | Unrestricted | - | Domestic Non-State-Owned Legal Person | | Seagull Investments, LLC | 22,901,063 | 2.65 | 22,901,063 | Unrestricted | - | Overseas Legal Person | | Shenzhen Jinshi Zhongrui Investment Management Co., Ltd. - Kaiyuan Zhuque (Shenzhen) Equity Investment Partnership (Limited Partnership) | 20,330,959 | 2.35 | 20,330,959 | Unrestricted | - | Domestic Non-State-Owned Legal Person | 2020 Half-Year End Top Ten Unrestricted Shareholders' Shareholdings | Shareholder Name | Number of Unrestricted Tradable Shares Held | Type and Quantity of Shares | | :--- | :--- | :--- | | Hong Kong Securities Clearing Company Limited | 31,774,445 | RMB Common Shares 31,774,445 | | Industrial and Commercial Bank of China Co., Ltd. - Noah Growth Stock Fund | 6,991,753 | RMB Common Shares 6,991,753 | | Ji Gang | 4,570,000 | RMB Common Shares 4,570,000 | | China Construction Bank Co., Ltd. - Huaxia Guozheng Semiconductor Chip ETF | 4,043,133 | RMB Common Shares 4,043,133 | | Ma Jianqiu | 3,999,500 | RMB Common Shares 3,999,500 | | Zhou Yue | 3,436,936 | RMB Common Shares 3,436,936 | | National Social Security Fund 114 Portfolio | 3,096,600 | RMB Common Shares 3,096,600 | | Bank of China Co., Ltd. - Cathay CES Semiconductor Industry ETF | 3,045,640 | RMB Common Shares 3,045,640 | | Gongqingcheng Tailipaisi Investment Partnership (Limited Partnership) | 2,500,000 | RMB Common Shares 2,500,000 | | Jia Yuan | 2,205,000 | RMB Common Shares 2,205,000 | Preferred Shares Information This section confirms that the company had no preferred shares during the reporting period Preferred Shares Information During the reporting period, the company had no preferred shares Directors, Supervisors, and Senior Management Information This section provides details on the company's directors, supervisors, and senior management, including changes in their shareholdings and personnel appointments during the reporting period Changes in Shareholdings During the reporting period, some directors and senior management experienced changes in their shareholdings, primarily due to reductions through centralized bidding, while the shareholdings of Yu Renrong, Yang Hongli, Lyu Dalong, Liu Yue, Chen Hongyi, Wang Haifeng, Wen Donghua, Han Jie, Chen Zhibin, Zhou Shuyang, and Wang Song remained stable or they held no shares Directors, Supervisors, and Senior Management Shareholding Changes | Name | Position | Beginning of Period Shareholding | End of Period Shareholding | Change in Shares During Reporting Period | Reason for Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Yu Renrong | Director | 279,435,000 | 279,435,000 | 0 | / | | Ji Gang | Director | 6,245,000 | 6,240,000 | -5,000 | Centralized bidding reduction | | Jia Yuan | Director | 4,560,000 | 4,105,000 | -455,000 | Centralized bidding reduction | | Ma Jianqiu | Resigned Director | 6,733,200 | 5,948,500 | -784,700 | Centralized bidding reduction | Changes in Directors, Supervisors, and Senior Management During the reporting period, changes occurred in the company's General Manager and some directors and supervisors, with Mr. Ma Jianqiu resigning as General Manager and Director, Mr. Wang Song appointed as General Manager, and Mr. Yang Hongli, Mr. Lyu Dalong, and Ms. Liu Yue elected as directors, while Ms. Zhou Shuyang was elected as a supervisor - Mr. Ma Jianqiu resigned from his positions as the company's General Manager and Director[147][150] - Mr. Wang Song was appointed as the company's General Manager[150] - Mr. Yang Hongli, Mr. Lyu Dalong, and Ms. Liu Yue were elected as the company's directors[150] - Mr. Hu Yonghai resigned from his position as supervisor, and Ms. Zhou Shuyang was elected as the company's supervisor[150] Corporate Bonds Information This section confirms that the company had no corporate bonds during the reporting period Corporate Bonds Information During the reporting period, the company had no corporate bonds Financial Report This section presents the company's comprehensive financial statements, including the balance sheet, income statement, cash flow statement, and statement of changes in owners' equity Financial Statements This section provides the company's consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity for the first half of 2020, comprehensively reflecting its financial position, operating results, and cash flow situation Consolidated Balance Sheet As of June 30, 2020, the company's total assets reached 21.61 billion RMB, an increase of 23.66% from the beginning of the period, with total current assets of 13.39 billion RMB, total non-current assets of 8.22 billion RMB, total liabilities of 11.73 billion RMB, and total owners' equity of 9.88 billion RMB Consolidated Balance Sheet Key Data (June 30, 2020 vs December 31, 2019) | Project | June 30, 2020 (RMB) | December 31, 2019 (RMB) | | :--- | :--- | :--- | | Total Assets | 21,611,100,280.91 | 17,476,223,432.68 | | Total Current Assets | 13,387,024,486.88 | 10,880,667,208.76 | | Total Non-Current Assets | 8,224,075,794.03 | 6,595,556,223.92 | | Total Liabilities | 11,726,400,414.07 | 9,520,846,719.87 | | Total Owners' Equity | 9,884,699,866.84 | 7,955,376,712.81 | Consolidated Income Statement In the first half of 2020, the company achieved total operating revenue of 8.04 billion RMB, a 41.02% year-on-year increase, with net profit attributable to parent company shareholders reaching 990.10 million RMB, a 1206.17% year-on-year increase, indicating a significant improvement in profitability Consolidated Income Statement Key Data (2020 Half-Year vs 2019 Half-Year) | Project | 2020 Half-Year (RMB) | 2019 Half-Year (RMB) | | :--- | :--- | :--- | | Total Operating Revenue | 8,042,878,724.26 | 5,703,421,495.10 | | Total Operating Cost | 6,901,977,563.56 | 5,301,455,711.28 | | Total Profit | 1,075,269,673.60 | 290,679,978.53 | | Net Profit | 976,466,977.51 | 265,206,563.64 | | Net Profit Attributable to Parent Company Shareholders | 990,095,933.55 | 75,801,380.95 | | Basic Earnings Per Share (RMB/share) | 1.20 | 0.15 | Consolidated Cash Flow Statement In the first half of 2020, the company's net cash flow from operating activities was 209.37 million RMB, a 353.60% year-on-year increase, with net cash outflow from investing activities of 1.78 billion RMB and net cash inflow from financing activities of 1.14 billion RMB Consolidated Cash Flow Statement Key Data (2020 Half-Year vs 2019 Half-Year) | Project | 2020 Half-Year (RMB) | 2019 Half-Year (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 209,366,493.20 | 46,156,748.33 | | Net Cash Flow from Investing Activities | -1,783,208,726.35 | -946,502,664.04 | | Net Cash Flow from Financing Activities | 1,143,542,963.14 | 246,271,751.72 | | Net Increase in Cash and Cash Equivalents | -398,482,964.17 | -674,222,975.05 | Company Basic Information The company was established in 2007 and listed in 2017, completing the second unlocking of its 2017 restricted stock incentive plan and partial repurchase/cancellation, as well as the acquisition of Beijing OmniVision and other equity interests in 2019, resulting in a total share capital of 863,576,598 shares, with its main business in integrated circuit design, development, and sales, and Yu Renrong as the actual controller - The company was established on May 15, 2007, and listed on the Shanghai Stock Exchange on May 4, 2017, with stock code 603501[182] - In 2019, the company completed the acquisition of 85.53% equity in Beijing OmniVision, 42.27% in Superpix, and 79.93% in Vision Source, and raised supporting funds[183] - In the first half of 2020, the company completed the second unlocking of 15,843,576 shares under the 2017 Restricted Stock Incentive Plan and repurchased and canceled 85,500 restricted shares[183][184] - As of June 30, 2020, the company's cumulative issued share capital totaled 863,576,598 shares, with a registered capital of 863,576,598 RMB[184] - The company's main business scope includes the design, development, and sales of integrated circuits and computer software/hardware, with Mr. Yu Renrong as the actual controller[184] - As of June 30, 2020, the company's consolidated financial statement scope includes numerous subsidiaries covering semiconductor design, sales, and investment management[185][186][187] Significant Accounting Policies and Estimates This section details the company's adherence to enterprise accounting standards, covering accounting periods, operating cycles, functional currency, business combinations, consolidated financial statement preparation, joint arrangements, cash and cash equivalents, foreign currency transactions and translation, financial instruments, inventories, contract assets, assets held for sale, long-term equity investments, investment properties, fixed assets, construction in progress, borrowing costs, intangible assets, long-term deferred expenses, contract liabilities, employee benefits, provisions, share-based payments, revenue, contract costs, government grants, deferred income tax assets/liabilities, and leases, as significant accounting policies and estimates - The company adheres to enterprise accounting standards, with the accounting year from January 1 to December 31, an operating cycle of 12 months, and RMB as the functional currency[192][193] - Business combinations are categorized as under common control or not under common control, with the scope of consolidated financial statements determined based on control[193][194] - Financial instruments are classified as measured at amortized cost, at fair value through other comprehensive income (debt instruments/equity instruments), and at fair value through profit or loss[203] - Inventories are classified as raw materials, merchandise inventory, work-in-progress, and consigned processing materials, with analog chips (signal, protection, power management) valued using the weighted average method and CMOS image sensor chips using the first-in, first-out method[214][215] - Fixed assets are depreciated using the straight-line method, intangible assets (with finite useful lives) are amortized using the straight-line method, and internal R&D expenditures are divided into research and development phases, with development phase expenditures capitalized when conditions are met[231][239][241][242] - Revenue is recognized when the customer obtains control of the related goods or services, and for contracts with multiple performance obligations, the transaction price is allocated based on the relative standalone selling prices[256] - The company adopted the new revenue recognition standard from January 1, 2020, adjusting opening retained earnings and other related financial statement items, and reclassifying advances from customers to contract liabilities[270][272][276][281] Taxation This section discloses the main tax categories and rates applicable to the company and its subsidiaries, including VAT, urban maintenance and construction tax, and corporate income tax, noting that the company and some subsidiaries benefit from tax incentives as high-tech enterprises, enterprises in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, or small-profit enterprises, while overseas subsidiaries pay profit tax or corporate income tax according to local laws Main Tax Categories and Rates | Tax Type | Tax Base | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Sales of goods and taxable services, calculated as output tax minus input tax | 3.00-25.00