兆易创新(603986) - 2023 Q2 - 季度财报

Glossary This section defines common terms used throughout the report, including key semiconductor technologies and business models - Glossary of Common Terms | Term | Meaning | | :--- | :--- | | NOR Flash | Code-type flash memory chip, one of the main non-volatile flash memory technologies | | NAND Flash | Data-type flash memory chip, one of the main non-volatile flash memory technologies | | MCU | Micro Control Unit, single-chip microcomputer | | DRAM | Dynamic Random Access Memory | | Fabless | Integrated circuit enterprise operating model without a wafer foundry, focusing on chip design, R&D, and sales | Company Profile and Key Financial Indicators This section provides an overview of GigaDevice Semiconductor Inc. and its key financial performance for the first half of 2023 Company Information GigaDevice Semiconductor Inc. (stock code: 603986) is a Shanghai Stock Exchange-listed company, with He Wei as its legal representative and chairman, primarily engaged in integrated circuit design, R&D, and sales - The company's Chinese name is GigaDevice Semiconductor Inc., stock abbreviation is GigaDevice, and stock code is 603986[8][12] Key Accounting Data and Financial Indicators In H1 2023, the company's performance significantly declined due to the industry downturn, with revenue down 37.97% to CNY 2.966 billion and net profit attributable to shareholders down 78.00% to CNY 336 million, primarily due to weak consumer electronics and industrial market demand, while net cash flow from operating activities increased 506.82% to CNY 645 million due to reduced procurement - 2023 Half-Year Key Accounting Data | Key Accounting Data | Current Period (Jan-Jun) | Prior Year Same Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | CNY 2.966 billion | CNY 4.781 billion | -37.97% | | Net Profit Attributable to Shareholders of Listed Company | CNY 336 million | CNY 1.527 billion | -78.00% | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-recurring Items) | CNY 275 million | CNY 1.468 billion | -81.23% | | Net Cash Flow from Operating Activities | CNY 645 million | CNY 106 million | 506.82% | | Indicator | Current Period End | Prior Year End | Period-End vs. Prior Year-End Change (%) | | Net Assets Attributable to Shareholders of Listed Company | CNY 15.277 billion | CNY 15.186 billion | 0.60% | | Total Assets | CNY 16.528 billion | CNY 16.645 billion | -0.70% | - 2023 Half-Year Key Financial Indicators | Key Financial Indicators | Current Period (Jan-Jun) | Prior Year Same Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/share) | 0.51 | 2.31 | -77.92% | | Diluted Earnings Per Share (CNY/share) | 0.51 | 2.30 | -77.83% | | Weighted Average Return on Net Assets (%) | 2.19% | 10.73% | Decreased by 8.54 percentage points | - Performance decline reasons: Operating revenue decreased due to global economic and industry cycle impacts, weak consumer electronics market, and lower-than-expected industrial market demand, leading to product price pressure and a 37.97% year-on-year decrease[15] - Net profit decreased primarily due to a CNY 1.372 billion reduction in gross profit from lower revenue and a CNY 67 million increase in inventory impairment, partially offset by reduced income tax expenses and selling/administrative expenses[15] - Operating cash flow increased mainly because the prior year involved large advance payments for goods, which were absent this period, leading to a significant year-on-year increase in net cash flow[15] Management Discussion and Analysis This section provides an in-depth discussion of the company's industry, core competencies, and operational performance during the reporting period Industry and Main Business Overview The company's main business involves R&D and sales of memory (NOR Flash, NAND Flash, DRAM), microcontrollers (MCU), and sensors (touch, fingerprint recognition) using a Fabless model, with products widely used in industrial, consumer electronics, automotive, and IoT sectors; in H1 2023, the semiconductor industry faced downward pressure, with the global market size expected to decrease by 10.3% year-on-year, especially in the memory market, yet the company maintained a leading position in several segments despite the weak macro environment - Company's main product lines include: Memory: NOR Flash, SLC NAND Flash, Niche DRAM (DDR3L, DDR4); Microcontrollers (MCU): 32-bit general-purpose MCUs based on ARM Cortex-M series and RISC-V cores; Sensors: Touch chips and fingerprint recognition chips[20] - Company's Industry Position | Product Area | Industry Position | | :--- | :--- | | NOR Flash | 2022 market share 20%, global third, first among Fabless companies | | MCU | 2022 global market ranking seventh, first among Chinese brands | | Fingerprint Sensors | Second in China | - In H1 2023, the semiconductor industry faced a cyclical downturn, with WSTS forecasting a 10.3% year-on-year decrease in the global semiconductor market size for 2023; China's integrated circuit imports decreased by 18.5% year-on-year, and exports decreased by 10%[21] Analysis of Core Competencies The company's core competencies include diversified business layout, continuously enhanced technology and product advantages, flexible Fabless operating model, excellent talent team and corporate culture, and a strong intellectual property portfolio; the company develops synergistically across memory, MCU, and sensor business lines, covering industrial, automotive, and consumer sectors to effectively mitigate single-market fluctuation risks; technologically, the company maintains leadership in NOR Flash and MCU, actively advancing automotive-grade products and advanced processes; as of the reporting period end, the company holds 960 authorized patents, with technical personnel accounting for over 70% - The company adheres to a diversified layout, with businesses covering memory, microcontrollers, and sensors, expanding downstream applications to industrial, automotive, consumer electronics, network communications, and actively exploring overseas markets[22][23] - The company's technology and product advantages are continuously strengthening, with NOR Flash products maintaining leadership in capacity, performance, power consumption, and packaging, and automotive-grade products fully deployed; GD32 MCU products have mass-produced over 500 models, covering ARM and RISC-V cores, and the first ultra-high-performance MCU based on Arm Cortex-M7 core has been launched[23] - The company possesses a strong intellectual property moat, holding 960 authorized patents (31 new in H1), 116 trademarks, and 30 integrated circuit layouts as of the reporting period end[24] - The company's technical team is highly skilled, with 53% holding master's degrees or above, and technical personnel accounting for over 70%, ensuring product R&D and technological advancement[24] Discussion and Analysis of Operations In H1 2023, facing an industry downturn, the company achieved operating revenue of CNY 2.966 billion, a 37.97% year-on-year decrease, and net profit attributable to shareholders of CNY 336 million, a 78% year-on-year decrease; despite overall performance pressure, the company continued to deepen its presence in the automotive and industrial sectors, and expanded market share in consumer, mobile, and network communication fields, with some markets achieving year-on-year shipment growth; Q2 revenue saw a slight increase quarter-on-quarter from Q1; the company continued to improve its product lines, launching 1.2V low-power NOR Flash, 24nm NAND Flash, and Arm Cortex-M7 core-based MCUs; R&D investment reached CNY 510 million, accounting for 17.19% of revenue - The company deepened its layout in the automotive and industrial sectors, with cumulative shipments of automotive-grade flash memory products exceeding 100 million units, and automotive-grade MCU products collaborating with domestic leading Tier 1 suppliers and mass-applied in multiple mainstream car manufacturers[25][26] - Despite market weakness, the company's sensor product shipments in the mobile phone market achieved year-on-year growth, with Q2 increasing by approximately 60% quarter-on-quarter from Q1[26] - The company continuously innovates technology and upgrades products, with R&D investment reaching CNY 510 million in the reporting period, accounting for 17.19% of operating revenue[26] - Major Financial Statement Item Changes and Reasons | Item | Current Period Amount | Prior Year Same Period Amount | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | CNY 2.966 billion | CNY 4.781 billion | -37.97% | Market demand declined, product prices under pressure | | Operating Costs | CNY 1.974 billion | CNY 2.417 billion | -18.33% | Revenue decrease led to corresponding cost reduction | | Net Cash Flow from Operating Activities | CNY 645 million | CNY 106 million | 506.82% | Prior year involved large advance payments, absent this period | | Net Cash Flow from Investing Activities | -CNY 577 million | CNY 323 million | -278.86% | Increased expenditure on wealth management products YoY | | Asset Impairment Losses | -CNY 137 million | -CNY 70 million | 95.31% | Increased impairment for some inventories | Analysis of Assets and Liabilities As of June 30, 2023, the company's total assets were CNY 16.528 billion, a slight decrease of 0.70% from the beginning of the year; in terms of asset structure, transactional financial assets (primarily structured deposits) increased by 20.79% to CNY 2.244 billion; on the liability side, employee compensation payable significantly decreased by 74.33% due to reduced accrual for year-end bonuses; the company's external investment balance was CNY 3.899 billion, an 11.95% increase from the beginning of the year, mainly due to increased investment in bank wealth management products; overseas assets accounted for 11.66% of total assets - Major Balance Sheet Changes | Item Name | Current Period End Amount | Change from Prior Year End (%) | Explanation | | :--- | :--- | :--- | :--- | | Transactional Financial Assets | CNY 2.244 billion | 20.79% | Increase in structured deposits this period | | Other Non-current Assets | CNY 578 million | -40.56% | Advance payments for goods and property transferred out | | Employee Compensation Payable | CNY 60 million | -74.33% | Decrease due to reduced accrual for year-end bonuses this year | | Other Payables | CNY 259 million | -24.08% | Employee equity incentive restricted shares lifted from sales restrictions | - As of the reporting period end, the company's overseas assets were CNY 1.926 billion, accounting for 11.66% of total assets[31] - During the reporting period, the company, as a limited partner, invested in Xiaomi Zhizao Fund, CICC Qizhao Ruihong Fund, and Tsinghua Ginxing Innovation Fund, using its own funds for equity investments[34][37] Risk Factors The company faces major risks including macro environment and industry fluctuation risks, supply chain risks, talent loss risks, and exchange rate fluctuation risks; the cyclical nature of the semiconductor industry may impact the company's performance; as a Fabless enterprise, the company relies on external wafer foundries and packaging/testing plants, leading to uncertainties in capacity and costs; high-quality talent is a core competency, with a risk of loss; additionally, the company has a high proportion of overseas sales, facing exchange rate fluctuation risks - Macro and Industry Risks: The semiconductor industry has cyclical fluctuations, and the company will respond by strengthening core technological competitiveness and adjusting product and customer structures[41] - Supply Chain Risks: The company adopts a Fabless model; to mitigate supplier risks, it adheres to a diversified supply chain strategy, establishing long-term cooperation with multiple well-known suppliers[41] - Talent Loss Risks: The company attracts and retains core talent by establishing competitive compensation and benefits and equity incentive plans[41] - Exchange Rate Fluctuation Risks: The company has a high proportion of overseas sales, primarily settled in USD, and has formulated the "Foreign Exchange Hedging Business Management System" to mitigate exchange rate risks[41][42] Corporate Governance This section details changes in the company's directors, supervisors, and senior management, as well as the progress of its equity incentive plans Changes in Directors, Supervisors, Senior Management, and Equity Incentives During the reporting period, there were changes in the company's senior management, with Mr. He Wei appointed as General Manager, and Mr. Zhang Shuai resigning as director due to work reasons; the company continued to advance its equity incentive plans, canceling some stock options and repurchasing/canceling restricted shares for the 2020 and 2021 incentive plans, and completing the lifting of sales restrictions for the second tranche of restricted shares under the 2020 incentive plan - The company appointed Mr. He Wei as General Manager on April 26, 2023[46] - Mr. Zhang Shuai resigned from his positions as director and related committee member on June 26, 2023[46] - During the reporting period, the company repurchased and canceled some stock options and restricted shares from the 2020 and 2021 equity incentive plans due to reasons such as resignation or failure to meet performance targets[48] Environmental and Social Responsibility This section outlines the company's environmental protection efforts and social responsibility initiatives Environmental Information The company is not classified as a key pollutant-discharging entity and strictly complies with national environmental regulations, incurring no administrative penalties during the reporting period; the company advocates green environmental concepts, has obtained ISO14001 and other certifications, and all products comply with RoHS 2.0 and REACH standards; the company fulfills its environmental responsibilities through green product design, promoting green supply chains, establishing green logistics, promoting green office practices, and emphasizing electronic waste management; as a Fabless enterprise, the company's daily operational energy consumption is primarily office electricity, and through intelligent control and other measures, energy costs saved accounted for 3% of total energy costs in H1 2023 - All company products comply with RoHS 2.0 and REACH green environmental standards, and the company has obtained ISO9001, ISO14001, and ISO45001 certifications[50] - The company implements green environmental measures across five aspects: product design, supply chain, logistics, office operations, and waste management[50][51] - As a Fabless design enterprise, the company actively promotes energy conservation and emission reduction, saving 3% of total energy costs in H1 2023[52] Significant Matters This section covers important events and commitments made by the company and its stakeholders Fulfillment of Commitments During and continuing into the reporting period, the company's actual controller, shareholders, and the company itself strictly fulfilled various commitments made during major asset restructurings, initial public offerings, and refinancing, including resolving horizontal competition, related party transactions, maintaining listed company independence, return enhancement measures, and share reductions, with no instances of failure to timely fulfill commitments - Controlling shareholder and actual controller Zhu Yiming committed not to engage in businesses that constitute horizontal competition with the company and to minimize related party transactions[56][57] - Shareholders such as National Integrated Circuit Industry Investment Fund Co., Ltd., Xunan Investment Co., Ltd., and Ge Weidong committed not to seek control of the listed company during their shareholding period[68][69] Significant Related Party Transactions During the reporting period, the company engaged in daily operational related party transactions with Changxin Memory, Unisoc, and Telink Micro, among others; the company's board of directors and general meeting of shareholders have reviewed and approved the estimated annual daily related party transaction amounts for 2023, with transactions adhering to market principles and not harming the interests of the company or its shareholders - The company estimated the daily related party transaction amounts for 2023 with Changxin Memory, Unisoc, and Telink Micro, which have been approved by the board of directors and general meeting of shareholders[73] Share Changes and Shareholder Information This section details changes in the company's share capital and provides information on its shareholders Share Capital Changes During the reporting period, the company's total share capital remained unchanged at 667,025,148 shares; the share structure changed due to the lifting of sales restrictions for the second tranche of the 2020 equity incentive plan, converting 836,665 restricted shares into unrestricted tradable shares; as of the end of the period, restricted shares accounted for 0.44%, and unrestricted tradable shares increased to 99.56% - On May 9, 2023, the company's 2020 equity incentive plan granted 836,665 restricted shares had their second tranche of sales restrictions lifted and were listed for trading, leading to a decrease in restricted shares and a corresponding increase in unrestricted tradable shares[76][77] Shareholder Information As of June 30, 2023, the company had 162,065 common shareholders; among the top ten shareholders, actual controller Zhu Yiming held 6.86%, being the largest shareholder; Hong Kong Securities Clearing Company Limited, InfoGrid Limited, Ge Weidong, and other institutional and individual investors were among the top ten shareholders; Zhu Yiming and InfoGrid Limited are parties acting in concert - Top Ten Shareholders' Shareholding as of Reporting Period End | Shareholder Name | Shares Held at Period End | Proportion (%) | | :--- | :--- | :--- | | Zhu Yiming | 45,758,013 | 6.86% | | Hong Kong Securities Clearing Company Limited | 28,741,833 | 4.31% | | InfoGrid Limited | 24,954,400 | 3.74% | | Ge Weidong | 19,003,070 | 2.85% | | Huaxia CSI Semiconductor Chip ETF | 14,333,121 | 2.15% | - Actual controller Zhu Yiming and shareholder InfoGrid Limited (Hong Kong Yingfu De Co., Ltd.) are parties acting in concert[80] Financial Report This section presents the company's financial statements and selected notes for the reporting period Financial Statements Financial statements present the company's financial position at the end of the reporting period and its operating results and cash flows during the reporting period; as of June 30, 2023, total assets were CNY 16.528 billion, and equity attributable to parent company shareholders was CNY 15.277 billion; in H1 2023, operating revenue was CNY 2.966 billion, and net profit was CNY 336 million; net cash flow from operating activities was CNY 645 million, net cash flow from investing activities was -CNY 577 million, and net cash flow from financing activities was -CNY 443 million - Consolidated Balance Sheet Summary (June 30, 2023) | Item | Amount | | :--- | :--- | | Assets | | | Cash and Cash Equivalents | CNY 6.629 billion | | Inventories | CNY 2.115 billion | | Transactional Financial Assets | CNY 2.244 billion | | Total Assets | CNY 16.528 billion | | Liabilities | | | Accounts Payable | CNY 534 million | | Total Liabilities | CNY 1.251 billion | | Owners' Equity | | | Equity Attributable to Parent Company Owners | CNY 15.277 billion | | Total Liabilities and Owners' Equity | CNY 16.528 billion | - Consolidated Income Statement Summary (January-June 2023) | Item | Amount | | :--- | :--- | | Total Operating Revenue | CNY 2.966 billion | | Total Operating Costs | CNY 2.565 billion | | Including: R&D Expenses | CNY 477 million | | Total Profit | CNY 334 million | | Net Profit | CNY 336 million | | Net Profit Attributable to Parent Company Shareholders | CNY 336 million | - Consolidated Cash Flow Statement Summary (January-June 2023) | Item | Amount | | :--- | :--- | | Net Cash Flow from Operating Activities | CNY 645 million | | Net Cash Flow from Investing Activities | -CNY 577 million | | Net Cash Flow from Financing Activities | -CNY 443 million | | Net Increase in Cash and Cash Equivalents | -CNY 286 million | Notes to Financial Statements (Selected) Notes to financial statements provide detailed explanations of financial statement items; during the reporting period, the company's operating revenue primarily came from integrated circuit business, with memory chips contributing the most at CNY 2.012 billion; geographically, overseas revenue significantly exceeded domestic revenue; inventory book value at period end was CNY 2.115 billion, with an impairment provision of CNY 295 million, reflecting market pressure; R&D investment capitalization ratio was low, with most expensed; the company retrospectively adjusted opening financial statements according to "Interpretation No. 16 of Accounting Standards for Business Enterprises" - 2023 Half-Year Operating Revenue Composition | Contract Classification | Revenue Amount (CNY) | | :--- | :--- | | By Product Type | | | Memory Chips | 2,012,604,651.81 | | Microcontrollers | 771,737,278.59 | | Sensors | 176,696,904.46 | | By Operating Region | | | Domestic Region | 562,238,518.31 | | Overseas Region | 2,403,573,545.51 | - Inventory Status (Period End) | Item | Book Balance | Inventory Impairment Provision | Book Value | | :--- | :--- | :--- | :--- | | Raw Materials | CNY 1.454 billion | CNY 155 million | CNY 1.299 billion | | Work-in-Progress | CNY 166 million | CNY 9 million | CNY 157 million | | Finished Goods | CNY 787 million | CNY 131 million | CNY 655 million | | Total | CNY 2.410 billion | CNY 295 million | CNY 2.115 billion | - During the reporting period, the company's total R&D investment was CNY 510 million, of which CNY 7.054 million was recognized as intangible assets (capitalized), and CNY 477 million was expensed, indicating a high expensing ratio[247]