2023-08-25 09:59Financial Performance - Semiconductor Manufacturing International Corporation (SMIC) reported unaudited revenue of approximately $1.5 billion for the first half of 2023, representing a year-over-year decrease of 20% compared to the same period in 2022[1]. - The company reported a net loss of $200 million for the first half of 2023, compared to a profit of $300 million in the same period last year[1]. - Revenue for the six months ended June 30, 2023, was $3,022.7 million, a decrease of 19.3% compared to $3,745.1 million for the same period in 2022[11]. - Net profit attributable to shareholders for the same period was $633.9 million, down 34.1% from $961.6 million in the prior year[11]. - Gross margin decreased to 20.6%, down 19.5 percentage points from 40.1% in the previous year[12]. - Basic earnings per share for the six months ended June 30, 2023, was $0.08, a decline of 33.3% compared to $0.12 in the same period last year[12]. - The company reported a decrease in the number of wafers sold, which contributed to the decline in sales and profitability[13]. - The company reported a revenue of $3,022.7 million for the first half of 2023, a decrease of 19.3% compared to $3,745.1 million in the same period last year[56]. - The number of wafers sold decreased from 3.727 million to 2.655 million, equivalent to approximately 8-inch wafers[58]. - Gross profit fell to $621.2 million from $1,500.7 million year-on-year, primarily due to reduced wafer sales and changes in product mix[58]. - Operating profit decreased to $163.1 million from $1,075.4 million in the previous year, influenced by changes in revenue, cost of sales, and gross profit[58]. - The company reported a total comprehensive income for the period was $527.16 million, down from $892.56 million in the previous year, indicating a decrease of about 41%[167]. Research and Development - The company plans to invest $2 billion in research and development for new technologies and products in the upcoming fiscal year[1]. - Research and development expenses accounted for 11.4% of operating revenue, an increase of 2.0 percentage points from 9.4% in the previous year[12]. - R&D expenses for the first half of 2023 amounted to $345.3 million, representing 11.4% of total revenue, an increase of 2.0 percentage points compared to the same period in 2022[27]. - The number of R&D personnel increased to 2,283, accounting for 11.1% of the total workforce, up from 9.6% in the previous year[31]. - The company has filed a total of 19,232 patent applications, with 13,218 granted, indicating a strong focus on innovation[26]. - The company emphasizes the importance of sustainable talent and capital investment to strengthen technological barriers and enhance competitive advantages[24]. - The company is focusing on expanding its industrial ecosystem while enhancing its own process technology and platform development[24]. - The company is focusing on advancing its 28nm and 12nm process technologies, with plans to begin volume production by the end of 2023[1]. Market Strategy and Expansion - SMIC aims to expand its market presence in Europe and North America, targeting a 10% increase in market share by the end of 2024[1]. - The company is actively pursuing strategic partnerships and potential acquisitions to enhance its technological capabilities and market reach[1]. - The company has established an international management team and service network, with marketing offices in the USA, Europe, Japan, and Taiwan, to better expand the market and respond to customer needs[36]. - The company plans to continue focusing on technology research and development, aiming to quickly validate new products and arrange supporting production capacity for the next growth cycle[79]. - The company is focused on strategic acquisitions to bolster its market position and drive future growth[156]. Supply Chain and Risk Management - SMIC has identified supply chain risks and is implementing measures to mitigate potential disruptions, including diversifying suppliers and increasing inventory levels[1]. - The company faces risks related to high customer concentration, which could impact operational efficiency and profitability if major customers encounter significant issues[43]. - Supply chain risks are present due to reliance on a limited number of qualified suppliers for critical materials and equipment, which could affect production and operational continuity[44]. - Financial performance may fluctuate due to macroeconomic conditions, industry cycles, and rising costs of raw materials and equipment, potentially impacting sales revenue and profit margins[45]. - The company has implemented a comprehensive risk management system to address potential natural disasters and supply interruptions[55]. Environmental and Sustainability Efforts - Environmental protection investments amounted to $97 million during the reporting period[105]. - The company has established environmental protection mechanisms and is classified as a key pollutant discharge unit[105]. - The company achieved a reduction of approximately 5,781 tons of carbon dioxide equivalent emissions through various carbon reduction measures in the first half of 2023[109]. - All key pollutant discharge indicators met standards during the reporting period, with no administrative penalties for environmental issues[108]. - The company received national green factory certification for its Shanghai and Shenzhen facilities in the first half of 2023[108]. - The company has passed ISO 14001 environmental management system certification and other relevant certifications, ensuring effective execution of environmental responsibilities[108]. Corporate Governance and Compliance - The company has adopted a corporate governance policy since January 25, 2005, and has complied with all provisions of the corporate governance code as of June 30, 2023[81]. - The company confirmed compliance with insider trading regulations as of June 30, 2023[103]. - Major shareholders have pledged to minimize related party transactions that could negatively impact the interests of the company and its shareholders[114]. - The company will strictly adhere to legal procedures for related party transactions, ensuring fairness and compliance to protect shareholder interests[113]. - The commitment from shareholders and management to avoid conflicts of interest in related party transactions is long-term and effective until certain conditions are met[112]. - The company has committed to fulfilling all public commitments made during the A-share issuance, ensuring compliance with regulatory oversight[129]. Financial Position and Capital Management - Total assets as of June 30, 2023, were $45,844.4 million, an increase of 4.6% from $43,807.8 million as of December 31, 2022[11]. - Cash flows from operating activities decreased significantly to $1,597.7 million, down 57.0% from $3,715.5 million in the previous year[11]. - The company has total interest-bearing debt amounts to $9,661.3 million as of June 30, 2023, compared to $8,694.4 million as of December 31, 2022[63]. - The company has capital expenditure commitments of $10,914.5 million for machinery and equipment procurement as of the end of the reporting period[64]. - The company has a substantial fixed asset base, and any significant decline in asset market value could lead to impairment losses, negatively affecting profitability[46]. - The company plans to optimize its capital structure to maximize returns for stakeholders while ensuring sustainable operations[68]. Shareholder Information - As of June 30, 2023, the total number of registered shareholders is 268,688, with 256,576 A-share holders and 12,112 Hong Kong stock holders[144]. - The company issued a total of 7,925,936,550 shares, with 5,968,533,830 shares (75.3%) listed in Hong Kong and 1,957,402,720 shares (24.7%) on the Shanghai Stock Exchange[147]. - Major shareholders include China Information Technology Group Co., Ltd. with a total equity of 1,189,323,450 shares, representing 15.01% of the total issued shares[146]. - The total number of shares held by the top ten unrestricted shareholders includes shares from various funds and state-owned enterprises[149]. - The report indicates a decrease in holdings for senior management, with a total reduction of 47,000 shares during the reporting period[152]. Legal and Regulatory Matters - The company faced ongoing arbitration with PDF Solutions, Inc. regarding contractual obligations, with the arbitration process still in progress[133]. - The company has faced legal disputes related to its A-share issuance, with jurisdiction established under the laws of the People's Republic of China[130]. - The company has disclosed that it will take remedial measures if unable to fulfill commitments due to non-force majeure reasons[129].