2024-03-28 16:00Financial Performance - The total revenue for 2023 was RMB 45.25 billion, a decrease of 8.6% compared to RMB 49.52 billion in 2022[20]. - The net profit attributable to shareholders was RMB 4.82 billion, down 60.3% from RMB 12.13 billion in the previous year[20]. - The net profit after deducting non-recurring gains and losses was RMB 3.27 billion, a decline of 67.7% from RMB 10.13 billion in 2022[20]. - The cash flow from operating activities was RMB 23.05 billion, a decrease of 37.0% compared to RMB 36.59 billion in 2022[20]. - The gross profit margin for the year was 22%[12]. - The company's gross margin decreased to 21.9% in 2023 from 38.3% in 2022, a decline of 16.4 percentage points[21]. - Operating revenue decreased by 8.6% to RMB 45,250,425,000 from RMB 49,516,084,000, primarily due to a 17.4% reduction in wafer sales volume[77]. - Gross profit fell by 47.8% to RMB 9,904,124,000, attributed to decreased production capacity utilization and changes in product mix[77]. - The net cash flow from operating activities decreased by 37.0% to RMB 23,047,761,000, mainly due to a reduction in cash received from sales[79]. - Investment income dropped by 69.9% to RMB 250,095,000, primarily due to reduced operating profits from joint ventures[77]. Risk Factors - The report includes a detailed discussion of various risks faced during operations, including semiconductor industry cycles and competition[6]. - The company has outlined its risk factors in the management discussion and analysis section of the report[3]. - The semiconductor industry is experiencing a cyclical downturn, but there are signs of recovery in the terminal market demand in the second half of 2023, with inventory digestion remaining a key theme[33]. - The company faces risks related to technology upgrades and R&D investment, which are critical for maintaining its competitive edge in the capital-intensive semiconductor industry[61]. - The company is exposed to financial risks, including performance volatility due to macroeconomic fluctuations and changes in industry demand[64]. - The company has a significant reliance on major clients, which poses risks if these clients encounter operational difficulties[62]. - The company is actively managing supply chain risks, particularly concerning the availability and pricing of essential materials and components[63]. - Changes in national industrial policies could impact the company's development, given the strategic importance of the semiconductor industry[66]. - The semiconductor industry is subject to cyclical risks influenced by macroeconomic fluctuations, which may impact market demand[68]. - Geopolitical tensions and export control policies from countries like the U.S. pose risks to the company's operations and supply chain stability[69]. Research and Development - Research and development expenses accounted for 11.0% of operating revenue in 2023, an increase of 1.0 percentage point from 2022[21]. - The company has established a comprehensive and efficient innovation mechanism, with a rigorous R&D process to ensure successful project conversion[35]. - The company applied for 601 invention patents and obtained 562 in the current year, bringing the total to 17,602 applications and 11,641 granted[45]. - The workforce in R&D increased to 2,363, representing 11.7% of the total staff, with an average salary of CNY 469,000[49]. - The company has developed multiple technology platforms, including 28nm ultra-low power and 40nm embedded storage, which have entered small batch trial production in 2023[43]. - The company is focusing on expanding production capacity and enhancing industry chain collaboration to strengthen its market position[42]. - The company is committed to long-term capacity planning while solidifying its short-term operational foundation to capture the growth trend in the semiconductor sector[33]. Corporate Governance - The company operates under a red-chip structure, indicating specific governance arrangements[5]. - The board of directors was fully present at the meeting[4]. - The company has established a structured corporate governance framework, including an audit committee, remuneration committee, nomination committee, and strategic committee[131]. - The company has maintained compliance with relevant laws and regulations in all significant aspects[130]. - The company has implemented internal control and risk management measures to mitigate financial and operational risks[114]. - The company has a public float of over 25% of its issued share capital as of the reporting date[129]. - The company has not repurchased, sold, or redeemed any of its listed securities during the reporting period[118]. - The company has a structured corporate governance framework, including an audit committee, remuneration committee, nomination committee, and strategic committee[131]. - The company has established various environmental protection, safety, and health policies, and has obtained international standard certifications[114]. Future Outlook - The company plans to achieve a sales revenue growth of no less than the average of comparable peers, with a projected single-digit percentage increase year-on-year for 2024[112]. - The company anticipates a stable and moderate growth in 2024, driven by improving customer inventory and rising demand in mobile and internet sectors[112]. - The company is focusing on sustainability initiatives, with a goal to reduce carbon emissions by 25% over the next five years[154]. - The company is facing challenges from macroeconomic conditions, geopolitical factors, and competition, but aims to maintain profitability through cost control and efficiency improvements[112]. - The company plans to invest $500 million in new manufacturing facilities to boost production capacity by 40%[154]. Shareholder Matters - The company plans not to distribute profits for the fiscal year 2023, pending approval at the 2024 annual general meeting[5]. - The company reported a distributable reserve of RMB 40,232.1 million as of December 31, 2023[117]. - There were no ordinary shares declared or paid cash dividends during the reporting period[116]. - The company emphasizes that the fundamental changes in business and significant matters such as profit distribution and loss compensation are subject to the shareholders' meeting[135]. - The company clarifies that capital reserves cannot be used to cover losses according to the Company Law of the People's Republic of China, but the Cayman Islands Company Law allows such adjustments without affecting overall financial stability[136]. Market Position - The company ranks fourth globally among pure wafer foundry companies in terms of sales in 2023, and is the leading integrated circuit manufacturer in mainland China[41]. - The global semiconductor industry is expected to show long-term growth despite short-term supply-demand imbalances, driven by increasing demand for smart applications across various sectors[33]. - The semiconductor market is witnessing a structural supply-demand adjustment, with memory chips being the primary area of decline, while demand in logic, analog, and sensor sectors remains relatively stable[39]. - The company is focusing on local manufacturing demand and cost competition, actively adjusting its product mix and enhancing technical innovation to support customers[33]. Compensation and Remuneration - Total remuneration for all directors and senior management during the reporting period amounted to RMB 46,270,000[159]. - Total remuneration for core technical personnel during the reporting period was RMB 28,432,000[159]. - Senior management compensation for the year ending December 31, 2023, was RMB 44,012,000, including salary, bonuses, and benefits[160]. - The company’s remuneration policies for directors and senior management were strictly adhered to, with no violations reported during the period[159]. - The company has implemented a performance-based evaluation mechanism for senior management, linking short-term and long-term incentives to company performance[171].