SMIC(HK:00981)2023-09-05 08:30Financial Performance - Semiconductor Manufacturing International Corporation reported a revenue of $1.5 billion for the first half of 2023, representing a 10% decrease compared to the same period in 2022[7]. - Revenue for the six months ended June 30, 2023, was $3,022,684 thousand, a decrease of 19.3% compared to $3,745,058 thousand for the same period in 2022[11]. - Net profit attributable to shareholders for the same period was $633,864 thousand, down 34.1% from $961,559 thousand in the previous year[11]. - Gross margin for the first half of 2023 was 20%, down from 25% in the same period last year[7]. - Basic earnings per share decreased to $0.08, a decline of 33.3% compared to $0.12 in the same period last year[12]. - Operating profit decreased to $163.1 million from $1,075.4 million in the previous year, influenced by the changes in revenue, cost of sales, and gross profit[58]. - The company reported a total comprehensive income for the period of $624.58 million, a decrease of 44.7% from $1,129.23 million in the previous year[161]. - The company reported a significant increase in inventory impairment losses, which rose to $67,503 thousand from $21,008 thousand year-over-year[181]. Research and Development - R&D expenses for the first half of 2023 were $300 million, accounting for 20% of total revenue, as the company continues to invest in new technologies[7]. - 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]. - The company has launched a new 7nm process technology, which is expected to begin production in Q4 2023[7]. - The R&D process includes seven stages, ensuring successful project conversion through strict approval processes[19]. - The company is advancing several R&D projects, including a 28nm low-power platform and a 40nm embedded storage process for automotive applications, with significant progress reported[28][30]. - The company has established a comprehensive intellectual property system, with a total of 13,124 authorized patents, including 11,329 invention patents[35]. - The company added 339 invention patents and 255 utility model patents in the current period, bringing the total to 19,232 patents[26]. Market Strategy and Expansion - The company is expanding its market presence in Europe and North America, aiming to increase its customer base by 25% by the end of 2024[7]. - SMIC is actively pursuing strategic partnerships and potential acquisitions to enhance its technological capabilities and market reach[7]. - The company is focusing on technology innovation and process optimization to adapt to market demand changes and strengthen customer collaboration[38]. - The company is actively expanding its customer base through various marketing strategies and direct communication to tailor solutions[20]. - The company is focused on building a platform-based ecosystem service model, offering design services and IP support[18]. Risks and Challenges - SMIC has identified several key risks, including supply chain disruptions and geopolitical tensions, which may impact future performance[5]. - The company faces risks related to high customer concentration, which could affect operational efficiency and profitability if major customers encounter issues[43]. - Supply chain risks are present due to reliance on a limited number of qualified suppliers for critical materials and components[44]. - The integrated circuit industry is subject to policy changes that could negatively impact the company's development if significant unfavorable changes occur in national policies[47]. - Geopolitical tensions and export control policies from countries like the U.S. pose risks to the company's supply chain and operational stability[50]. Corporate Governance - The board of directors has confirmed that there are no significant changes in corporate governance or financial practices[5]. - The company continues to comply with the Hong Kong Listing Rules regarding the disclosure of director and senior management changes[83]. - The company’s governance structure has been updated with the recent changes in the board of directors[83][84]. Environmental and Social Responsibility - The company invested $9.7 million in environmental protection during the reporting period[105]. - In the first half of 2023, the company processed 154,160 cubic meters of wastewater and 405,532,200 cubic meters of exhaust gas, with all pollution control facilities operating normally[107]. - The company achieved ISO 14001 environmental management system certification and ISO 50001 energy management system certification for its key pollutant discharging enterprises[108]. - The company continues to conduct carbon verification and implement carbon emission control measures as part of its commitment to reducing carbon emissions[109]. Shareholder Information - The company does not propose any interim dividend for the six months ended June 30, 2023, compared to no dividend for the same period in 2022[87]. - The company reported a total of 27,640,901 shares outstanding as of June 30, 2023[93]. - The company has a total of 5,998,940 shares that are currently unvested under the 2021 stock incentive plan[100]. - The company will initiate stock repurchase measures if the stock price falls below the latest audited net asset value per share for 20 consecutive trading days[116]. Financial Position - As of June 30, 2023, the total interest-bearing debt amounted to $9,661.3 million, an increase from $8,694.4 million as of December 31, 2022[62]. - The company’s liquidity position is supported by restricted cash of $388.8 million, which is pledged for various financial obligations[68]. - The total assets as of June 30, 2023, included non-current financial assets measured at fair value of $523.6 million, up from $208.3 million at the end of 2022[67]. - The company reported total liabilities increased to $15,858,759 thousand as of June 30, 2023, from $14,846,363 thousand at the end of 2022, reflecting a rise of approximately 6.8%[164].