SMIC(688981)2022-03-30 16:00Financial Performance - In 2021, the company's revenue increased by 29.7% to CNY 35.63 billion from CNY 27.47 billion in 2020[15]. - The net profit attributable to shareholders rose by 147.7% to CNY 10.73 billion, compared to CNY 4.33 billion in the previous year[15]. - The net cash flow from operating activities increased by 58.2% to CNY 20.84 billion, up from CNY 13.17 billion in 2020[15]. - The company's total assets grew by 12.4% to CNY 229.93 billion at the end of 2021, compared to CNY 204.60 billion at the end of 2020[15]. - The net assets attributable to shareholders increased by 10.2% to CNY 109.20 billion from CNY 99.13 billion in 2020[15]. - Gross margin increased to 29.3%, up 5.5 percentage points from 23.8% in 2020[16]. - Net profit margin rose to 31.4%, an increase of 16.8 percentage points compared to 14.6% in 2020[16]. - Basic earnings per share reached 1.36 CNY, a 103.0% increase from 0.67 CNY in 2020[16]. - The total net profit under International Financial Reporting Standards was 10,952.3 million CNY, compared to 4,924.6 million CNY in the previous year[18]. - The company achieved operating revenue of 35,630.6 million RMB, an increase of 29.7% compared to the previous year[88]. - Net profit reached 11,202.5 million RMB, marking a significant increase of 178.6% year-over-year[88]. Operational Highlights - The company maintained a full capacity utilization rate throughout 2021, reflecting strong demand and operational stability[8]. - The company is focusing on balancing supply and demand dynamics in 2022, addressing structural shortages in the industry[9]. - The company plans to enhance cooperation with customers and suppliers while advancing expansion projects[9]. - The company maintained a high capacity utilization rate and expanded production capacity steadily in response to market demand[27]. - The company is focused on developing a platform-based ecosystem service model, providing comprehensive integrated circuit solutions[27]. - The company is committed to enhancing its R&D capabilities and expanding its technology platforms to meet diverse customer needs[30]. - The company is focused on expanding its production capacity and enhancing collaboration within the semiconductor industry to meet growing market demands[118]. Research and Development - Research and development expenses as a percentage of operating income decreased by 5.4 percentage points to 11.6% due to increased revenue and capacity constraints[17]. - The company has developed eight major product platforms over the past four years, targeting both existing and emerging markets[8]. - The company has received 672 invention patents this year, bringing the cumulative total to 10,698[43]. - The company is focusing on advanced packaging technologies to strengthen its technical leadership in the integrated circuit industry[39]. - The number of R&D personnel decreased from 2,335 to 1,758, representing a reduction of approximately 24.7%[49]. - R&D personnel accounted for 9.9% of the total workforce, down from 13.5% in the previous period[49]. - The company is exploring potential mergers and acquisitions to enhance its competitive edge, with a budget of $G million set aside for this purpose[186]. Market and Industry Context - The global integrated circuit market is experiencing a supply-demand imbalance, driven by increased demand for smart devices and IoT applications[35]. - The demand for specialty process chips in power management, high-voltage drive, microcontrollers, RF, and image sensors continues to grow[38]. - The integrated circuit foundry industry is capital-intensive, requiring continuous significant investment to upgrade technology and maintain production capacity[63]. - The integrated circuit industry has evolved from a vertically integrated manufacturing model to a stable ecosystem that includes both vertical integration and vertical division of labor, with a focus on specialized services in design, manufacturing, and packaging testing[129]. - The demand for wafer foundry services is primarily driven by North America, China, other Asia-Pacific regions, and European countries, with significant growth in emerging sectors such as IoT, AI, and cloud computing[130]. Risks and Challenges - The company faced various risks in its operations, including reliance on a few customers and the ability to introduce new technologies[2]. - The company faced significant challenges due to being placed on the U.S. Entity List, impacting its production and operations[25]. - The company faces risks related to technology upgrades and talent shortages, which could impact its competitive edge in the semiconductor industry[60][61]. - Supply chain risks are present due to reliance on a limited number of qualified suppliers for critical materials and equipment, primarily located outside of China[65]. - There is a risk of declining gross margins if the overall integrated circuit industry faces adverse conditions, including rising raw material prices and underutilized capacity[67]. - Ongoing trade tensions, particularly between the U.S. and China, pose risks related to supply chain disruptions and potential restrictions on investment and materials[76]. Corporate Governance - The company has adopted a corporate governance policy since January 25, 2005, and has complied with all relevant corporate governance codes[163]. - The company has established a set of insider information management systems that all directors and senior management must comply with[165]. - The company held its 2021 Annual General Meeting on June 25, 2021, with resolutions published on the Hong Kong Stock Exchange website[166]. - The company allows shareholders holding 10% or more of shares to request a special general meeting[171]. - The company has summarized the compensation of senior executives in its annual report[170]. - The company’s remuneration policies for directors and senior management are strictly adhered to, with no violations reported during the period[193]. Future Outlook - The company anticipates that its revenue growth in 2022 will exceed the average growth rate of the foundry industry, with a gross margin higher than that of 2021[133]. - Capital expenditures for 2022 are projected to be approximately 32.05 billion yuan, marking a peak investment period to support existing and new factory expansions[133]. - In 2022, the company plans to increase production capacity more than in 2021, with new factories in Shanghai, Beijing, and Shenzhen expected to commence operations by the end of the year[132].