Science and Technology Innovation Board is about to usher in the "first Brother".

Since submitting Science and Technology Innovation Board's IPO application, Semiconductor Manufacturing International Corporation has been setting a new record: after Science and Technology Innovation Board submitted his IPO application on June 1, Semiconductor Manufacturing International Corporation only took 29 days to obtain registration approval, setting a new record for Science and Technology Innovation Board's IPO review speed. After the Lightning meeting, Semiconductor Manufacturing International Corporation announced on July 5 that Science and Technology Innovation Board's IPO offering price was 27.46 yuan per share, and large funds and other powerful institutions participated in the subscription. In terms of financing scale, Semiconductor Manufacturing International Corporation is the largest A-share IPO since Agricultural Bank Of China IPO in 2010.

According to the prospectus, Semiconductor Manufacturing International Corporation initially issued 1.686 billion shares, accounting for 23.62% of the total number of shares after the offering. If the over-allotment option is exercised, the newly issued share capital will be expanded to 1.938 billion shares, accounting for about 26.23% of the total number of shares after the issue.

According to the prospectus, Semiconductor Manufacturing International Corporation can raise up to 53.2 billion yuan if he exercises the over-allotment option, and Semiconductor Manufacturing International Corporation can raise at least 46.3 billion yuan even if he does not exercise the over-allotment option.At that time, Semiconductor Manufacturing International Corporation will become a veritable Science and Technology Innovation Board "fund-raising king".

As a leading Chinese mainland chip manufacturer, Semiconductor Manufacturing International Corporation, now highly sought after by investors, has not been plain sailing in the course of more than 20 years of development: in 2004, Semiconductor Manufacturing International Corporation was listed on the New York Stock Exchange and the Hong Kong Stock Exchange, but due to mediocre performance, it encountered the embarrassing situation of listing is the peak. In June 2019, Semiconductor Manufacturing International Corporation announced his delisting from the New York Stock Exchange due to persistent low trading volume and high corporate financing costs.
However, only a year after delisting US stocks, Semiconductor Manufacturing International Corporation set Science and Technology Innovation Board's fund-raising record, and even the market value of Hong Kong stocks doubled. Just one year can not make Semiconductor Manufacturing International Corporation's performance to achieve great transformation, but Semiconductor Manufacturing International Corporation's macro environment is undergoing drastic changes, which makes it ushered in an unprecedented opportunity for development.

The pursuit of investors at this time, what is valued is the future prospect of Semiconductor Manufacturing International Corporation's track. After expressing support with capital money, Semiconductor Manufacturing International Corporation may also be able to better grasp the window of opportunity.

20 years of tortuous development

Founded in 2000, Semiconductor Manufacturing International Corporation is the most advanced, well-equipped, largest and transnational integrated circuit manufacturing enterprise group in the mainland, providing wafer foundry and technical services for different technology nodes from 0.35um to 14nm. Headquartered in Shanghai, it has a global manufacturing and service base.

There are a 300mm fab and a 200mm fab in Shanghai, a holding 300mm advanced process fab in Shanghai, a 300mm wafer fab and a holding 300mm advanced process fab in Beijing, a 200mm fab in Tianjin and Shenzhen, and a 300mm bump processing joint venture plant in Jiangyin. Semiconductor Manufacturing International Corporation has also set up marketing offices and customer services in the United States, Europe, Japan and Taiwan, as well as a representative office in Hong Kong, China.
Semiconductor Manufacturing International Corporation founder Zhang Rujing's previous entrepreneurial experience is also related to the semiconductor industry.

In 1997, Zhang Rujing, who had worked for the American semiconductor company Texas Instruments Inc for nearly 32 years, gave up the DRAM (dynamic random access memory) industry because of Texas Instruments Inc's strategic adjustment and decided to retire and return to Taiwan. In the same year, Zhang Rujing founded Shida Semiconductor, a foundry in Taiwan, becoming Taiwan's third wafer generation industrialist.

At that time, Taiwan's semiconductor industry already had two mountains: Taiwan Semiconductor Manufacturing Co Ltd and United Microelectronics Corp. Under the attack of the two men, Zhang Rujing's Worldwide Semiconductor was slightly inferior in terms of capital, technology, talent and production capacity. During the development of Worldwide Semiconductor, United Microelectronics Corp announced the five-in-one case, and Taiwan Semiconductor Manufacturing Co Ltd was also suffering from insufficient production capacity. Shida Semiconductor had just built two factories when it became a coveted target. In 2000, under the operation of World University Semiconductor investor Hu Dingwu, World University Semiconductor was sold to Taiwan Semiconductor Manufacturing Co Ltd for US $5 billion, and Zhang Rujing, who was forced to accept the truth, had no choice but to find another battlefield.

In 2000, the mainland encouraged the development of semiconductors. Two months after the sale, Zhang Rujing raised $1.48 billion to register Semiconductor Manufacturing International Corporation in the Cayman Islands, with the first investors including Shanghai Industrial Co., Ltd., Peking University Bluebird Goldman Sachs Group and Handing Asia Pacific. After investigation, Semiconductor Manufacturing International Corporation chose to settle in Shanghai.

After its establishment, Semiconductor Manufacturing International Corporation developed rapidly. In 2004, Semiconductor Manufacturing International Corporation, who had been founded for only four years, went to the United States and listed in Hong Kong, and soon joined the leading camp of the semiconductor contract manufacturing industry.

But the good times did not last long. In 2008, the market price of memory chips began to fall, Semiconductor Manufacturing International Corporation's profits were under pressure, and Zhang Rujing rushed to seek capital injection from state-owned enterprises. In November of the same year, Datang Holdings acquired a 16.6% stake in Semiconductor Manufacturing International Corporation at a price of 36 Hong Kong dollars per share for US $172 million, making it Semiconductor Manufacturing International Corporation's largest shareholder.

After the completion of the capital injection, Semiconductor Manufacturing International Corporation continued to sue Taiwan Semiconductor Manufacturing Co Ltd because of product patent issues. In November 2009, the California District Court ruled that SMIC had illegally used 61 of 65 disputed patent projects, and Taiwan Semiconductor Manufacturing Co Ltd demanded $1 billion in damages from Semiconductor Manufacturing International Corporation. In the face of high compensation, Semiconductor Manufacturing International Corporation hopes to reconcile with Taiwan Semiconductor Manufacturing Co Ltd. Semiconductor Manufacturing International Corporation's settlement is that Taiwan Semiconductor Manufacturing Co Ltd can take an 8 per cent stake in Semiconductor Manufacturing International Corporation, plus a 2 per cent share option.
Although the two sides reached a settlement, Zhang Rujing chose to resign after a series of lawsuits. Zhang Rujing said, "the lawsuit with Taiwan Semiconductor Manufacturing Co Ltd exhausted me, and I did my best." In 2009, Zhang Rujing officially withdrew from Semiconductor Manufacturing International Corporation and said goodbye to the semiconductor industry.

In the following years, Semiconductor Manufacturing International Corporation changed CEO several times, and the direction of development has been erratic. Until 2017, Liang Mengsong, a technology maniac who served as a senior R & D director of TSMC, joined him as a joint CEO with former CEO Zhao Haijun.

After Liang Mengsong joined, it took only more than half a year to increase the yield of trial production of SMIC 14nm from 3% to 95%. At this point, Semiconductor Manufacturing International Corporation ushered in an accelerated period of development. at the same time, he also began to develop more advanced 14nm chips.

While Semiconductor Manufacturing International Corporation's development is gradually on the right track, the external development environment is also undergoing rapid changes.

In 2019, the United States upgraded its controls on semiconductor exports. To this end, the Chinese government stepped up its efforts to support the domestic chip industry. Semiconductor Manufacturing International Corporation also benefited from this and embarked on the fast track of development. In 2019, Semiconductor Manufacturing International Corporation's orders began to climb, including Huawei and other companies. Semiconductor Manufacturing International Corporation disclosed in his annual report that the production capacity of its 14-nanometer process products in 2019 showed a situation of huge demand and insufficient supply.

Under the influence of multiple factors such as the poor performance of US stock prices and the outbreak of domestic demand, Semiconductor Manufacturing International Corporation withdrew from the New York Stock Exchange on May 24, 2019 and joined the Kechuang Board in June this year. Semiconductor Manufacturing International Corporation also ushered in investors' more cautious consideration.

Decode the real Semiconductor Manufacturing International Corporation

Returning to Semiconductor Manufacturing International Corporation's performance itself, in a short period of one year, while the capital market encountered both ice and fire, Semiconductor Manufacturing International Corporation's own performance did not change much.

According to Semiconductor Manufacturing International Corporation's prospectus, Semiconductor Manufacturing International Corporation's operating income from 2017 to 2019 was 21.39 billion yuan, 23.017 billion yuan and 22.018 billion yuan respectively, with 1.9% and 7.61% growth in 2017 and 2018 compared with the same period last year, while in 2019, Semiconductor Manufacturing International Corporation fell into negative growth and revenue fell 4.34% from the same period last year.

In the same period, Semiconductor Manufacturing International Corporation's net profit was 1.245 billion yuan, 747 million yuan and 1.794 billion yuan respectively, with year-on-year changes of-52.7%,-39.98% and 140.04%.

Semiconductor Manufacturing International Corporation's "big change" of net profit in 2019 is inseparable from the support of the government.After dismantling the prospectus, it is not difficult to find that the amount of government subsidies to it has been expanding in recent years. From 2017 to 2019, Semiconductor Manufacturing International Corporation enjoyed government subsidies of 1.024 billion yuan, 1.107 billion yuan and 2.039 billion yuan respectively, accounting for 82.23%, 148.09% and 113.69% of the net profit in the same period, respectively. In 2018 and 2019, government subsidies exceeded the company's net profit.

From the market point of view, the prospectus reveals that Semiconductor Manufacturing International Corporation's main business is mainly concentrated in Chinese mainland and Hong Kong, the United States and other regions. After 2017The scale of orders from the United States has gradually declined, the number of orders from China has begun to climb, and the revenue structure has begun to diversify and stabilize.
From 2017 to 2019, Semiconductor Manufacturing International Corporation's main business income from Chinese mainland and Hong Kong accounted for 47.26%, 59.09% and 59.39% respectively, while that from the United States accounted for 40.01%, 31.61% and 26.36%, respectively. The proportion of main business income from other regions was 12.73%, 9.3% and 14.25%, respectively.

However, Semiconductor Manufacturing International Corporation still faces the problem of relying too much on big clients. From 2017 to 2019, the sales contributed by Semiconductor Manufacturing International Corporation's top five customers accounted for 50.45%, 45.22% and 43.21% of the total revenue respectively, although it decreased during the reporting period, but it was still at a high level. If major problems occur in the production and operation of major customers in the future, it will have a negative impact on their performance stability and sustainable profitability.

The semiconductor industry is notoriously high, requiring a lot of research and development, which is also evident in Semiconductor Manufacturing International Corporation. According to the prospectus, from 2017 to 2019, Semiconductor Manufacturing International Corporation's R & D expenses were 3.576 billion yuan, 4.471 billion yuan and 4.744 billion yuan respectively, accounting for 16.72%, 19.42% and 21.55% of operating income in the same period, and 287.24%, 598.29% and 264.5% of net profit in the same period.

It can be seen that Semiconductor Manufacturing International Corporation has been continuously increasing investment in R & D in recent years. In the long run, R & D will help the company to enhance the capacity of technological products and create a more competitive moat. But in the short term, it will also bring cost pressure to enterprises.

Especially in recent years, when Semiconductor Manufacturing International Corporation's comprehensive gross profit margin continues to decline and is lower than the average value of the same industry, Semiconductor Manufacturing International Corporation needs more money to invest in research and development and ease the financial pressure.

According to the prospectus, Semiconductor Manufacturing International Corporation's comprehensive gross profit margin was less than 25 per cent from 2017 to 2019, which were 24.76 per cent, 23.02 per cent and 20.83 per cent respectively. In the same period, the average comprehensive gross profit margin of semiconductor companies Taiwan Semiconductor Manufacturing Co Ltd, United Microelectronics and Hua Hong Semiconductor in the same industry was 28.99%, 28.9% and 26.43% respectively, and the comprehensive gross profit margin of industry companies was higher than that of Semiconductor Manufacturing International Corporation.

However, for Semiconductor Manufacturing International Corporation, money is not a problem for the time being.

By the end of 2019, Semiconductor Manufacturing International Corporation had more than 30 billion yuan in cash on his books. However, of the 30 billion, 13.988 billion are long-term loans in 2019, 698 million are short-term loans, and the non-current liabilities due within one year are 8.494 billion yuan, so there is great pressure on short-term debt repayment. Therefore, Semiconductor Manufacturing International Corporation needs to optimize the debt structure to ensure cash flow. The funds raised by the landing board can just play a regulatory role.

If you have food in your hand, don't panic in your heart. Semiconductor Manufacturing International Corporation, who is now sought after by investors, will also raise enough food and fodder for his own development after raising tens of billions of dollars through landing on the Kechuang board.

Prospect: opportunities and challenges coexist

Taiwan Semiconductor Manufacturing Co Ltd went to the United States to build a factory, Huawei chip supply was cut off, while China's semiconductor industry was suppressed by external forces, Semiconductor Manufacturing International Corporation also ushered in a window of opportunity.

Since 2018, the Ministry of Finance, the State Administration of Taxation, the National Development and Reform Commission and the Ministry of Industry and Information Technology have successively issued a number of documents to provide tax relief, financial subsidies and technical support for upstream and downstream semiconductor enterprises.

In 2019, Semiconductor Manufacturing International Corporation not only enjoyed targeted tax breaks and dividends, but also received a government subsidy of 2.04 billion yuan. And from the perspective of subsidies over the years, the amount of subsidies still has an upward trend.

In the face of the trend, investors with a keen sense of smell are scrambling to enter the market.

From the perspective of placement, Semiconductor Manufacturing International Corporation's final strategic allotment of about 843 million shares, accounting for 50% of the initial issue, accounting for about 43.48% of the total issued after the full exercise of the over-allotment option, the total amount of investor contributions (including brokerage commission) totaled 24.261 billion yuan.

Participate in this issue of strategic placement investors, the lineup is also quite luxurious.

According to the announcement, Semiconductor Manufacturing International Corporation's strategic placement investors include the second phase of the National Integrated Circuit Industry Investment Fund Co., Ltd., Qingdao Juyuan Core Star Equity Investment Partnership and other 29 investors. Strategic placement investors include central and local government investment funds, state-owned enterprises and overseas governments.

It is worth noting that Qingdao Juyuan Core Star, the distributor, has been allocated 2.213 billion yuan in this round of strategic placement, which is one of Semiconductor Manufacturing International Corporation's strategic investors. It is understood that Juyuan Core Star is an investment fund jointly composed of 14 industrial chain enterprises, including China Micro Corporation, Shanghai Xinxing, Central shares, Weir Semiconductor, Jiangfeng Electronics and so on. These enterprises are all upstream and downstream industries of the semiconductor industry.

According to reports, the 18 large enterprises or their subordinate enterprises participating in Semiconductor Manufacturing International Corporation's strategic placement have signed a "Memorandum of Strategic Cooperation" with Semiconductor Manufacturing International Corporation, including China Information and Communications Technology Group Co., Ltd. strategic cooperation will be carried out in the fields of technology, talents, products, and so on.
In other words, while obtaining financial support, Semiconductor Manufacturing International Corporation also obtained the blessing of resources from the upper and lower reaches of the industrial chain. Such treatment is not generous.

Semiconductor Manufacturing International Corporation is in a favorable climate, geographical location and people, but for Semiconductor Manufacturing International Corporation, a representative of the capital-intensive, technology-intensive and talent-intensive high-tech industry,After lengthening the timeline, the challenges it faces still need time to solve.

First of all, the semiconductor industry has a high threshold and high barriers, and talent is the key to its development.

According to the data released by the White Paper on talents in China's Integrated Circuit Industry (2018-2019), it is estimated that around 2021, the demand for talents in the chip industry will be about 722000, and there will be a demand gap of 261000. Under the gap, Semiconductor Manufacturing International Corporation's attractiveness to talents needs to be continuously improved.

According to data disclosed in Semiconductor Manufacturing International Corporation's 2018 Corporate Social responsibility report, Semiconductor Manufacturing International Corporation's staff turnover rate was 22 per cent in 2018, nearly half higher than the industry average, which was 14.3 per cent. According to the prospectus, the average salary of Semiconductor Manufacturing International Corporation's R & D staff in 2019 is 367000 yuan, which is even lower than Taiwan Semiconductor Manufacturing Co Ltd's median salary of 383000 yuan. Semiconductor Manufacturing International Corporation's salary is slightly lower than that of companies in the same industry.

In addition to the risk of brain drain caused by insufficient treatment, Semiconductor Manufacturing International Corporation's chip research and development capability also has a certain gap compared with other companies.

Take the product as an example, in 2015, Gro Fonder began to achieve mass production of 14 nm wafer foundry, but Semiconductor Manufacturing International Corporation achieved mass production of 14 nm wafer foundry three years later than Gro Fonder. Compared with the industry leader, as early as 2018, Taiwan Semiconductor Manufacturing Co Ltd 7 nanometer process integrated circuit wafer foundry business has been mass production.

Zhou Zixue, chairman of Semiconductor Manufacturing International Corporation, also stressed that "as far as the integrated circuit wafer foundry industry is concerned, on the key index of advanced process linewidth, there is still a certain gap between Chinese mainland enterprises and the leading enterprises in the industry in terms of production equipment and technical personnel. Under the background that the integrated circuit industry is facing full competition on a global scale, Chinese mainland & Johnson enterprises will still be in a relatively weak position in the process of competing with the leading enterprises in the industry. "

Fortunately, Semiconductor Manufacturing International Corporation's 14nm process wafers are sufficient to meet domestic technology needs. In 2020, Semiconductor Manufacturing International Corporation announced an additional annual capital expenditure of US $1.1 billion to US $4.3 billion to cope with strong order demand. This time, about 40% of the funds raised by Semiconductor Manufacturing International Corporation and Science and Technology Innovation Board IPO will be used for the 12-inch chip SN1 project (SMIC South Phase I). SMIC South is a 12-inch wafer factory, which mainly meets the R & D and mass production plan of Semiconductor Manufacturing International Corporation 14 nm and below advanced process nodes.

In the semiconductor industry, which is heavy on assets, long return cycle and needs a large number of cutting-edge talents, the challenge facing Semiconductor Manufacturing International Corporation is enormous, and the window period created by the times is also apparent. Since its establishment 20 years ago, Semiconductor Manufacturing International Corporation still plays an important role in the industry, although there are some gaps between the industry leaders and the global industry leaders in some aspects.

Today, Semiconductor Manufacturing International Corporation, who absorbs a huge amount of money through Science and Technology Innovation Board's listing, has leveraged more, and Semiconductor Manufacturing International Corporation's down-to-earth acceleration is needed to respond to the enthusiastic expectations of many parties.