A share code: 688981 a share abbreviation: Semiconductor Manufacturing International Corporation(688981) Announcement No.: 2022-002 Hong Kong share code: 00981 Hong Kong share abbreviation: Semiconductor Manufacturing International Corporation(688981)
Semiconductor Manufacturing International Corporation(688981)
About signing the 2022 framework agreement with Datang Holdings
Announcement of related party (connected) transactions
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear legal responsibility for the authenticity, accuracy and integrity of its contents according to law.
1、 Overview of 2022 framework agreement
We refer to the announcement of the company on Hong Kong stocks dated January 23, 2019, which is related to the 2019 framework agreement. As the 2019 framework agreement has expired on December 31, 2021 and the company intends to continue the transactions under it, the company announced that it will sign the 2022 framework agreement with Datang holdings on continuous connected transactions on February 10, 2022 for a period of three years from January 1, 2022.
(I) summary of main terms
Contracting Party: (1) the company; and
(2) Datang Holdings
Signed on: February 10, 2022
Term of validity: three years from January 1, 2022 to December 31, 2024
Main terms: Semiconductor Manufacturing International Corporation(688981) group will carry out business cooperation with Datang holdings and its affiliates, including but not limited to chip processing services.
(II) pricing policy
The pricing of the transactions to be conducted under the 2022 framework agreement will be determined based on the reasonable market price (obtained through fair negotiation in the normal and general business process according to the normal commercial terms, or the market price provided to an independent third party) or the price based on the actual production cost plus reasonable profit (refer to the general profit margin of the industry), And will be determined on terms no less favourable than those sold by an independent third party to the Semiconductor Manufacturing International Corporation(688981) group or no better than those sold by the Semiconductor Manufacturing International Corporation(688981) group to an independent third party (if any). With regard to Semiconductor Manufacturing International Corporation(688981) group's provision of chip OEM services to Datang holdings and its affiliates, the company will refer to the terms (including pricing) and reasonable market price (if applicable) it provides to independent third-party customers for services of similar nature and quantity.
(III) annual upper limit and benchmark
Past transactions
For the years ended December 31, 2019, 2020 and 2021, the annual caps under the 2019 framework agreement are US $20 million, US $35 million and US $48 million respectively. The past revenue generated under the 2019 framework agreement is as follows:
For the year ended December 31, 2021, 2019 and 2020, $million (audited) (audited) (Unaudited) total past revenue 9.90 7.20 25.50 on the date of this announcement, the company confirmed that the total past revenue did not exceed the annual upper limit under the 2019 framework agreement signed with Datang holdings and its affiliates on continuously connected exchanges.
The total past revenue under the 2019 framework agreement is far lower than the annual ceiling, mainly due to the business adjustment of Datang holdings, so that it is not necessary for Semiconductor Manufacturing International Corporation(688981) group to provide chip processing services in the corresponding period.
Annual cap under the 2022 framework agreement
The expected maximum limit for the three years ending December 31, 2024 under the 2022 framework agreement (referring to the company's expected maximum income from continuous connected transactions) is as follows:
Year ended December 31
2022 2023 2024 million US dollars million US dollars million
Expected ceiling 181.00 182.00 187.00 in determining these expected ceilings, the company has considered:
(i) The potential scope of continuous connected transactions it may provide under the current market conditions of the semiconductor industry and the company's technical capacity;
(II) due to the shortage of global wafer supply and the expected business growth of Datang holdings, the demand for wafers of Datang holdings is expected to increase significantly in the next few years; and
(III) Semiconductor Manufacturing International Corporation(688981) the overall business prospect of the group, and make conservative forecasts on price and quantity.
2、 Internal control measures
The company has (1) reviewed, approved and selected verification procedures when necessary to ensure that the agreed prices and terms of continuous connected transactions are not inferior to those given by Semiconductor Manufacturing International Corporation(688981) group or from independent third parties, and comply with the pricing policy; And (2) adopt procedures for identifying connected persons and monitoring the annual cap of continuous connected transactions.
3、 Reasons and benefits of concluding the 2022 framework agreement
In view of the future demand of Datang holdings for chip OEM services, the company believes that the conclusion of the 2022 framework agreement with Datang holdings can bring sustained and long-term business opportunities to the company and promote the technical development of the company.
The directors (including independent non-executive directors) believe that such continuous connected transactions are conducted in the daily business process of the company in accordance with general business terms, are fair and reasonable, and are in line with the overall interests of the company and shareholders.
Mr. Lu Guoqing, the non-executive director (the executive director and President of Datang Holdings) and Dr. Chen Shanzhi, the non-executive director (the senior vice president of Datang Holdings), have abstained from voting on the relevant board resolutions on the approval of the 2022 framework agreement. Except for the Discloser, no other director is deemed to have a significant interest in the 2022 framework agreement, which requires the director to abstain from voting on the approval of the 2022 framework agreement at the meeting of the board of directors.
4、 Meaning of Listing Rules
As Datang holdings is the holding company of Datang Hong Kong, the major shareholder of the company (directly holding about 10.79% of the total issued share capital of the company on the date of this announcement), Datang holdings is the contact person of Datang Hong Kong and a connected person of the company in accordance with Chapter 14A of the Hong Kong listing rules.
As the applicable percentage rate (except the profit ratio) is higher than 0.1% but lower than 5% on an annual basis, according to Chapter 14A of the Hong Kong listing rules, the continuous connected transactions constitute the non exempt continuous connected transactions of the company, and shall comply with the reporting, announcement and annual review requirements under Chapter 14A of the Hong Kong listing rules, but shall be exempted from the requirements approved by independent shareholders.
According to the relevant provisions of the Listing Rules of Kechuang board, the 2022 framework agreement and the transactions to be carried out under it constitute daily connected transactions, which must also be disclosed in Shanghai Stock Exchange.
5、 Information on contractors
Our company
The company and its subsidiaries are one of the world's leading integrated circuit wafer foundry enterprises. It is also an integrated circuit manufacturing enterprise group with the most advanced technology, the most complete supporting facilities and the largest scale in China. It provides integrated circuit foundry and technical services for different technology nodes from 0.35 micron to 14 nm. Headquartered in Shanghai, China, the group has a global manufacturing and service base. Semiconductor Manufacturing International Corporation(688981) has a 200mm wafer factory and a 300mm advanced process joint venture wafer factory with actual control in Shanghai, China; There is a 300mm wafer factory and a holding 300mm wafer factory in Beijing; A 200mm wafer factory has been built in Tianjin; There is a holding 200mm wafer factory in Shenzhen. Semiconductor Manufacturing International Corporation(688981) group also set up marketing offices and customer service in the US, Europe, Japan and Taiwan, China, and has set up representative offices in Hongkong, China.
Datang Holdings
Datang Hong Kong is a wholly-owned subsidiary of Datang holdings, while Datang holdings is a wholly-owned subsidiary of Telecommunications Science and Technology Research Institute Co., Ltd. Telecommunications Science and Technology Research Institute Co., Ltd. is a wholly-owned subsidiary of China information and Communication Technology Group Co., Ltd. ("China Xinke group"). Headquartered in Wuhan, China, China Information Technology Group has formed industrial sectors such as optical communication, mobile communication, optoelectronics and integrated circuits, network security and special communication, intelligent application and data communication. As the birthplace of China's optical communications, China Xinke group has core intellectual property rights and one of the main proponents of international standards for mobile communications. It is an internationally renowned provider of information and communication products and comprehensive solutions. It has made positive contributions to innovating and creating information and communication technologies with China's independent intellectual property rights and promoting the development of information and communication industry, It has a high voice and influence in the world.
6、 Interpretation
In this announcement, unless the context otherwise requires, the following words have the following meanings:
"2019 framework agreement" refers to the framework agreement signed between the company and Datang holdings on January 23, 2019, as stated in the announcement of the company on January 23, 2019
"2022 framework agreement" refers to the framework agreement signed between the company and Datang holdings on February 10, 2022
"Contact person" has the meaning given to it in the Hong Kong listing rules
"Board of directors" means the board of directors of the company
"The company" or " Semiconductor Manufacturing International Corporation(688981) " means Semiconductor Manufacturing International Corporation ( Semiconductor Manufacturing International Corporation(688981) integrated circuit manufacturing Co., Ltd *), a limited company incorporated in the Cayman Islands, Its shares are listed on the main board of the Hong Kong Stock Exchange and the science and Innovation Board of the Shanghai Stock Exchange
"Connected person" has the meaning given to it in the Hong Kong listing rules
"Continuing connected transactions" means the transactions specified in the 2022 framework agreement
"Datang Hong Kong" refers to Datang Holdings (Hong Kong) Investment Co., Ltd., a company incorporated in Hong Kong and a wholly-owned subsidiary of Datang holdings
"Datang Holdings" means Datang Telecom Technology Industry Holdings Limited (a company incorporated under the laws of China)
"Director" means a director of the company
"Expected ceiling" refers to the maximum annual income expected by the company from continuing connected transactions for the years ended December 31, 2022, 2023 and 2024
"Hong Kong" means the Hong Kong Special Administrative Region of China
"Hong Kong Listing Rules" means the rules governing the listing of securities on the stock exchange of Hong Kong Limited. "Hong Kong Stock Exchange" means the stock exchange of Hong Kong Limited
"China" means the people's Republic of China
"Shareholder" means the holder of a share
"Shares" means all classes of shares in the share capital of the company
" Semiconductor Manufacturing International Corporation(688981) group" means the company and its subsidiaries
"Listing Rules of sci tech Innovation Board" refers to Shanghai
