Company Code: 688981 Company Abbreviation: SMIC

SMIC International Integrated Circuit Manufacturing Co., Ltd.

Summary of the 2022 Annual Report

Section 1 Important Tips

The summary of the 1.'s annual report is derived from the full text of the annual report and provides a comprehensive understanding of the Company's results of operations, financial position and future development plans.

investors should go to the http://www.sse.com.cn website to read the full annual report carefully.

2. Significant Risk Alert

In this report, the Company has elaborated on the various risks and countermeasures that the Company may face in the course of production and operation, please refer to "4. Risk Factors" in "Section IV Management's Discussion and Analysis" of this report ".

3. The Board of Directors, Directors and senior management of the Company warrant the truthfulness, accuracy and completeness of the contents of the Annual Report and that there is no

false records, misleading statements or material omissions, and assumes individual and joint legal responsibility.

All directors of the 4. company attend the board meeting.

5. Ernst & Young Hua Ming Certified Public Accountants (Special General Partnership) has issued a standard unqualified audit report for the Company.

6. companies were not profitable at the time of listing and have not yet achieved profitability.

□ Yes √ No

The profit distribution plan or the plan to increase the share capital of the provident fund for the reporting period adopted by the resolution of the board of directors of the 7..

The company does not intend to make profit distribution in 2022, and the proposal has yet to be submitted to the 2023 annual general meeting for consideration.

8. whether there are important matters such as special arrangements for corporate governance.

√ Applicable □ Not applicable

Special arrangements for corporate governance:

√ The Company is a red-chip enterprise.

Section 2 Basic Information of the Company

1. Company Profile

Company Stock Profile

√ Applicable □ Not applicable

Company Stock Profile

Stock Type Stock Listing Exchange and Sector Stock Abbreviations Stock Abbreviations Before Change of Stock Code

A- share SSE CRE Board SMIC 688981 Not applicable

Hong Kong Stocks Hong Kong Stock Exchange Main Board SMIC 00981 Not Applicable

Corporate Depository Receipt Profile

□ Applicable √ Not applicable

Contacts and Contact Information

Secretary of the Board of Directors (Information Disclosure Domestic Representative) Securities Affairs Representative

Name: Guo Guangli, Wen Jiehan

Office Address No.18 Zhangjiang Road, Pudong New Area, Shanghai, China No.18 Zhangjiang Road, Pudong New Area, Shanghai, China

Telephone 021-20812 800 021-20812800

E-mail ir@smics.com ir@smics.com

Brief introduction of the company's main business during the 2. reporting period.

Main business, main products or services of the (I)

The company is one of the world's leading integrated circuit wafer foundry companies and a leader in the integrated circuit manufacturing industry in mainland China.

Leading process manufacturing capabilities, capacity advantages, service support, to provide global customers with 0.35 microns to FinFET different technology nodes.

Wafer foundry and technical services.

In addition to integrated circuit wafer foundry, the company is also committed to creating a platform-based ecological service model, providing customers with one-stop supporting services such as design services, IP support, and photomask manufacturing, and promoting upstream and downstream collaboration in the integrated circuit industry chain. Together with partners in all links in the industry chain, we provide customers with a full range of integrated circuit solutions.

(II) main business model

1. Profit model

The company is mainly engaged in integrated circuit wafer foundry business based on a variety of technology nodes and technology platforms, and provides design services and IP.

Support, photomask manufacturing and other ancillary services.

2. R & D model

The company has a complete and efficient innovation mechanism, a sound R & D process management system and a professional R & D team to promote the R & D of the application platform, further consolidate the technical foundation and build technical barriers. The company's R & D process mainly includes seven stages, namely project selection, feasibility assessment, project initiation, technology development, technology verification, product verification and product commissioning, each stage has a strict approval process to ensure the successful transformation of R & D projects.

3. Procurement mode

The company mainly purchases materials, spare parts, equipment and technical services required for integrated circuit wafer foundry and supporting services from suppliers. In order to improve production efficiency and strengthen cost control, the company has established a procurement management system. The company has a mature supplier management system and a relatively complete supply chain security system. It has established a supplier access mechanism, a supplier assessment and evaluation mechanism, and a supplier capacity development and improvement mechanism. While maintaining long-term cooperative relations with major suppliers At the same time, it takes into account the introduction and training of new suppliers to strengthen the stability and security of the supply chain.

4. Production mode

The company plans production capacity according to market demand and puts it into production as planned, as follows:

(1) Small batch trial production: customers in accordance with the company's design rules for product design. After the design is completed, the company according to the customer's production.

The product requires small batch trial production.

(2) Risk mass production: small batch of post-production samples after packaging testing, functional verification and other links, if in line with market requirements, then enter the wind.

risk production stage. The risk mass production phase mainly includes product yield improvement, production process capacity improvement, and production capacity expansion. (3) Mass production: After the risk mass production phase is completed and the above delivery indicators are up to standard, the mass production phase is entered. in mass production

In the phase, the sales department confirms the purchase order quantity with the customer, and the production planning department arranges production and tracks production according to the customer's order demand.

Production progress and provide production progress reports to customers.

5. Marketing and sales model

The company adopts a variety of marketing methods and actively expands customers through various channels. After establishing a cooperative relationship with customers, the company communicates directly with customers and forms solutions that meet their needs.

Through market research, the company actively contacts and visits target customers, introduces processes and services that match customers, and then launches a series of customer development activities. The company establishes cooperative relations with customers through cooperation with design service companies, IP suppliers, EDA manufacturers, packaging and testing manufacturers, industry associations and various integrated circuit industry promotion centers. The company conducts promotional activities and acquires customers by hosting technical seminars and other activities or participating in various professional exhibitions, summits and forums in the semiconductor industry. Some customers contact the company for direct cooperation through public channels such as the company's website and word-of-mouth communication. The company's sales team signs orders with customers and provides integrated circuit wafer foundry and related supporting services according to the order requirements, and the manufactured products will eventually be shipped to customers or their designated downstream packaging and testing manufacturers.

The company has formed the current wafer foundry model based on factors such as market supply and demand, upstream and downstream development, the company's main business, main products, core technology, and its own development stage. During the reporting period, there were no significant changes in the key factors of the above business model. Industry situation of (III)

1. The development stage, basic characteristics and main technical threshold of the industry

In 2022, the global integrated circuit industry will enter a phase of slowing growth. Local escalation of conflict, energy crisis, high inflation, etc.

Multiple events have had a negative impact on the macro economy, with weaker demand for smartphone and PC shipments and increased inventories. Previously scarce semiconductor production capacity has been loosened. At the same time, the trend of coordinated development of the global industrial chain is further hindered, and the importance of the integrated circuit industry in the development of localization continues to be highlighted. Overall, with the continuous growth of the total global wafer foundry capacity, local industrial chain coordination, operating cost control, technology competitiveness and R & D resource allocation will become the focus of the future development of the global wafer foundry industry.

From the perspective of mainland China, benefiting from the promotion of the industrialization of digital technologies such as smart IoT and green energy by local technological innovation initiatives, the product categories of the integrated circuit design industry have continued to expand, becoming a driving force for the further development of the scale and process technology of the foundry industry. Important driving force. At the same time, the scale of the local integrated circuit industry is still unable to meet the actual needs of the market, and there is still a gap in the industry's process technology capabilities compared to the world's leading companies.

The company is in the integrated circuit wafer foundry industry. The research and development process of wafer foundry involves many disciplines such as materials science, chemistry, semiconductor physics, optics, microelectronics, quantum mechanics, etc., based on a professional technical team and strong research and development capabilities to integrate the process. The operation process of wafer foundry has very strict management and implementation specifications for the production environment, energy, raw materials, equipment and quality system. Overall, wafer foundry is a highly technology-intensive, talent-intensive and capital-intensive industry.

2. Analysis of the company's position in the industry and its changes

SMIC is one of the world's leading integrated circuit wafer foundry companies and a leader in the integrated circuit manufacturing industry in mainland China. It has leading process manufacturing capabilities, production capacity advantages, and supporting services. According to the latest 2022 sales ranking of pure wafer foundry companies around the world, SMIC ranks fourth in the world and first among Chinese mainland companies.

3. Development and future development trends of new technologies, new industries, new formats and new models during the reporting period

The production process of integrated circuit wafer foundry companies is carried out under highly sophisticated equipment to ensure that integrated circuit devices achieve the required performance and yield of the product. In recent years, the head advantage of the foundry industry has become more apparent, with high capital investment and high technical barriers to increase market share. Wafer foundry companies use platform diversity, differentiation and technology leadership as their core strengths to attract customers. As the technology development trend of the industry becomes more diversified, while companies are pursuing smaller transistor structures vertically, they continue to use the production line cost and performance advantages of the developed process nodes to carry out horizontal derivative platform construction to meet the huge terminal market The application needs of different customers in each market segment.

At the same time, integrated circuits continue to develop in the technical fields of packaging, design services and photomasks: various new packaging technologies provide more systematic solutions for breaking through the limit of transistor line width and improving the integration degree of multi-chip integration; In the field of design services, DTCO(Design Technology Co-Optimization, Design Process Collaborative Optimization) evaluates and adjusts specific design and process matching, effectively reduce the cost and risk of semiconductor process development, photomask as a core key tool in the integrated circuit manufacturing industry chain, with the evolution of mask process and dielectric materials, further improve the process performance of design graphics lithography.

In recent years, with the changes in the global macro-industrial situation, the capacity scale effect of wafer foundries and the synergy of the local industrial chain have become one of the important factors for customers to measure the stability and integrity of the supply chain. Therefore, while focusing on their own process technology and platform construction, wafer foundry enterprises also pay more attention to the ecological layout of the industry.

Combining the above factors, foundry companies must have sustainable talent and capital investment, and continue to strengthen technical barriers by strengthening R & D and expanding scale, and enhance the competitive advantage and industry adaptation capabilities in the industry, thereby maintaining, consolidating and enhancing the market position.

Key accounting data and financial indicators of 3. companies

Major accounting data and financial indicators of the (I) in the last 3 years

Unit: thousand yuan Currency: RMB

2022 2021 Year over year 2020

Increase/decrease (%)

Total assets 305,103,691 229,932,806 32.7 204,601,654

Net assets attributable to shareholders of listed companies 133,371,921 109,198,772 22.1 99,128,037

Operating income 49,516,084 35,630,634 39.0 27,470,709

Net profit attributable to shareholders of listed companies 12,133,079 10,733,098 13.0 4,332,270

Deductions attributable to shareholders of listed companies for non -9,764,381 5,325,423 83.4 1,696,902

Net profit from regular profit and loss

Net cash flow from operating activities 36,591,209 20,844,994 75.5 13,174,290

Weighted average return on net assets (%) 0.3 6.5 decrease in 10.0 10.3

Percent

Basic earnings per share (RMB/share) 1.53 1.36 12.5 0.67

Diluted earnings per share (RMB/share) 1.53 1.35 13.3 0.64

R & D investment as a percentage of operating income (%) 10.0 11.6 decreased by 1.6 17.0

Percent

Key accounting data by quarter for the (II) reporting period

Unit: thousand yuan Currency: RMB

First Quarter Second Quarter Third Quarter Fourth Quarter

(January-March) (April-June) (July-September) (October-December)

Operating income 11,854,010 12,738,235 13,171,314 11,752,525

Net profit attributable to shareholders of listed companies 2,843,451 3,408,319 3,137,737 2,743,572

Deductions attributable to shareholders of listed companies for non -2,598,443 2,572,991 2,799,375 1,793,572

Net profit after regular profit and loss

Net cash flows from operating activities 10,413,790 14,077,708 6,668,245 5,431,466

Description of discrepancies between quarterly data and disclosed periodic report data

□ Applicable √ Not applicable

4. shareholders

Total number of (I) common shareholders, total number of preferred shareholders with restored voting rights and total number of shareholders holding special voting shares

Unit: Unit

Total number of common shareholders as of the end of the reporting period (households)(1) 309,568

Total number of common shareholders (households) at the end of the previous month prior to the disclosure date of the annual report (2) 305,362

Total number of preferred shareholders with restored voting rights as at the end of the reporting period (households)-

Total number of preferred shareholders whose voting rights were restored at the end of the previous month prior to the disclosure date of the annual report (households)-

Total number of shareholders holding special voting shares as at the end of the reporting period (households)-

Total number of shareholders holding special voting shares at the end of the previous month prior to the disclosure date of the annual report (households)-

Note:

(1) As of the end of the reporting period, there were 309,568 registered shareholders: 297,284 A shares and 12,284 Hong Kong shares.

(2) As of February 28, 2023, the number of registered shareholders was 305,362: 293,130 A shares and 12,232 Hong Kong shares.

(II) of the top ten shareholders' holdings as of the end of the reporting period

1. As at the end of the reporting period, the Company had issued 5,955,261,976 shares in Hong Kong, representing approximately 75.3 per cent of the Company's total share capital.

The Exchange has issued 1,957,402,720 shares, representing approximately 24.7 per cent of the Company's total share capital.

2. The Hong Kong register of shareholders of the Company is LIMITED by the HKSCC NOMINEES (Hong Kong Securities Clearing (Nominees) Limited) and its

He is composed of registered shareholders, of which HKSCC NOMINEES LIMITED holds approximately the Company's Hong Kong shares on behalf of non-registered shareholders.

Other registered shareholders hold approximately 0.2 per cent of the Company's Hong Kong shares.

3. Under the Hong Kong Securities and Futures Ordinance, shareholders holding an interest of 5% or more of any class of voting shares of the Company are required to enter.

The Company excludes the number of shares held by HKSCC NOMINEES LIMITED separately based on the information disclosed in the declaration.

1,116,852,595 Hong Kong shares held by Datang Hong Kong and 617,214,804 Hong Kong shares held by Xinxin Hong Kong.

4. The nature of A- share shareholders shall be reported in accordance with the categories of holders in the register of A- share shareholders of China Settlement.

Unit: Unit

Shareholdings of the top ten shareholders

Include pledge, mark

Transfer or freezing of holdings

Limited loan

Name of shareholder Increase or decrease in the number of shares held at the end of the reporting period

(Full Name) (%) Share Nature of Shares

Number of copies Limited status Quantity

Amount of shares

Quantity

HKSCC NOMINEES -275,986,434 4,209,031,144 53.19-Unknown-Unknown

LIMITED

Datang Holdings (Hong Kong) 264,330,000 1,116,852,595 14.11-None-Overseas

Investment Co., Ltd. Legal Person

("Datang Hong Kong")

Xinxin (Hong Kong) Investment -617,214,804 7.80-None-Overseas

Capital Limited ("Xin Legal Person"

Core Hong Kong ")

National Integrated Circuit Production -127,458,120 1.61-None-Other.

Industry Investment Fund Phase II

Company limited by shares

("National Integrated Power

Road Fund II ")

China Merchants Bank shares have 75,263,148 107,589,687 1.36-None-Other

Limited Company-Huaxia

SSC Board 50 Ingredients

Transactional Open Refers

Number of securities investment funds

China ICT Section -72,470,855 0.92-None-State-owned

Technology Group Co., Ltd. Legal Person

China Construction Bank shares unknown 39,669,162 0.50-none-other.

Ltd.-Hua

Xia Guozheng Semiconductor Core

Open-ended trading

Index securities investment base

Gold

Guoxin Investment Co., Ltd. -382,120 36,034,485 0.46-None-State Owned

judicial person

Industrial and Commercial Bank of China shares 16,385,958 34,745,131 0.44-none-other.

Ltd.-Easy.

Fonda SSE Board

50 component transactional open

put index securities investment

Funding

China Merchants Bank shares have 6,700,000 33,700,000 0.43-none-other.

Limited Company-Galaxy Chuang

New Growth Hybrid Certificate

securities investment fund

Description of the above-mentioned shareholders' affiliation or concerted action 1. Datang Hong Kong is a wholly-owned subsidiary of China Xinke.

2. Xinxin Hong Kong for the national integrated circuit industry investment fund shares have.

Ltd. (the "National Integrated Circuit Fund").

3. Directors of the National Integrated Circuit Fund, Fou Luguang, Yang Lumin and Tang Xue.

Feng, Yan Jianqiu, Wang Wenli also served as the National Integrated Circuit Fund II.

period of directors, supervisors Lin Guifeng, Song Ying also served as the National Integrated Power.

Supervisor of Road Fund Phase II; Director Fan Bing also serves as the National Integrated Power Company.

Supervisor of the second phase of the Road Fund.

4. Huaxin Investment Management Co., Ltd. as the fund manager root.

According to their respective entrustment management agreements, the National Integrated Circuit Fund, the National Integrated Circuit Fund, and the National Integrated Circuit Fund, respectively,

The second phase of the National Integrated Circuit Fund is managed.

5. The National Integrated Circuit Fund and the National Integrated Circuit Fund Phase II have

Some of the same shareholders.

In addition, the company does not know whether the other shareholders mentioned above are related.

relationship or a concerted action relationship.

Description of preferred shareholders with restored voting rights and number of shares held None

Holders of depositary receipts

□ Applicable √ Not applicable

Table of the top ten shareholders in the number of voting rights as of the end of the reporting period

□ Applicable √ Not applicable

Block diagram of the property rights and control relationship between the (III) company and the controlling shareholder.

□ Applicable √ Not applicable

Block diagram of the property rights and control relationship between the (IV) company and the actual controller.

□ Applicable √ Not applicable

Total number of preferred shareholders and top 10 shareholders of the Company at the end of the (V) reporting period

□ Applicable □ Not applicable

5. corporate bonds

√ Applicable □ Not applicable

(I) of all bonds of the company surviving on the date of approval of the annual report.

Unit: Yuan Currency: RMB

Bond Name Short Code Maturity Bond Balance Interest Rate (%)

SMIC Integrated Power

Road Manufacturing Co., Ltd. 19 SMIC MTN001 101900258 Mar 4, 2022-3.57

The first phase of 2019

medium-term notes

Interest payments on bonds during the reporting period

□ Applicable √ Not applicable

Adjustments to the credit rating results of companies or bonds made by credit rating agencies during the reporting period

□ Applicable √ Not applicable

(II) the company's main accounting data and financial indicators in the past 2 years.

√ Applicable □ Not applicable

Unit: thousand yuan Currency: RMB

Main indicators 2022 2021 the current period over the same period of the previous year increase or decrease (%)

Gearing ratio (%) 4.3 percentage points increase 33.9 29.6

Net profit after non-recurring gains and losses 9,764,381 5,325,423 83.4

EBITDA All Debt Ratio (%) Decrease by 5.4 percentage points 51.1 56.5

Interest guarantee multiple 18.4 17.3 5.9.

Section III Important Matters

The 1. company shall, in accordance with the principle of materiality, disclose significant changes in the company's operations during the reporting period, as well as any changes in the company's operations that occurred during the reporting period.

Matters that have a significant impact on the company's operations and are expected to have a significant impact in the future.

During the reporting period, the Group realized operating income of RMB 49,516.1 million, an increase of 39.0 over the same period of the previous year; realized net profit

Run 14,653.5 million yuan, an increase of 30.8 over the same period last year. During the reporting period, the Group's cash from operating activities was RMB 36,591.2 million, an increase of 75.5 over the same period of the previous year; cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets was RMB 42,205.6 million, an increase of 48.8 over the same period of the previous year.%.

If there is a delisting risk warning or termination of listing after the disclosure of the annual report of a 2. company, it shall disclose the circumstances that lead to the delisting risk warning or termination of listing.

reasons for the listing situation.

□ Applicable √ Not applicable