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Global Semiconductor Forum 2012. China Market, Global Impact. TY Chiu Chief Executive Officer Semiconductor Manufacturing International Corp. March,9 th , 2012. SAFE HARBOUR STATEMENTS (Under the Private Securities Litigation Reform Act of 1995 ). - PowerPoint PPT Presentation
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SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials.
Global Semiconductor Forum 2012
March,9th, 2012
TY Chiu
Chief Executive OfficerSemiconductor Manufacturing International Corp.
China Market, Global Impact
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials.
SAFE HARBOUR STATEMENTS (Under the Private Securities Litigation Reform Act of 1995 )
This presentation file contains, in addition to historical information, “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on SMIC’s current assumptions, expectations and projections about future events. SMIC uses words like “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements involve significant risks, both known and unknown, uncertainties and other factors that may cause SMIC’s actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements, the current global financial crisis, orders or judgments from pending litigation and financial stability in end markets.
Investors should consider the information contained in SMIC’s filings with the U.S. Securities and Exchange Commission (SEC), including its Annual Report on Form 20-F filed with the SEC on June 28, 2011, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, and such other documents that SMIC may file with the SEC or SEHK from time to time, including on Form 6-K. Other unknown or unpredictable factors also could have material adverse effects on SMIC’s future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this presentation file may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this presentation file. Except as may be required by law, SMIC undertakes no obligation and does not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise.
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials. 3
China IC Market Growth China IC Market Opportunities China IC Ecosystem China IC Industry Transformation Summary
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials. 4
China IC Market Growth
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials. 5
Global GDP Forecast
▪ Global economic recovery is slow and expected to extend to 2013
▪ China, India and the rest of the Asia Pacific region remains strong in 2012
▪ China may face growth challenge (no more double-digit growth)
World US UK Germany European Union
China India Asia Pacific
South Korea
Japan
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
3.81.6
0.93.0
1.6
9.27.4
6.8
3.5
-0.6
3.31.2 0.6 0.3
-0.5
7.57.0 6.4
1.6 2.73.9
1.9 2.0 1.50.8
8.87.3 7.1
3.3 2.8
2006200720082009201020112012E2013F
Sources: International Monetary Fund (IMF), iSuppli, Gartner, Team Analysis, Q4’11 ~ 02’12
Global GDP ExpectationsY2006-Y2013F
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials.
IC Industry
Advanced Materials
High-end Equipment
Manufacturing
New Generation Information Technology
Energy Saving &
Environmental Protection
Biotech
Alternative-fuel cars
Alternative Energy
Government Support to Boost Economy
7 Strategic Emerging Industries Supported by the Chinese Government
Government programs support both domestic supply and demand:
Boost domestic demand China’s economic stimulus program covers: Home Applications, 3G Handsets, Digital
TV , Automotive Electronics and Solar Panels Strengthen local supply capability
7 national strategic industries are well defined Semi industry is the foundation of these strategic industries
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Unit: Billion USD
Source:iSuppli Corporation Global and China AMFT
China’s IC Industry: Continued Growth
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China is OPEN to Innovative Products
China market is seeking innovative electronics products Chinese are OPEN to innovative products for entertainment; no longer restricted to
household electronics such as refrigerators or TVs Worldwide electronic providers are penetrating the China Market with good products Local providers are starting to grow through low-cost solutions
This is a great opportunity for the global electronics companies
Example: iPhones are BIG in China‒ The iPhone is an indicator of innovative electronic devices ‒ China iPhone revenue grew from 2% in 2009 to 12% in 2010. ‒ “China could be a major driver of upside to iPhone estimates in
CY12 - with our estimate for WW unit sales of 138.8 million units still feeling conservative.” (Barclays Capital)
8
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China IC Market Opportunities--- Fabless & Foundry
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SMIC shall not be responsible for any party’s reliance on these materials.
Substantial Gap Between China IC Imports & Exports
Gap between IC imports and exports is large, and getting wider
Source: China Customs (Semi 2011 Q3)
China Imports – Goods ($B); ICs Dominate Overall Imports
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China IC Market, Global Business Opportunities
Domestic IC Market is open to the world Total IC consumption continue to grow unabated. China strong increasing import confirms an open and competitive
market.
Local IC companies find good positions to grow Domestic IC fabless companies are very energetic
Revenue CAGR from 2001 to 2010 = 48% Focus Areas:
Provide low-cost solutions for ShanZai (山寨 ) and worldwide market
Provide niche solutions for domestic-specific applications
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• China IC consumption accounts for 1/3 of worldwide sales revenue • IC purchases by local brands > $40B USD in 2011
China IC Industry Landscape
$B(USD)Market Shares of Local Brand & Local Design
Source: iSuppli & CBU internal research
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China Fabless Revenue: Rapid Growth
Mainland Chinese fabless industry demonstrates strong growth:• High demands for electronics in China • Favorable government policy• Government standards for electronics
Sources: Gartner, iSuppli, CCID, Bernstein Research, and Team Analysis Q4’11 ~ 02’12
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Chinese Fabless Continuing the Momentum
Continuing the Momentum: Chinese fabless revenue growth will likely stabilize at ~15% By 2015, Chinese fabless companies are expected to contribute >3%
of total semiconductor industry revenue
Sources: Gartner, iSuppli, CCID, Bernstein Research, and Team Analysis Q4’11 ~ 02’12
Chinese Fabless Revenue Forecast Contribution to WW Semi Market
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Key Factors to Win China IC Market
• Capitalizing on domestic business opportunities– Provide solutions that meet domestic market requirements– Provide solutions that target domestic specifications – Add specific features to meet domestic culture
• Offer cost-effective IC solutions to the world– China is already the factory of the world– Combine with domestic electronics factories to provide low-cost solutions
• Innovation and productization – Early insight into global trends and innovative products– Quick response, offering solutions to world and domestic markets
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials. Event or Business Segment
TD Baseband --- China Standard TD-SCDMA/TD-LTE
Spreadtrum released the industry‘s first TD-SCDMA dual-card mobile chip (SC8800G Oct, 2011), which is the world’s first 40nm low-power commercial TD-HSPA/TD-SCDMA dual-mode communications chip that can be run on TD-HSPA, TD-SCDMA, GSM/GPRS/EDGE mode, and supports 2.8Mbps TD-HSDPA and 2.2Mbps TD-HSUPA.
SC8800G can be used for cost-competitive TD feature phone and TD smart phone applications. Its TD-SCDMA baseband platform, SC8803G, is used in the Samsung GALAXY Note.
Source: Leadcore company web site and 集微网
Source: Spreadtrum company website
CYIT’s TD-SCDMA chip uses SMIC’s 65nm process with independent IPs. It can be used in a variety of applications such as low-end smart phones, LTE multi-mode data card, and TD single-mode data cards that can be used in the Interenet of Things.
Source: CYIT company website
Leadcore TD baseband dual-mode solution, DTivy®1760, successfully passed the technical test. Its TD-LTE and TD-SCDMA function can switch automatically. This brings TD-LTE solution closer to commercial market.
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials. Event or Business Segment
Social Security Cards --- China-Specific Market
To offer better government service to its people, China starts to install banking features in to Social Security cards. This is a new China-specific business opportunity.
Datang • The leading IC design and solution provider; provides self-developed SSCs with embedded
banking features
Fudan Microelectronics• The provider of SSCs with banking features for Tianjin City, based on SMIC’s 0.18um EEPROM
process. The card supports the contactless bank card feature which qualifies for QPBOC’s e-cash standard
CEC HED “ 华大芯” • The provider of China Residents Insurances Cards, with contactless CPU IC that can be used
nation-wide
Source: Datang company website
Source: Fudan company website
Source: Huada company website
SMIC ConfidentialAll copyrights and IP belong to SMIC. For reference only and may not be copied or distributed without written permission from SMIC.
SMIC shall not be responsible for any party’s reliance on these materials. Event or Business Segment
Baseband --- From Domestic to Worldwide Markets
May 20, 2011, Spreadtrum Communications, China's leading 2G/3G wireless communication chip supplier, released two new low-cost multimedia mobile phone chips (SC6610 & SC6620). The highly integrated chips provide an economical cost structure for GSM/GPRS multimedia mobile phones to meet the lower end of the growing emerging domestic and overseas market demand for handsets.
This provides customers with a variety of choices including dual-card, tri-card and quad-card options available on a single baseband RF chip.
Source: SMIC Internal Study
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PAD --- Low-Cost Innovative Solutions for the World
Ingenic’s Novo 7, based on MIPS and Android 4.0, was selected as one of “The Best Products of CES 2012” in Las Vegas on January 13 2012
Source: Rockchip company website
Allwinner Tech’s xPAD dominates the Chinese consumer electronics market. xPAD uses a highly integrated ultra-high-definition 55nm SoC chip. With its low-cost high-definition performance, xPAD won “The Most Promising” Award in the 6th China IC Industry Promotion Conference held by CSIP.
Rockchip’s Multimedia pad
Rockchip’s RK29XX series is based on SMIC’s 55nm process and uses an ARM Cortex-A8 processor running at up to 1.2GHz. It is also the first in the industry to support the VP8 video codec (open-sourced by Google’s WebM platform).
Source: Allwinner company website
Source: Ingenic company website
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■ RDA Microelectronics – a leading radio-frequency and mixed-signal fabless design company which takes the leading market share position in Bluetooth (37% ), End Module/Power Amplifiers (34%) and also #1 in FM and DVB-S Tuner products. (iSuppli, 2011 Q3)
Source: 2011 Q1 RDA website
High-performance low-power RF IC chip, Wifi chip, and Bluetooth chip
INNOPOWER IP
SMIC 55nm LL Technology
RDA Wins Battles in Bluetooth, P/A, FM, & DVB-S Tuner
"We are quite satisfied that SMIC is fully capable of tackling our leading-edge design challenges. As the dominant provider in the RF/Mixed-Signal market, close collaboration of our innovative design with Innopower and SMIC accelerates the development and allows us to provide the most advanced technology for FM radio receiver chip."
-- Vincent Tai, Chief Executive Officer of RDA
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HHNEC finds its niche position in providing specialsolutions for smartcards, power, discrete applications Maintained revenue growth while overall financial trend
worsened. It generated ~400M USD revenue, and ~70M net profit in 2011.
A good example for IC manufactures that capacity is not always the king.
Key records:– >5 billion accumulated smartcard shipments in the past 10
years– 1.05 billion SIM cards shipped in 2011; accounts for 23%
of wroldwide market share (4.6B), making HHNEC #2 worldwide
– >70% China market share in 2nd generation ID cards, Social Security cards, etc.
Niche IC Foundry Provider
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Domestic Advanced IC Foundry Provider
# 4 IC foundry in the world Offers the most advanced technology solutions in
China Combines technology and IP solutions to provide
numerous application platforms. Helps customers achieve quicker time-to-market
China revenue grew to 431m USD in 2011, a 33% increase over 2010
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• PMIC, PMU, Discrete PowerPower Management
• Flash Controller, USB, Bridge IC, TCON, Audio, Video
Wireline Communication
• Handphone CISImage & Display
• Touchpad controller, MCUMCU
• Banking Card, Smart CardSmart Card
• WiFi, Blue Tooth, FMConnectivity
• Base Band, Application Processor, TabletMobile Computing
• NOR FlashMemory• Set-top Box, TV chips, TV Game ASIC,
ProjectorDigital Home
SMIC Platform Services: Various Applications
23
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• Hynix successfully leveraged favorable government policy and capital market in China for a dramatic turn around– Hynix China started in 2006, in 2012 its capacity accounts for 39%
of Hynix’s worldwide capacity. – Hynix China helps the company survived in the DRAM war, and
secured the 2nd place in the global DRAM business
Big IC Player Found Its Strength in China
Sources: Gartner, 2011
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Other Top Tier Semi Companies in China
Ranking Top 10 IC Company Headquarter Fab in
China
1 Intel USA 12"
2 Samsung Korea 12"
3 TI USA 8"
4 Toshiba Japan N/A
5 Renesas Japan N/A
6 Qualcom USA Fabless
7 ST Italy, France N/A
8 Hynix Korea 12"
9 Micron USA N/A
10 Broadcom USA Fabless
• More top tier IC companies start to leverage China strength– 4 out of top 10 IC companies have Fabs (or plan to) in China
• Intel, Hynix, & TI are in production• Samsung is in preparation
2011 Top 10 IC Companies
Sources: iSuppli, Gartner, TRI, Databeans, SMIC, UMC, TSMC, Wiki, IC Insights, Team Analysis, Q4’11 ~ 02’12
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China IC Ecosystem --- More Opportunities
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Top Players in China Ecosystem
ICECOSYSTEM
MaterialHardware
Mask Manufacturing
Foundry
CP Testing
BumpingPackaging / Assembly & Testing
Design Service
EDA Tool
IP Provider
Fabless Fab-lite
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• Shanghai semiconductor sales revenue grows 17% in 2011– Fabless and Hardware/Material show strongest growth momentum
Semi Industry Growth Benefits The Whole Ecosystem
Source : CISA
2011 Revenue$B (USD)
2010 Revenue$B (USD) Growth
Fabless 2.29 1.74 31.20%
IC Foundry 1.97 2.05 -4.20%
Assembly 4.41 3.85 14.70%
Hardware & Material 1.01 0.64 59.60%
Total 9.68 8.28 17.00%
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Material Provider --- KonFoong Materials
KonFoong Materials - leading providers of ultra high purity sputtering targets founded in 2005.
Products are adopted by international brands such as SMIC, TSMC, IBM, Toshiba, Hynnix, and NXP. Sales growth rate >100% each year
Source: 2012 Q1 KFMI Promotion Material
KongFoon’s clients
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Anji Microelectronics – a leading supplier of advanced materials (CMP slurries, cutting slurries and associated chemical solutions for solar industry, resistance stripping and cleaning solutions, etc.)
Anji’s Advantages• Domestic manufacturing and warehousing• Local infrastructure supply chain
Chemical Provider --- Anji Microelectronics
Anji’s clients
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China IC Industry Transformation--- Offering Job Opportunities to the World
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ShanZai (山寨 ) Turning Into Brands
K-Touch Communications – Founded in 2002, K-Touch started with mock-up phones based on
Windows Mobile In 2006, partnered with MediaTek to become top 3 manufacturer in domestic
handset market, the only local China brand in the top 3 Acquired by Alibaba (2012 Feb) Products sold in 22 countries/regions, including Russia, Malaysia, and India Winning Strategy:
‒ Offers a unique “Create in China” mobile solution - leveraging mature supply chain system in China
‒ A wide range of product lines, from low-end to top of the line, with corresponding prices to meet different customers’ needs
‒ Provides very thorough post-sale service‒ Strong R&D Team of 700+, partnering with Microsoft, Broadcom and
Qualcomm.
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A ShanZai (山寨 ) Turned Into a BIG Brand!
G’FIVE Mobile Technology• Listed as top 10 global handphone manufacturer in 2 years• Led Indian handphone market with 21% share in 2010; beating Nokia.
More successful stories in India:• India's mobile handset market witnessed 14.1 % growth in 2011• Local and Chinese handset makers such as Micromax, G'Five, Karbonn, Spice,
Maxx and Lava have a strong presence in the market and have stayed ahead of many big players with their "feature-rich,” “localized” products, at much lower price points
(Source: CyberMedia Research, 2011)
(Source: ABI Research, Feb, 2012)
RANKING HANDSET VENDOR
% MARKET SHARE
1 G’FIVE 21%
2 NOKIA 13%
2010 India Mobile Handset Vendors Ranking
(Source: ABI Research, Feb, 2011)
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Summary
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• China IC business opportunities are open to the world
– China’s IC industry growth is solid and driven by strong domestic demand and global market
– China fabless & foundry players target specific positions to win market share
– A healthy IC ecosystem has evolved across the board
– Global enterprises can also leverage favorable policy and environment for rapid growth
– Transformation of “ShanZhai (山寨 )” to emerging brand, providing value products worldwide, going global and creating job opportunities around the world
China Market, Global Impact
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Thank You