TCL科技:2021年半年度报告摘要（英文版）

Stock Code: 000100 Stock Name: TCL Tech. Announcement No. 2021-092
TCL 科技集团股份有限公司
TCL Technology Group Corporation
INTERIM REPORT 2021(SUMMARY)
10 August 2021
Part I Important Notes
This Summary is based on the full text of the 2021 Interim Report of TCL Technology Group Corporation (together
with its consolidated subsidiaries the “Group” or “Company” except where the context otherwise requires). In order
for a full understanding of the Company’s operating results financial position and future development plans
investors should carefully read the aforesaid full text on the media designated by the China Securities Regulatory
Commission (the “CSRC”).Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved interim cash and/or stock dividend plan for ordinary shareholders:
□ Applicable √ Not applicable
The Company has no interim dividend plan either in the form of cash or stock.Board-approved interim cash and/or stock dividend plan for preference shareholders:
□ Applicable √ Not applicable
This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions the Chinese versions shall prevail.Part II Key Corporate Information
1. Corporate Information
Stock name TCL Tech. Stock code 000100
Place of listing Shenzhen Stock Exchange
Contact Information Board Secretary
Name Liao Qian
10/F Tower G1 International E Town TCL Science Park 1001 Nanshan District Shenzhen
Office address
Guangdong Province China
Tel. 0755-3331 1666
Email address ir@tcl.com
2. Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.□ Yes ■ No
Item H1 2021 H1 2020 Change (%)
Revenue (RMB) 74298646758 29333210856 153.29%
Net profit attributable to the company’s
6783884807 1208065986 461.55%
shareholders (RMB)
Net profit attributable to the company’s
shareholders before non-recurring gains and
5497817947 181862847 2923.06%
losses (RMB)
Net cash generated from/used in operating
13895714157 7347810779 89.11%
activities (RMB)
Basic earnings per share (RMB/share) 0.5026 0.0932 439.27 %
Diluted earnings per share (RMB/share) 0.4835 0.0893 441.43%
Up by 14.85 percentage
Weighted average return on equity (%) 18.96% 4.11 %
points
30 June 2021 31 December 2020 Change (%)
Total assets (RMB) 302205481260 257908278887 17.18%
Owners’ equity attributable to the company’s
37557664687 34107795454 10.11%
shareholders (RMB)
3. Shareholders and Their Shareholdings at the End of the Reporting Period
Unit: share
Number of preference
Number of ordinary
shareholders with resumed -
shareholders at the 788420
voting rights at the period-
period-end
end (if any)
5% or greater ordinary shareholders or top 10 ordinary shareholders
Total ordinary Restricted Shares in pledge marked or frozen
Name of Nature of Shareholding
shares held at the ordinary shares
shareholder shareholder percentage (%) Status Shares
period-end held
Put in
pledge by Li 72000000
Li Dongsheng Domestic natural Dongsheng
and his acting-in- person/general 8.26% 1158599393 610181602 Put in
concert party legal person pledge by344899521
Jiutian
Liancheng
Huizhou
State-owned legal
Investment 5.30% 743139840 0
person
Holding Co. Ltd.Wuhan Optics
Valley Industrial State-owned legal
3.65% 511508951 511508951 In pledge 255754475
Investment Co. person
Ltd.Hong Kong
Securities Foreign legal
3.26% 457823997 0
Clearing person
Company Ltd.China Securities
Finance Domestic general
2.66% 373231553 0
Corporation legal person
Limited
Tibet Tianfeng
Enterprise Domestic general
1.75% 245969062 0
Management Co. legal person
Ltd.Sinatay Life
Insurance Co. Fund wealth
Ltd.－ management 0.58% 81958072 0
Conventional product etc.Product
ICBC Credit
Suisse Asset
Management－
Agricultural
Bank of China- Fund wealth
ICBC Credit management 0.53% 74761500 0
Suisse China product etc.Securities
Financial Asset
Management
Plan
Southern Asset
Management－
Agricultural
Bank of China－ Fund wealth
Southern China management 0.53% 74761500 0
Securities product etc.Financial Asset
Management
Plan
Zhong Ou Asset
Management-
Agricultural
Bank of China- Fund wealth
Zhong Ou China management 0.53% 74761500 0
Securities product etc.Financial Asset
Management
Plan
Being acting-in-concert parties upon the signing of the Agreement on Acting in Concert Mr. Li
Related or acting-in-concert parties Dongsheng and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership)
among the shareholders above (hereinafter referred to as “Jiutian Liancheng”) are the biggest shareholder of the Company with a
total of 1158.5994 million shares.Top 10 ordinary shareholders Shareholder Tibet Tianfeng Enterprise Management Co. Ltd. held 163223537 shares in the
involved in securities margin Company in its general securities account and 82745525 shares in its securities margin account
trading (if any) totaling 245969062 shares.4. Change of the Controlling Shareholder or the Actual Controller
Change of the Controlling Shareholder
□ Applicable √ Not applicable
No change of the controlling shareholder during the Reporting Period.Change of the Actual Shareholder
□ Applicable √ Not applicable
No change of the actual shareholder during the Reporting Period.5. Number of Preference Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
No preference shareholders in the Reporting Period.6. Corporate Bonds
√Applicable □ Not applicable
(1) General Information of Corporate Bonds
Outstanding
Coupon rate
Bond name Abbr. Bond code Date of issuance Value date balance
(annualized)
(RMB’0000)
TCL Corporation’s
Corporate Bonds
Publicly Offered in
17TCL01 112518 18 April 2017 19 April 2017 100000 3.40%
2017 to Qualified
Investors (Tranche
1)
TCL Corporation’s
Corporate Bonds
Publicly Offered in
17TCL02 112542 6 July 2017 7 July 2017 15700 3.45%
2017 to Qualified
Investors (Tranche
2)
TCL Corporation’s
Corporate Bonds
Publicly Offered in
18TCL01 112717 5 June 2018 6 June 2018 17001.90 4.00%
2018 to Qualified
Investors (Tranche
1)
TCL Corporation’s
Corporate Bonds
Publicly Offered in
18TCL02 112747 17 August 2018 20 August 2018 200000 5.30%
2018 to Qualified
Investors (Tranche
2)
TCL Corporation’s
Corporate Bonds
Publicly Offered in
19TCL01 112905 17 May 2019 20 May 2019 100000 4.33%
2019 to Qualified
Investors (Tranche
1)
TCL Corporation’s
Corporate Bonds
Publicly Offered in
19TCL02 112938 19 July 2019 23 July 2019 100000 4.30%
2019 to Qualified
Investors (Tranche
2)
TCL Corporation’s
Corporate Bonds
Publicly Offered in
19TCL03 112983 17 October 2019 21 October 2019 200000 4.20%
2019 to Qualified
Investors (Tranche
3)
TCL Technology
Groupo
Corporation’s
Technology
Innovation Short-
21TCLK1 149434 25 March 2021 29 March 2021 50000 3.65%
Term Corporate
Bonds Publicly
Offered in 2021 to
Qualified Investors
(Tranche 1)
(2) Selected financial information of the Company in the past two years:
Unit: RMB
Item 30 June 2021 31 December 2020 Change
Current ratio 105.64% 92.50% 13.14%
Debt/asset ratio 65.17% 65.08% 0.09%
Quick ratio 78.66% 66.36% 12.30%
H1 2021 H1 2020 Change
Debt/EBITDA ratio 10.68% 5.12% 5.56%
Interest cover (times) 5.12 1.22 319.02%
Cash-to-interest cover (times) 7.23 5.81 24.48%
EBITDA-to-interest cover
8.55 3.93 117.66%
(times)
Debt repayment ratio (%) 100% 100% 0.00
Interest payment ratio (%) 100% 100% 0.00
Explanation of why any financial indicator in the table above registered a year-on-year change of over 30%: In the Reporting Period
benefiting from growth in the industry in addition to the Company’s fast production ramp-up and acquisition of Zhonghuan the Company
saw a year-on-year surge in size operating performance and profitability resulting in great changes in the financial indicators in the table
above.Part III Management Discussion and Analysis
Overview
The COVID-19 epidemic has yet to subside geopolitical relations have entered a new landscape and
international trade frictions pose multiple challenges to global economic development. However the
fact that international division of labor and comparative advantage determine the basis for the
allocation of production factors industrial chain and value chain distribution will remain unchanged.As a sound industrial layout and sound supply chain systems have already been established in China
the complex and volatile internal and external environment will further consolidate the strategic
direction of independent and controllable key and core technologies for scientific and technological
enterprises which will help accelerate the tackling of fundamental high-end and core technologies
fortification and will promote the upgrading of the industrial chain and manufacturing industry thus
ushering in new development opportunities for China's technology sector.Dedicated to national strategic sectors that are high-tech asset-heavy and long-cycle the Company
focused on the development of its core main businesses: semiconductor displays and semiconductor
photovoltaics and semiconductor materials. With the accelerated trend of country-by-country shifts
and concentration of leadership in the semiconductor display industry driven by operation and
management efficiency generations of production lines and scale effect the competitive advantages
of Chinese enterprises have been brought to the fore and the Company's semiconductor display
businesses have initiated a phase of overall leadership that spans from efficiency and products to
technologies and ecology. Meanwhile the Company empowered and supported by continuous reform
and innovation extreme management efficiency and global operational capacity has made remarkable
achievements in the layout of the new industrial track for semiconductor photovoltaics and
semiconductor materials businesses and has successfully created a secondary growth curve once again.During the reporting period the Company achieved operating revenue of CNY 74.3 billion a year-on-
year increase of 153.3%; net profit of CNY 9.25 billion a year-on-year increase of 765%; net profit of
CNY 6.78 billion attributable to the shareholders of listed companies a year-on-year increase of
461.5%; comprehensively surpassing the budget. Wherein: (1) Benefiting from the upward prosperity
of the industry coupled with factors such as the fast-paced growth of its own capacity and the
improvement of product structure the Company achieved from the semiconductor display business
operating revenue of CNY 40.8 billion a year-on-year increase of 93.6% under the same conditions
and net profit of CNY 6.61 billion a year-on-year increase of CNY 6.75 billion; (2) Leveraging
advantages such as technological accumulation leading capacity improvement and supply chain
synergy through the reform of mechanisms and systems and the stimulation of organizational vitality
the Company saw significant year-on-year increases in both revenue and profit from its semiconductor
photovoltaics and semiconductor businesses. Zhonghuan Semiconductor achieved operating revenue
of CNY 17.64 billion a year-on-year increase of 104.1% and net profit of CNY 1.89 billion a year-
on-year increase of 160.6%.The Company focused on investment in the research and development of core techniques basic
technologies and new materials to enhance the technical strength of key links in value chains and
strategic control points. During the reporting period the Company invested CNY 5.09 billion in
research and development accounting for 7.0% of operating revenue a year-on-year increase of 76.9%.To date the number of PCT patent applications reached 13170 and the number of patent applications
in the field of quantum dot electroluminescence technology and materials has reached 1480 ranking
second in the world. In the field of semiconductor displays the Company focused on promoting the
development of new display technologies such as printed OLED/QLED Mini-LED and Micro-LED
achieving ecological leadership among next-generation display technologies; in the field of
semiconductor photovoltaics and semiconductor materials the Company has established advantages
in 210 mm large silicon wafers and shingled photovoltaic modules as well as the ecologies of related
technologies and is a leader in the technologies and production techniques of the 4-12-inch products
in China.Production capacity was further improved scale advantage was increased and structure of products
and customers were continuously optimized. CSOT Suzhou t10 (formerly Samsung Suzhou LCD
factory) and the supporting module factory (M10) were delivered and consolidated on April 1st ; the
Ultra High Definition (UHD) Display Project t7 ramped up as scheduled and the Company focused
on t9 investment and construction in the fields of high-end IT and commercial displays. The growth
rate of the business scale for semiconductor displays will remain the highest in the industry. The
Company has a total capacity of 70 GW for semiconductor photovoltaic materials including a capacity
of 39 GW for G12. The construction of the Ningxia Zhonghuan Phase VI Project began in March the
Diamond Wire Cut Ultra-thin Silicon Wafer Intelligent Factory Project implemented in Tianjin and
Inner Mongolia was put into operation smoothly the Jiangsu G12 High-efficiency Shingled
Photovoltaic Modules Project has achieved a production capacity of 6 GW the G12 High-efficiency
Shingled Photovoltaic Modules Project in Tianjin has entered the construction stage and the
manufacturing capacity of the semiconductor photovoltaics industrial chain has rapidly improved. The
Company will increase investment in Zhonghuan Advanced bases in Inner Mongolia Tianjin and
Jiangsu and promote the full coverage of all kinds of power semiconductor chips and integrated circuit
chips; in addition the Company has invested in the establishment of a semiconductor investment and
operation platform in order to strengthen the synergy of industrial chains and is looking for industrial
investment and layout opportunities in related fields such as semiconductor integrated circuits.The Company has maintained a global supply chain management system and operation capabilities.The Company possesses globally unified management competencies in areas such as supply chain
management intellectual property protection risk control and compliant operations. At present the
planned capacity of the CSOT factory in India is 8 million large-sized display modules and 30 million
small and medium-sized display modules which can meet the local supporting needs of strategic
customers; Moka Technology a subsidiary of the Company has established the capacity to supply
complete machines and modules in Mexico; Zhonghuan Semiconductor has set up module factories in
Europe and Mexico and deployed battery capacity in Malaysia the Philippines and Singapore.The Company accelerated digital transformation and continued to promote the upgrading of extreme
cost efficiency and agile manufacturing. The Company continued to devote itself to cultivating the
fields of intelligent manufacturing and Industry 4.0 building TCL CSOT into an example of an
intelligent factory and established the first industrial interconnection total solution in the industry; also
Zhonghuan Semiconductor’s Industry 4.0 intelligent factory continued to promote digital and
intelligent transformation and upgrading.This year marks the 40th anniversary of TCL's founding. Over the past 40 years TCL has loyally
dedicated itself to the manufacturing industry and met the challenges brought about by change
traveling upstream along the electronics industrial chain all the way from processing trade and terminal
production to display device manufacturing new energy and core material layouts. The Company
entered the semiconductor display industry in 2009 and gradually established TCL CSOT as a leader
in efficiency profits and scale effect; in 2020 the Company by delisting Zhonghuan Electronic and
shifting its layout to the semiconductor photovoltaics and semiconductor materials track clearly
defined its strategic direction moving towards being a leading global technology group by
coordinating its two core industries. With the accumulation of gradually deepening leading technology
advanced techniques and financial underpinnings the Company will also complete the transformation
from being a follower to becoming a leader thus guiding China's technology sector to global ecological
leadership based on a more solid foundation.Looking ahead there will be two innate characters remaining unchanged in the semiconductor display
industry which are the improvement of the supply-demand relationship and the concentration of
leadership. The cyclical weakening trend of the industry will be made clear and the relative
competitive advantage of TCL CSOT will be further strengthened; the global consensus on improving
the quality and efficiency of clean energy will drive the rapid growth of the semiconductor
photovoltaics industry; with the accelerated development of the semiconductor industry in China
historic opportunities and challenges coexist. The Company will build strategic control points in the
fields of semiconductor displays semiconductor photovoltaics and semiconductor materials adhere tothe business strategy of “Improving Business Quality and Efficiency Strengthening Advantages andMaking up for Disadvantages Accelerating Global Layout and Innovation-driven Development”
continuously improve competitiveness develop sustainably and healthily and become a global
industry leader.Operation of main businesses
The Company's main business structure consists of its semiconductor display business semiconductor
photovoltaics and semiconductor materials businesses industrial finance and investment platforms and
other businesses. The Company will continue to optimize its business structure and further concentrate
its resources on the development of its main businesses to achieve the strategic goal of being a global
leader in its two core industries: semiconductor displays and semiconductor photovoltaics and
semiconductor materials.TCL Tech
Semi-conductor Semi-conductor photovoltaic & Industrial finance &
Other
display Semi-conductor materials investment
Zhonghuan Zhonghuan TCL Financial TCL
TCL CSOT China Ray Highly TPC
Photovoltaic Advanced Capital
Moka TCL
Juhua
Technology Microchip
(I) Semiconductor display business
The supply-demand relationship of the semiconductor display industry has improved industry
concentration has increased product prices have continued to rise and the overall profitability of the
industry has continued to improve. As a leading enterprise in the semiconductor display industry TCL
CSOT has fully benefited from the upward prosperity of the industry while it continues to expand its
scale through organic growth and inorganic mergers and acquisitions maintaining a leading position
of both efficiency and benefits in the global industry. During the reporting period TCL CSOT achieved
a sales area of 17.792 million square meters a year-on-year increase of 25.3% and TCL CSOT
achieved from the semiconductor display business operating revenue of CNY 40.8 billion a year-on-
year increase of 93.6% under the same conditions and net profit of CNY 6.61 billion a year-on-year
increase of CNY 6.75 billion including net profit of CNY 4.21 billion in Q2 of 2021 an increase of
76% over Q1.The business scale advantages of large-sized products were expanded and the product structure
continued to be enriched. Factories t1 t2 and t6 maintained full sales and produced at full capacity
and factory t7 ramped up as scheduled factory t10 (formerly Samsung Suzhou LCD factory) began to
be consolidated in Q2. With regard to market share the Company ranked #2 globally in terms of TV
panels ranked #1 globally in terms of 55-inch products ranked #2 globally in terms of 65-inch and
75-inch products and ranked #3 globally in terms of 32-inch products and leaped to #1 globally in
terms of 8K and 120Hz high-end TV panels; the Company seized the rapid growth opportunities in the
commercial display market and is rapidly increasing its market share in the markets of interactive
whiteboards splicing screens and advertising machines among which it ranked #1 globally in terms
of its shipment volume for interactive whiteboards. During the reporting period the structure of large-
sized products was further optimized and the proportion of non-TV screen operating revenue increased
from 16% to 22%; also the customer portfolio was further optimized.Technical capacity in terms of small-sized products business was improved and the structure of
products and customers was optimized. Factory t3 continued to optimize the product portfolio of the
LTPS production line enhanced product competitiveness accelerated the development and import of
medium-sized products increased the proportion of shipment volume of medium-sized products for
notebooks vehicle-mounted devices and tablets to 23% and maintained its position within the top four
globally in terms of the shipment volume for LTPS mobile phone panels. The Phase I flexible
AMOLED production line of Factory t4 was scheduled to produce at full capacity and the move-in of
Phase II and Phase III equipment was completed. Through differentiated technical reserves such as
folding (screens) under-screen camera placement and LTPO product development and customer
cooperation were accelerated in the high-end market and the shipment volume more than doubled
year-on-year.Medium-sized products business grew rapidly in high-end market segments and production capacity
construction was accelerated. Through the production capacity adjustment of the existing production
lines the Company sped up the strategic layout of medium-sized products and laid the foundation for
core customer cooperation. Focusing on high-end e-sports products in the display market with the
second largest market share in the world the Company ranked #2 globally in terms of shipment volume
for LTPS notebook panels improved its ranking to #1 globally in terms of the shipment volume for
LTPS tablet PC panels and introduced a number of Chinese and foreign leading corporations as
customers into the field of vehicle-mounted products with a rapid increase in shipment volume. In
order to meet the needs of customers and resolve the production capacity bottleneck of IT products
the Company has invested in the G8.6 Oxide Semiconductor-based New Display Device Production
Line t9 Project which is expected to be put into operation in 2023.During the reporting period the financial performance of the semiconductor display business consists
of the following:
Shipment area Shipment volume Revenue Net profit
Project 10000 Year- 10000 CNY Year-Year-on- CNY 100 Year-on-year
square on-year pieces / 100 on-year
year (%) million (%)
meters (%) 10000 sets million (%)
Large-sized 131.9
1698.8 24.3% 2776.6 20.0% 282.0 71.7 1384.6%
products %
Medium-to- Loss reduced
small sized 80.4 51.1% 4898.7 25.4% 106.4 44.7% -3.5 by CNY 20
products million
Increased by
Moka
- - 229.3 -2.1% 35.6 38.1% 1.1 CNY 120
Technology (*)
million
Other and
- - - - (16.4) - (3.1) -
offsets
Increased by
Total - - - - 408 93.6% 66.1 CNY 6.75
billion
* Note: The shipment volume revenue and net profit of Moka Technology are Q2 2021 data and the year-on-year data are for reference
purposes only including Moka Technology Q2 2020 data.Looking ahead there are bright prospects for the long-term development of the semiconductor display
industry. The production capacity of mainland China's LCD display industry is highly concentrated
within the leading enterprises and the leading enterprises had significant advantages in terms of
management efficiency scale technology cost supply chain and so forth significantly increasing the
barriers to entry; the demand for traditional displays such as those for TVs IT and mobile phones
maintained steady growth while emerging displays such as commercial displays and vehicle-mounted
LCDs developed rapidly while the growth of demand for large-sized products slowed down in the
second half of the year but in the long run the supply and demand of the LCD industry will move
towards dynamic balance. TCL CSOT will maintain its continuous growth of revenue and consolidate
the advantages of highly efficient operation and operating benefits. TCL CSOT still faces great
challenges in the OLED industry. In the first half of the year the Company focused its energy on
breaking through the bottleneck of product technology meeting the delivery needs of strategic
customers and making breakthroughs in key technologies such as foldable screens; it is expected that
the sales volume will continue to grow in the second half of the year which will gradually improve
operating benefits.In the context of the gradual stabilization of the industry landscape the growth in capacity and
structural optimization of TCL CSOT will be the main driving force for its future performance growth
and the Company will accelerate its advancement from being a global leader in the large-sized display
field to becoming a leader across all sizes centered on "Optimizing Production Line Structure and
Product Structure Improving Customer Portfolio and Perfecting Industrial Ecology".The capacity and revenue of TCL CSOT will continue to grow at a high rate. The Company will have
grown from 3 high-generation lines (2 G8.5 lines and 1 G11 line) in 2020 to 4.5 lines by the end of
the year (t10 has been consolidated and t7 Phase I has finished ramping up) and by 2025 the Company
will have 6 high-generation lines (t7 and t9 will reach their designed capacity). The capacity of TCL
CSOT high-generation lines will exceed a compound annual growth rate (CAGR) of 18% in the next
five years. Meanwhile the full-capacity production of t4 flexible OLED production lines from Phase
I to Phase III will also bring significant revenue growth. Samsung Suzhou's module factory(M10)
acquired by the Company and Moka Technology which provides integrated manufacturing of
complete modules will promote the extension of the Company's value chains to the downstream.TCL CSOT will continue to optimize its business and product structures. With the replenishment of
medium-sized product production capacity TCL CSOT will form a full-product business layout of
large medium and small-sized products with more balanced business and revenue structures resulting
in higher output value per unit area and revenue growth. Adhering to the high-end product strategy
TCL CSOT will give full play to the advantages of CSOT HVA technology and high-generation
production lines deepen cooperation with global leading brand customers continue to increase its
share in high-end markets such as oversized 8K 120Hz and curved-surface products and deepen high-
quality growth.TCL CSOT will leverage its management advantages to remain an industry leader in efficiency and
benefits. Through its extreme management capability and industrial synergy TCL CSOT has
consistently maintained industry-leading profitability levels since it began operations. With the
expansion of capacity and the enrichment of production lines the Company will actively adjust the
layout strategies of production lines and products giving full play to the advantages of production
lines and reducing losses in capacity loss on production lines; the Company will strengthen digital and
intelligent operation improving intelligent manufacturing capability and improving the operational
efficiency of the whole industrial chain; the Company will give play to scale effect improving the
integration of supplier resources and layout of the industrial chain thus creating a more flexible and
cost-competitive supply chain. With the depreciation of the existing production lines maturing one
after another it is expected that the proportion of depreciation accounting for revenue will gradually
decline and CSOT's profitability will be further enhanced.TCL CSOT will continue to strengthen technological innovation striving to become a leader in new
display technology. Through the “National Printing and Flexible Display Innovation Center” of
Guangdong Juhua a subsidiary of the Company and JOLED of which TCL CSOT is a strategic
shareholder TCL CSOT is accelerating the research and development of mass production technology
for printed display techniques and actively promoting the development of OLED and QLED materials
under its own IP through ChinaRay Optoelectronic improving the construction of the printed display
ecology. At the same time by means of equity investment and strategic cooperation and other methods
the Company works with industrial chain partners to jointly promote the development of new display
technologies such as Mini-LED and Micro-LED leading the trend of future technology development.(II) Semiconductor photovoltaics and semiconductor materials business
As global resource consumption and ecological environment problems are becoming increasingly
prominent China's goals for “emissions peak” and “carbon neutrality” are clearly put to the fore in the
national outline of the 14th Five-Year Plan(2021-2025) and the clean energy industry has entered a
period of rapid growth. However with the gradual controlling of the COVID-19 epidemic global
economic recovery is expected to strengthen and with strong demand for industrial products pushing
up the prices of bulk raw materials the supply chain and cost management capabilities pose challenges
for enterprises. In the face of external environmental fluctuations Zhonghuan Semiconductor through
product technology improvement and capacity expansion integration of supply chain resources
management efficiency improvement and manufacturing mode transformation has improved business
quality and efficiency comprehensively improved corporate competitiveness and firmly moved
towards the strategic goal of becoming a global leader in the photovoltaics industry and a leader in the
semiconductor silicon wafer industry in China. During the reporting period Zhonghuan
Semiconductor experienced a total operating revenue of CNY 17.64 billion a year-on-year increase of
104.1% and net profit of CNY 1.89 billion a year-on-year increase of 160.6%.1. Semiconductor photovoltaics industry
In the first half of the year as the photovoltaics industry ushered in rapid development the Company
manifested its accumulated technological advantages smoothly transformed its product structure and
continuously improved the scale of its production capacity. It continued to improve asset operation
efficiency and investment income of production lines through technological innovation process
technology transformation and Industry 4.0 application in various operation scenarios. At the same
time through strategic supply chain synergy and cooperation built up over time Zhonghuan
Semiconductor effectively responded to the pressure of a tight supply-demand relationship for
polysilicon raw materials and rapid short-term price increases improved the material storage and
supply system and strengthened its ability to deal with external risks ensuring the stable growth of
product profits. During the reporting period the operating revenue of the semiconductor photovoltaics
business reached CNY 16.53 billion a year-on-year increase of 106.9%.In terms of semiconductor photovoltaic materials Zhonghuan Semiconductor continued to promote
the improvement of the production and marketing scale and quality of 210 mm products and
synergized the upstream and downstream ecology of the industrial chain in order to effectively meet
the needs of the whole photovoltaics industry chain in terms of benefits. At the end of the reporting
period the Company's production capacity of semiconductor photovoltaic materials increased to 70
GW an increase of more than 55% compared with that of the end of 2020 (of which G12 capacity
accounted for about 56%) and market share continued to increase. During the reporting period silicon
material consumed by unit product decreased by nearly 2% year-on-year the A-class rating of silicon
wafers increased significantly and the gross profit margin per unit product continued to improve
quarter-on-quarter and the profitability continued to improve through optimization of process
technologies.In terms of semiconductor photovoltaic modules the Company continued to cooperate and innovate
with leading G12 PERC battery manufacturers in China focusing on the research and development of
shingled photovoltaic modules and implemented a differentiated competition strategy promoting the
expansion of large-sized and high-powered modules with “G12 + shingled photovoltaics” technology
thus improving the ability to win orders in China and abroad. The production capacity of the G12
High-Efficiency Shingled Photovoltaic Modules project in the Jiangsu Province reached 6 GW; the
G12 High-Efficiency Shingled Photovoltaic Modules Project in Tianjin has officially entered the
construction stage with all equipment having entered the site simultaneously and thus overall
capacity scale is steadily improving.With the sound global layout of the Company brand benefits are emerging overseas business is
growing significantly and the Company ranks #1 globally in terms of share for export sales of silicon
wafers. Maxeon a subsidiary of the Company expanded smoothly in the North American market and
won orders for high-efficiency solar modules at the GW level from Primergy in the first half of the
year. In the future the Company will further expand its manufacturing system for batteries and
modules and the businesses of ground-mounted power stations and distributed power stations all over
the world.2. Semiconductor materials industry
As the COVID-19 epidemic continues its trend toward normalization the global demand for industrial
automotive and consumer electronics has recovered robustly coupled with the surging demand for a
variety of emerging chip applications and the continuing shortage of chips leading to a sharp rise in
the price of upstream semiconductor materials. In the context of the shortage of key materials the
progress of importing domestic Chinese semiconductor materials has noticeably accelerated and
Chinese semiconductor material enterprises have also obtained considerable market substitution space.During the reporting period the Company seized opportunities in industry upturns and domestic
Chinese market substitution accelerated the verification of semiconductor material products and
customer development received recognition from major customers worldwide rapidly expanded the
scale of production and sales and increased revenue by 65.8% year-on-year. At present the production
lines put into operation by the Company have achieved full-capacity production. During the reporting
period the Company added EPI routes to 6-inch products and began to plan its end-customer
certification continued to increase the certification of 8-inch products such as Logic and CIS for
Chinese customers accelerated the certification of new products for international customers and
comprehensively benchmarked 12-inch products against leading international products with both
product performance and quality receiving high praise by leading Chinese and foreign customers.Under the established strategic plan “9205” the company accelerated production capacity expansion
and sped up business expansion in product areas of all sizes and carried out the new investment
projects in Tianjin and Yixing factories smoothly laying the foundation for the accelerated
development of the semiconductor business. On the basis of consolidating its advantages in traditional
power semiconductor products the Company has become a powerful participant in digital logic
products and storage products.(III) Industrial finance and investment
During the reporting period the Company's financial and treasury businesses focused on ensuring the
Company's demand for project funds and further improved its ability to actively manage industrial
funds and risks reduced costs and increased efficiency controlled corporate receivables and foreign
exchange risks and supported the Company's core main businesses to move towards global leadership.TCL Capital explored investment and deployment opportunities in key areas that drive the
development of the science and technology industry such as new display types semiconductor and
core materials and process equipment related to the industrial chain and promoted technology and
business synergy concurrently creating investment income. At the end of the reporting period the
funds managed by TCL Capital reached a scale of about CNY 9.2 billion with a total investment of
116 projects. At present TCL Capital holds shares of listed companies such as CATL DKEM
Cambricon Newtouch Software Innoviz Petro-King ZJBC Information and HyUnion Holding;
Admiralty Harbour Capital Limited achieved steady growth in its investment banking and asset
management business completing 13 capital market and financial advisory projects during the
reporting period and being approved as a member of Euroclear Bank to engage in related international
securities clearing and custody business further diversifying its business scope; China Innovative
Capital continued to focus on the industrial chain layout opportunities of the two core main businesses
of the Company investing in more than 132 listed companies with steadily growing performance.Part IV Significant Events
See the 2021 Interim Report for more details.