Welcome to Semiconductor Manufacturing International Corporation's First Quarter 2021 Webcast Conference Call. Today's call will be live streamed through the internet at SMIC's website. Webcast playback will also be available approximately one hour after the event. Please be advised that your dial ins are in listen only mode. However, at the conclusion of the management presentation, we will have a question-and-answer session, at which time you will receive instructions on how to participate. Today's conference call will proceed in both Chinese and English. [Non-English content]. Without further ado, I would like to introduce Miss Guo Guangli, Board Secretary for the forward-looking statement. [Non-English content]. Greetings, welcome to SMIC's First Quarter 2021 Earnings Call. Today's call is hosted by Dr. Zhao Haijun, co-chief executive officer and Dr. Gao Yonggang chief financial officer. The call will last about 60 minutes. The management will provide their commentary in Chinese and investor relations team will provide English interpretation. During the subsequent Q&A session, we will accept questions in both Chinese and English. [Non-English content]. The earnings release and presentation are available at www.smics.com. Let me remind you that today's presentation includes forward-looking statements that do not guarantee future performances but represent our estimates and are subject to risks and uncertainties. Please refer to the forward-looking statement in our earnings announcement. Please note that today's earnings statement use International Financial Reporting Standards IFRS and all currency figures are in U.S. dollars unless otherwise stated. However, we will also reference financial measures that do not conform to IFRS in order to help investors compare SMIC's past performance. These non-IFRS measures may differ from similar data presented by other companies. Please refer to the tables in our announcement. [Non-English content]. I will now hand the call to CFO Dr. Gao Yonggang for financial highlights and guidance. [Non-English content]. Let me recap related events from 2020. According to the relevant regulations of Shanghai Stock Exchange, when a listed company has made profits during the annual reporting period and its accumulated undistributed profits are positive, but no cash dividends are distributed, the company shall provide a key explanation on matters related to the cash dividend plan in the earning webcast after the disclosure of the annual report and before the record day of the annual general meeting. On this basis, the company's 2020 profit distribution plan is as follows: SMIC's 2020 key financial metrics significantly increased as compared to that of previous year. According to China Accounting Standards, by the end of 2020, the accumulative undistributed profit was CNY 8.1 billion. In 2020, the company's free cash flow generated from operating activities after deducting cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets was negative CNY 24 billion. Taken into account that the company's current operating situation, the need of 2021 CapEx of CNY 28.1 billion, future development and other factors, the company proposed not to make profit distribution for 2020, which is in line with the company's long-term development needs and the long-term interest of shareholders, and in accordance with relevant laws and regulations. This will cause no harm to the interests of the company and its shareholders, especially the small and medium shareholders. The proposal has been reviewed and approved by the board of directors and will be submitted for approval at the annual general meeting on June 26th. We would like to thank our shareholders for their understanding and support. [Non-English content]. Now I will highlight our first quarter 2021 unaudited results, then give the second quarter guidance and full year outlook. Please be reminded that all earning figures in the following statements are prepared in accordance with IFRS, unless otherwise stated. [Non-English content]. First quarter 2021 revenue and gross margin beat guidance. Revenue was $1.104 billion, an increase of 12.5% quarter-over-quarter and an increase of 22% year-over-year. Gross margin was 22.7%, sequentially up 4.7 percentage points. First quarter 2021 results improved and beat guidance, mainly because. One, pricing adjustment and product mix optimization brought an increase of 5% in wafer ASP quarter-over-quarter. Two, increase in wafer shipments by 10% quarter-over-quarter. First quarter profit from operations was $125 million, an increase of 622.6% quarter-over-quarter and an increase of 163.3% year-over-year. Profit for the period attributable to SMIC was $159 million. Non-controlling interests were $43 million, which are losses borne by non-controlling interests of SMIC effectively controlled joint ventures. [Non-English content]. Moving to the balance sheet. At the end of the first quarter, total assets were $30.8 billion, among that total cash on hand, including cash and cash equivalents related restricted cash and financial assets, was $14.3 billion. Total liabilities were $8.6 billion, while total equity was $22.2 billion, including non-controlling interest. Total debt was $5.8 billion, and net debt was - $8.5 billion after deducting cash on hand. Gross debt to equity was 26.2%, and net debt to equity was negative 38.4%. In terms of cash flow, in the first quarter, we generated $464 million of cash from operating activities, a sequential down, mainly due to changes in working capital. Net cash used in investing activities and from financing activities were - $1.056 billion and - $216 million, respectively. [Non-English content]. Now, for the second quarter, our guidance is as follows: revenue is expected to grow 17%-19% sequentially. Gross margin is expected to range from 25%-27%, mainly due to, one, the huge gap between supply and demand. Under the current market dynamics, the company has made reasonable pricing adjustment accordingly after communication with our customers. Wafer ASP will further strengthen, driving revenue growth exceeding expectations from earlier this year. Two, capacity expansion and improving operational efficiency will further increase fab output. IFRS OpEx is expected to increase sequentially, while losses to be borne by non-controlling interests of SMIC effectively controlled joint ventures are expected to decrease quarter-over-quarter. [Non-English content]. According to first quarter results and second quarter guidance, revenue for the first half of 2021 will be expected to be around $2.4 billion, beating original forecast. This year, the semiconductor market notes a positive development. Under normal circumstances, the company should have maintained the rapid growth momentum from last year, but as SMIC was placed on the U.S. Entity List, the company is restricted from procuring related U.S. origin items and technology. There are still risks and uncertainties to our second half of 2021. In February, the annual forecast we gave were revenue growth target to be mid to high single-digit percent, and gross margin target to be in the mid-teens range. In light of the information currently available to the company, and based on the uncertain assumption that operational continuity will not be significantly adversely affected, our annual revenue and gross margin are expected to beat original forecast. However, out of an abundance of caution, we ask for your understanding that we will not provide an exact revised range of our second half and full year expectation for the time being. We will do our best to ensure operation continuity and improve performance for a better return to our shareholders. We reiterate our 2021 CapEx plan of $4.3 billion. The majority is for Non-FinFET capacity expansion, and the remaining is for FinFET, the infrastructure of the Beijing Jingcheng project and others. Annual depreciation and amortization is estimated to be roughly $2 billion. EBITDA is expected to be above $2.3 billion. This concludes the financial remarks. [Non-English content]. Thank you, Dr. Gao, for the financial update. I will now hand the call to our Co-CEO, Dr. Zhao Haijun, to comment on markets, company operations, and technology platforms. [Non-English content]. During the first quarter of 2021, SMIC still faced a challenging environment. On one hand, market demand was strong. Our current capacity could not fulfill customer needs, and products in every market segment faced shortages. From power management, RF driver ICs to microcontroller units, specialty memory, CIS and other applications. On the other hand, certain restrictions on the company's supply chain caused by the U.S. Entity List created a lot of uncertainties in operational continuity and further capacity building, and brought higher requirements to operational planning and engineering management. [Non-English content]. The company united as one and actively responded under this complex situation. We worked extra hard in production planning and engineering management, steadily dedicated and devoted, repeatedly checking every link in the production process that may affect the company's operational continuity. Designed and implemented feasible plan, sought for verifications and solutions step by step, and maintained a fully loaded operation. [Non-English content]. Under the current supply shortage situation, our principle for capacity allocation is give priority to meet the needs of customers that have collaborated and co-developed with the company for the long term, then consider products with high growth margin and at the same time communicate closely with other customers to negotiate and accommodate their most important needs. We commit to be the finest and largest in scale for competitive advantage products and the lead in the market segments. [Non-English content]. Under the unremitting efforts of all our staff, eight-inch equivalent wafer shipment was 1.56 million in first quarter 2021, a 10% growth sequentially. First quarter revenue and gross margin beat guidance. Revenue grew 12.5% sequentially and exceeding $1.1 billion for the first time. Gross margin was 22.7%, sequentially up 4.7 percentage points. [Non-English content]. Now let me provide details on Non-FinFET and FinFET technology respectively. For Non-FinFET processes, the current market continues to be very strong and is in high demand, and capacity will continue to be in short supply till the end of this year. Among the nodes, 40 nano and 0.15, 0.18 micron are particularly tight. In the first quarter, revenue grew across the board in the segment market. Combined revenue from CIS, specialty memory and power management grew 20% sequentially. In addition, with the development of domestic panel display supply chain, high voltage driver IC rose to the prominence. Demand has entered a rapid upward trajectory. In the first quarter, revenue from high voltage panel display driver ICs doubled sequentially using our 0.15 micron, 55 and 40 nano technologies. [Non-English content]. Everyone is concerned about our expansion progress. We continue to push forward on the expansion plan of Non-FinFET we disclosed earlier this year to increase monthly capacity of 10,000 for 12-in and 45,000 for eight-inch. There will be some new capacity gradually released quarter by quarter, but most will form in the second half of this year. Follow up plans for our new fab, in addition to the Beijing Jingcheng project, we signed the cooperation framework agreement for Shenzhen project in March, with a goal of building a capacity of 40,000 12-in wafers per month for Non-FinFET technology. The shell has been built, and the fab is expected to commence production in the coming year. However, there may be some delay for equipment to reach production considering the impact of the Entity List. [Non-English content]. As for FinFET technology progress, the first generation FinFET has entered the mature stage of mass production, and the product yield has reached the industry standard. The development of multiple derivative platforms are carrying out as planned and achieving the goal of diversified product portfolio, and new tape-out projects are steadily engaging. Compared with the previous generation, the second generation FinFET technology has greatly improved the transistor density per unit area, completed the development of low voltage process, and enter risk production. In the first quarter, FinFET revenue grew sequentially from a trough. FinFET technology has a heavy depreciation burden and will place pressure on the company's overall profitability for a long period of time. The restriction of the Entity List brings higher risks and uncertainties to FinFET. [Non-English content]. We believe that in 2021, challenges and growth opportunities coexist. Although we cannot fully control external forces, we will respond actively, continue to focus on our business, adhere to customer orientation, tackle the difficulties with precision, enter the first tier in the segment market, seize the market opportunities, execute cautiously and conscientiously, and perform better and better. [Non-English content]. Thank you, Dr. Zhao. Next is our Q&A session. Chinese questions will be answered in Chinese. English questions will be answered in English. As usual, please limit your questions to two per person. Questions will be answered by Dr. Zhao and Dr. Gao. I would now like to open up the call for Q&A. Operator, please assist. [Non-English content]. At this time, if you wish to ask a question, please press star followed by one on your telephone. To withdraw your question, please press the pound or hash key. Please stand by while we compile the Q&A roster. [Non-English content]. Your first question comes from Randy Abrams from Credit Suisse. Please ask your question. Okay. Yes. Thank you. Congratulations on the outlook, especially considering the restrictions. As the first question, I have two parts on the second quarter guidance for the 17%-19% for the sales growth. For that growth, could you split the growth between shipment increase versus pricing, and also from filling the 14 nm capacity that was underutilized after the Huawei restriction? That's the first part. The second part, for growth through this year, since you're operating near full, could you discuss how much capacity you would be increasing in second quarter and then also in second half over first half? Randy, thank you for the questions. Actually, I can combine two questions for one answer. I can give you the first answer, that for the capacity increment in the second quarter, similar to the first quarter, we will have 10% incremental in shipment, and that contribute to the revenue of the total. I could not break down right away the ratios between the price raising and the shipments, but more or less, you can calculate right away. Okay. I'll do a quick follow-up on that. For the FinFET, if you could discuss the applications and how that ramp is coming up from the trough. The second question I had was on the gross margin coming back up to mid-20s%. I think previously you expected could be mid-to-high teens. Could you discuss now if you think that's the new baseline for gross margins, if no further restrictions, or if you could even improve that with the stronger pricing? If you could discuss the gross margin outlook and also FinFET applications. Yes. Even though we cannot forecast too much on the total wafer shipments because of the uncertainties on the supply chain and the other factors. I agree with you on the comments on the margin part, since the price, this part of allocations has been settled with customer, and we can more or less say it's pretty stable and on the forecast for the gross margins. The variation definitely will be there. You know that when we have more capacity getting into production, and we got into a phase of depreciation. That depends on how much we can move up the incremental capacity. Definitely, for the final margin, there will be some fluctuation and factors there. You know that. Okay. To clarify, it sounds like stable, similar levels may be able to be maintained as long as no major changes. Like they keep stable in this level. Just now I say that for the ASP part, more or less, we already settled with customer. The factor phase in is the speed of the incremental capacity and the depreciations. Definitely, we have a CapEx number already forecast, and there will be a little bit gap between the CapEx and the two shipments. We already say that this year we will have more than 10,000 wafers or 10,000 wafers 12-in get into production. We also have 45,000 wafers eight-inch get into production. We can phase in this kind of depreciations and together with the guidance we gave, and that's more or less the formula. Okay. One final follow-up. On the 45K eight-inch, do you feel comfortable on securing all of the tools? Is that used, or you're finding kind of semi or new tools, and do you feel confident on that capacity? We should say that for the future, definitely, there could be some uncertainties. Up to this moment, the capacity build-up amount is 45,000 eight-inch wafers ahead of schedule. We already have more than 33%, one-third of capacity build-up already contribute to the revenue. Okay, great. Thank you. Thanks, Randy. [Non-English content]. Your next question comes from Szeho Ng from China Renaissance. Please ask your question. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. Congratulations. [Non-English content]. [Non-English content]. Your next question comes from Leping Huang from Huatai Securities. Please ask your question. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. OK. [Non-English content]. [Non-English content]. [Non-English content] Your next question comes from Jinsong Zhu from Haitong Securities. Please ask your question. [Non-English content]. [Non-English content]. [Non-English content]. OK. [Non-English content]. Your next question comes from Charlie Chan from Morgan Stanley. Please ask your question. [Non-English content]. Charlie, [Non-English content]. [Non-English content]. Charlie, [Non-English content]. [Non-English content]. Charlie, [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. [Non-English content]. Charlie, [Non-English content]. [Non-English content]. [Non-English content], Charlie. [Non-English content]. [Non-English content]. I would now like to hand the call back to Miss Guo for closing remarks. [Non-English content]. Thank you all for participating in today's conference call. Thank you for your trust and support. [Non-English content]. This concludes SMIC's first quarter earnings conference call. We thank you for joining us today.