Report of Foreign Issuer (6-k)
May 16 2019 - 8:01AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2019
Commission File Number: 001-31994
Semiconductor Manufacturing International Corporation
(Translation of registrant’s name into English)
18 Zhangjiang Road
Pudong New Area, Shanghai 201203
People’s Republic of China
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
☒
Form 20-F
☐
Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
☐
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
☐
Yes
☒
No
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): n/a
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Semiconductor Manufacturing International Corporation
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Date: May 15, 2019
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By:
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/s/ Dr. Gao Yonggang
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Name:
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Dr. Gao Yonggang
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Title:
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Executive Director, Chief Financial Officer and Joint Company Secretary
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Hong Kong
Exchanges
and
Clearing Limited
and The Stock
Exchange
of
Hong Kong
Limited
take
no
responsibility
for
the
contents
of
this
announcement,
make
no
representation
as to
its accuracy
or
completeness
and
expressly disclaim
any
liability whatsoever
for
any loss
howsoever
arising
from
or
in
reliance
upon
the
whole
or
any
part
of
the
contents
of
this
announcement.
SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION
中 芯 國 際 集 成 電 路 製 造 有 限 公 司
*
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 981)
CONTINUING CONNECTED TRANSACTIONS
IN
RELATION
TO NSI
FRAMEWORK
AGREEMENT
NSI FRAMEWORK AGREEMENT
The Company announces that on 15 May 2019, the Company and NSI entered into the NSI Framework Agreement in relation to the supply of goods, rendering of or receiving services, leasing of assets, transfer of assets and provision of technical authorisation or licensing. The NSI Framework Agreement has a term of three years commenced on 1 January 2019 and ending on 31 December 2021.
LISTING RULES IMPLICATIONS
As at
the date
of
this
announcement,
China
IC
Fund holds
approximately 15.78% interest in
the
Company through
its
wholly-owned subsidiary, Xinxin (Hongkong) Capital Co., Limited. Accordingly,
it is a
connected person
of the
Company
at
the
issuer level under
the
Listing Rules.
As at
the date
of
this
announcement,
the
registered capital
of
NSI
is
held
as to
approximately
38.57% and 32.97%
by
the Group and China
IC Fund
, respectively
.
NSI
is
therefore
a
n associate
of
China IC Fund
as
defined
under rule 14A.13
of
the
Listing
Rules
and
thus
a
connected
person
of
the
Company
under
the
Listing
Rules.
As one or more of the applicable percentage ratios (other than the profits ratio) in respect of each of the Annual Caps are more than 0.1% and less than 5%, the transactions contemplated under the NSI Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules and are subject to the reporting, announcement and annual review requirements but exempt from the Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
NSI FRAMEWORK AGREEMENT
The Company announces that on 15 May 2019, the Company and NSI entered into the NSI Framework Agreement in relation to supply of goods, rendering of or receiving services, leasing of assets, transfer of assets, provision of technical authorisation or licensing.
The NSI Framework Agreement has a term of three years commenced on 1 January 2019 and ending on 31 December 2021.
Summary of Principal Terms of the NSI Framework Agreement
D
ate:
15 May
2019
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Effective
period:
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Commenced
on
1 January
2019 and
ending
on 31
December 2021.
Two
months before
the expiry date
of
the NSI
Framework Agreement, the parties
will
consider
whether
to
renew
the
NSI
Framework
Agreement.
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Parties:
(i)
the
Company
on
behalf
of
itself
and
its
subsidiaries; and
(ii)
NSI.
Continuing Connected Transactions
The Continuing Connected Transactions set out in the NSI Framework Agreement will include the following:
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1.
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Type I CCT: purchase
and sale
of
spare
parts,
raw
materials, photomasks
and
finished
products;
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2.
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Type II CCT: rendering
of or
receiving services, including, without limitation,
(a)
processing and
testing
service; (b) procurement service;
(c)
research, development
and
experiment support service; (d) comprehensive, logistics, production management
and
IT
service;
and
(e) water,
electricity,
gas
and
heat
provision
service;
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3.
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Type III CCT: leasing
of
assets,
such
as
plant and office premises;
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4.
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Type IV CCT: transfer
of
assets; and
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5.
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Type V CCT: provision
of
technical authorisation
or
licensing
by
the Company
to NSI.
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Pricing
The price of the Continuing Connected Transactions will be determined in accordance with the following general principles (in ascending order):
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(1)
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the
price
prescribed
or
approved
by
state
or
local
price
control
department
(if
any);
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(2)
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a reasonable price in accordance with the industry guided price (if any);
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(3)
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the comparable local market price which shall be determined after arm’s length negotiations between both parties with reference to (a) the market price charged by independent third parties for comparable product or services at the same time and in the same region; and (b) the lowest quotation that the purchaser can obtain by way of public tender through equalization calculation;
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(4)
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where there
is no
comparable local market price,
the price based
on
the
principle
of
cost
plus
a
fair and
reasonable profit
rate, being the
aggregate
sum
of
(a)
the
actual reasonable
cost, which is the standard cost of last quarter for the production fab;
and
(b)
a
fair
and
reasonable
profit
rate; or
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(5)
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where none
of
the above
general pricing principles
are
applicable,
the price
determined
by
other
reasonable
means
as
agreed
upon
by
both
parties
on
the
condition
that the
relevant
costs
are
identifiable
and are
allocated
to
each party
involved
on
a
fair and
equitable basis.
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Where general pricing principles (2) to (5) apply, to the extent possible, each of the Company and NSI will obtain at least two quotations or tenders from independent third parties before agreeing upon the applicable price.
As
to
the
price
prescribed
by
the state
or
local price
control department, state-prescribed fees
apply
to
water
and
electricity,
which
are
relevant
to
the cost
of
such
services
and are
determined
by
prices published
from time
by
time
by
the
relevant
PRC
government authority.
Under the
Pricing
Law
of
the PRC,
the
PRC
government
may
implement
a
state-prescribed
or
guidance
price
for
specific
goods and
services
if
necessary,
and such price will
be
promulgated
in
accordance
with
the
requirements
of
relevant laws, regulations
or
administrative
rules from
time
to
time.
If
any
state-prescribed
price
or
guidance
price
becomes available
to
the Continuing Connected Transactions
in
the
future,
the
parties
will
execute
such price first
in accordance
with
pricing
principle
(1)
above.
Based
on
the above
general principles
and
the
actual
circumstances
when
entering
into
the NSI Framework Agreement,
the
parties further agree
to the
following specific pricing policies for the
Continuing Connected Transactions.
If any
particular
Continuing Connected Transaction
is
not
covered
by
the
following policies,
or
any
of
the
following policies
is no longer
applicable,
the
parties
will use the above
general principles
to
determine
the price for
the relevant
transaction.
Types of Continuing Connected
Transactions
Pricing
policy
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1.
Mutual purchase
and sale
of
spare
parts
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The market price of spare parts, with the relevant transportation fees borne by the purchaser, with reference to market price (see general pricing principle (3) above)
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2.
Mutual purchase
and sale
of
raw
materials
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The market price of raw materials, with the relevant transportation fees borne by the purchaser, with reference to market price (see general pricing principle (3) above)
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3.
Purchase
of
photomasks by NSI from the Company
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With
reference
to
market
price (see
general pricing principle
(3)
above)
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4.
Sales
of
finished products by the Company to NSI
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With reference to market price (see general pricing principle (3) above)
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Types of Continuing Connected
Transactions
Pricing
policy
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1.
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Mutual rendering
of
processing
and
testing service
due
to
the Company and
NSI’s
production
capacity limits
of
certain
types
of
products
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With
reference
to
market
price (see
general pricing principle
(3)
above)
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2.
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Rendering
of
procurement services
by
the Company
to
NSI
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Cost plus
a
fair and
reasonable profit
rate
in
line
with the
industry
(see
general pricing principle (4) above),
based
on
allocation
of
procurement department expenses according
to
working hours
or
workload
plus
a
subsequent profit
rate
of
5%
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3.
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Provision
of
research, development
and
experiment support services by
the Company
to
NSI
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With
reference
to
market
price (see
general pricing principle
(3)
above)
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4.
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Rendering of comprehensive administration, logistics, production management
and
IT
services
by
the Company
to
NSI
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Cost plus
a
fair and
reasonable profit
rate
in
line
with the
industry
(see
general pricing principle (4) above),
based
on
allocation
of
labour
cost
and relevant resources consumption according
to
the proportion
of
working
hours
or
workload
plus
a
subsequent profit
rate
of
5%,
or
with
reference to market
price
provided
by
independent third
parties
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5.
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Provision
of
water, electricity, gas
and
heat
by
the Company
to
NSI
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The
price
prescribed
or
approved
by
state
or
local
price
control department
(if
any)
(see
general pricing principle
(1)
above)
or
with
reference
to
market price (see
general pricing principle (3) above)
Types of Continuing Connected
Transactions
Pricing
policy
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1.
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Leasing
of
plant and office
by
the Company
to
NSI
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With
reference
to
market
price (see
general pricing principle
(3)
above)
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1.
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Mutual
transfer
of
equipment
With
reference
to
market
price (see
general
pricing
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principle (3) above)
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1.
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Provision
of
technical authorisation
or
licensing
by
the Company
to
NSI
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With
reference
to
market
price (see
general pricing principle
(3)
above)
Considering
the
general principles
and the
detailed pricing policies,
the
Directors (including
the
independent non-executive Directors)
are
of
the view that the
methods
and
procedures are sufficient
to
ensure
that the
Continuing Connected Transactions
will
be
conducted
on
normal commercial
terms
or
better
and not
prejudicial
to
the
interests
of
the
Company
and
its minority
Shareholders.
Payment
The
consideration
of
the
Continuing Connected Transactions
will
be
paid
in
accordance with the
relevant implementation agreements
to be
entered into
for
each
transaction, the terms of which will be on normal commercial terms or better,
and
will
be
funded
by
the
relevant parties’ internal resources.
The
Company
will closely
monitor the relevant transactions on
an
ongoing basis
to
ensure
the
Annual
Caps for each type
of the Continuing Connected Transactions
are not
exceeded.
Other Terms
The terms
of
the NSI
Framework Agreement
are
subject
to
compliance
with
applicable
laws
and regulations including
the
requirements
of
any
regulatory authorities (including
but
not
limited to
the
Stock
Exchange
and
the
New
York
Stock
Exchange,
Inc.).
THE ANNUAL CAPS AND BASIS OF DETERMINATION
Historical Transaction Amount
The historical transaction amounts between the Company and NSI for transactions of similar nature to the NSI Framework Agreement for the two years ended 31 December 2017 and 2018 are as follows:
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Nature of transactions
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Transactions For the Year Ended 31 December
2017
(US$ '000)
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Transactions For the Year Ended 31 December
2018
(US$ '000)
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Purchase and sale of goods
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1,198
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8,809
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Rendering of or receiving services
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540
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598
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Leasing of assets
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27
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22
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Transfer of assets
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-
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-
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Provision of technical authorisation or licensing
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-
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2,339.8
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There was no transaction of similar nature to the NSI Framework Agreement between the Company and NSI prior to 1 January 2017.
Annual Caps
The Annual Caps for the Continuing Connected Transactions between the parties are set out below:
For the year ending 31 December
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Nature of Continuing Connected Transactions
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2019
(US$ '000)
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2020
(US$ '000)
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2021
(US$ '000)
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Type I CCT
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40,500
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75,500
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120,000
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Type II CCT
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1,200
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1,200
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1,200
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Type III CCT
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100
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100
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100
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Type IV CCT
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-
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-
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-
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Type V CCT
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3,000
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3,000
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3,000
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In
arriving
at
the
Annual
Caps, the
Company
has
considered various assumptions and factors including the growth and expansion in its business operations since the establishment of NSI in October 2016. NSI is releasing new products from R&D developments and customer collaborations, starting from 2019.
It
is
expected
that NSI will
continue
to
increase
its
manufacturing capacity
and
develop
new
clients and products.
The
Company
has
also
considered
the
historical transaction amounts between the Company
and NSI
,
reasonable factors
such
as
the
expected occurrences of the Continuing Connected Transactions
in
light
of
current market conditions
of
the
semiconductor industry
and the
technological capability
of
the
Company.
REASONS FOR AND BENEFITS OF THE NSI FRAMEWORK AGREEMENT
The Company considers that the entry into the NSI Framework Agreement and the Continuing Connected Transactions with NSI will enable the Company to support customers in the integrated circuit design and product development for applications in smart home, industrial, and automotive electronics, new generations of radio communications, augmented reality, virtual reality, mixed reality, and other specialty systems. NSI will continue to bring the Company an effective and complete customer and product portfolio.
The
Directors (including
the
independent non-executive Directors)
are
of the
view
that
the
terms
of
the NSI
Framework Agreement including
the
Annual
Caps are fair
and reasonable,
and the
entering
into
of
the NSI
Framework Agreement
and the
Continuing Connected Transactions
are
on
normal
commercial
terms
or
better,
in
the ordinary
and usual
course
of
business
of
the Group and
in the
interests
of the
Company and
the
Shareholders
as
a
whole.
No Director is considered to have a material interest in the NSI Framework Agreement which would have required the Director to abstain from voting at the board meeting authorizing the NSI Framework Agreement.
IMPLICATIONS UNDER THE LISTING RULES
As at the date of this announcement, China IC Fund holds approximately 15.78% interest in the Company through its wholly-owned subsidiary, Xinxin (Hongkong) Capital Co., Limited. Accordingly, it is a connected person of the Company at the issuer level under the Listing Rules. As at the date of this announcement, the registered capital of NSI is held as to approximately 38.57% and 32.97% by the Group and China IC Fund, respectively. NSI is therefore an associate of China IC Fund as defined under rule 14A.13 of the Listing Rules and thus a connected person of the Company under the Listing Rules.
As one or more of the applicable percentage ratios (other than the profits ratio) in respect of each of the Annual Caps are more than 0.1% and less than 5%, the transactions contemplated under the NSI Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules and are subject to the reporting, announcement and annual review requirements but exempt from the Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
INFORMATION
ABOUT THE
PARTIES
Information on the Company
The Company is one of the leading foundries in the world, is Mainland China’s largest foundry in scale, broadest in technology coverage, and most comprehensive in semiconductor manufacturing services. SMIC provides integrated circuit (IC) foundry and technology services on process nodes from 0.35 micron to 28 nanometer. Headquartered in Shanghai, China, the Company has an international manufacturing and service base. In China, SMIC has a 300mm wafer fabrication facility (fab) and a 200mm fab in Shanghai; a 300mm fab and a majority-owned 300mm fab for advanced nodes in Beijing; 200mm fabs in Tianjin and Shenzhen; and a majority-owned joint-venture 300mm bumping facility in Jiangyin; additionally, in Italy the Company has a majority-owned 200mm fab. The Company also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan, and a representative office in Hong Kong.
Information on NSI
NSI is a company offering specialty semiconductor manufacturing foundry and design support services in high voltage analog, radio frequency front-end and optoelectronic integration technologies to global customers. NSI has a 200mm middle-end specialty fab in Ningbo.
DEFINITIONS
In this announcement the following words have the following meanings unless the context requires otherwise:
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‘‘Annual
Caps’’
|
the
proposed
annual
caps
for
each of
the
period
ending
31
December,
2019, 2020 and 2021
in
relation
to
each type
of the
Continuing Connected Transactions
which are more fully set out
in
the sub-section headed
‘‘The Annual
Caps and Basis of
Determination
— Annual Caps’’ in this announcement
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‘‘associates’’
has the
meaning as ascribed
to it
under the
Listing Rules
‘‘Board’’
the board
of
Directors
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‘‘China IC Fund’’
|
ChinaIntegrated Circuit Industry Investment Fund Co., Ltd.*(
國家集成電路產業投資基金股份有限公司
), a company established under the laws of the PRC
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‘‘Company’’ or ‘‘SMIC’’
|
Semiconductor Manufacturing International Corporation
(
中
芯國際集成電路製造有限公司
*)
,
a
company
incorporated
in
the Cayman Islands
with
limited liability,
the
shares
of
which
are
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|
listed
on
the main board
of
the Stock
Exchange
and
the American depositary shares
of
which are
listed
on the New
York Stock
Exchange,
Inc.
‘‘
connected person(s)
’’
has the
meaning as ascribed
to it
under the
Listing Rules
‘‘Continuing Connected
the Type I CCT, Type II CCT, Type III CCT, Type IV CCT and
Transactions’’
Type V
CCT contemplated under the NSI Framework Agreement
‘‘Director(s)’’
the
director(s)
of the
Company
‘‘Group’’
the
Company
and its
subsidiaries
the
Hong
Kong
Special
Administrative
Region
of
the
PRC
‘‘Listing
Rules’’
the Rules
Governing
the
Listing
of
Securities
on
The
Stock
Exchange of Hong Kong Limited
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‘‘NSI’’
|
Ningbo Semiconductor International Corporation*
(
中芯集成電路（寧波）有限公司
), a company established under the laws of the PRC
|
|
‘‘NSI Framework
Agreement’’
the
framework agreement entered into between the Company
and NSI on 15 May 2019 in relation to the Continuing Connected Transactions
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‘‘PRC’’
|
the
People’s Republic
of
China (for the
purposes
of
this announcement excluding
Hong Kong, Macau
Special Administrative Region
of
the
People’s Republic
of
China
and Taiwan)
|
|
‘‘Shareholder(s)’’
the
holder(s)
of
the
Share(s)
‘‘Shares’’
ordinary shares of par value US$0.004 each in the capital of the
Company listed on the Stock Exchange
‘‘Stock
Exchange’’
The
Stock
Exchange
of
Hong
Kong
Limited
|
‘‘Type
I
CCT’’
|
the
transactions contemplated
under the NSI
Framework
Agreement in relation to purchase and sale of goods
|
|
‘‘Type
II
CCT’’
|
the
transactions contemplated
under the NSI
Framework
Agreement in relation to rendering of or receiving services
|
|
‘‘Type
III
CCT’’
|
the
transactions contemplated
under the NSI
Framework
Agreement in relation to leasing of assets
|
|
‘‘Type
IV
CCT’’
|
the
transactions contemplated
under the NSI
Framework
Agreement in relation to transfer of assets
|
|
‘‘Type
V
CCT’’
|
the
transactions contemplated
under the NSI
Framework
Agreement in relation to provision of technical authorisation or licensing
|
‘‘U.S.’’
or
‘‘United
States’’
the
United States
of
America
‘‘US$’’
United
States
dollar,
the
lawful
currency
of
the
United
States
‘‘%’’
per
cent.
By order of the Board
Semiconductor Manufacturing International Corporation
Gao Yonggang
Executive Director, Chief Financial Officer and Joint Company Secretary
Shanghai, PRC, 15 May 2019
As at the date of this announcement, the directors of the Company are:
Executive Directors
ZHOU Zixue (
Chairman
)
ZHAO Haijun (
Co-Chief Executive Officer
)
LIANG Mong Song (
Co-Chief Executive Officer
)
GAO Yonggang (
Chief Financial Officer and Joint Company Secretary
)
Non-executive Directors
CHEN Shanzhi
ZHOU Jie
REN Kai
LU Jun
TONG Guohua
Independent Non-executive Directors
William Tudor BROWN
CHIANG Shang-Yi
CONG Jingsheng Jason
LAU Lawrence Juen-Yee
FAN Ren Da Anthony
*
For
identification purposes
only
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