FINANCIAL HIGHLIGHTS

The below information is prepared in accordance with International Financial Reporting Standards.

Revenue decreased by 13.1% from US$7,273.3 million in 2022 to US$6,321.6 million in 2023.
Gross margin decreased from 38.0% in 2022 to 19.3% in 2023.
Profit for the year attributable to owners of the Company decreased from 1,817.9 million in 2022 to 902.5 million in 2023.

LETTER TO SHAREHOLDERS

DEAR SHAREHOLDERS AND INVESTORS,

Since the establishment of 澳门太阳集团城9728, the Company has unswervingly followed the path of independent innovation, maintained strategic resolve in wafer manufacturing and constantly pursued excellence through tackling difficulties. The Company has achieved hard-won development obvious to all, which is inseparable from the care, support and help from our shareholders and investors. Here, on behalf of the Company’s Board and Management, I would like to extend my sincerest gratitude and best wishes to all!

In 2023, facing the world’s big changes unseen in a century, the Company confronted the fierce competition in the global semiconductor market and profound transformation within the industry. With all employees working as one wholeheartedly, the Company has always adhered to the principle of seeking progress while maintaining stability, and responded to the uncertainty in the external environment by virtue of the certainty in its development. Thus, the Company has withstood severe test in various aspects of technology R&D, production and operation, sales,supply chain,and etc. With the efforts of all cadres and employees, the Company’s revenue in 2023 was $6.32 billion, with adjustment magnitude smaller than that of industry average. Gross margin was 19.3% and annualized capacity utilization rate was 75%, basically in line with the Company’s guidance provided in the beginning of 2023. By the end of 2023, the Company’s total assets were $47.8 billion, equity attributable to owners of the Company was $20.1 billion, the asset structure remained stable and the monthly capacity reached 806 thousand 8-inch equivalent wafers.

Inthe past year, the Company has accelerated the expansion of strategic cooperation, actively undertaken and given full play to the pioneering role as a chain owner enterprise, driving the collaborative development and win-win cooperation of upstream and downstream in industrial chain and supply chain; the Company has continued to optimize the deployment of projects and adhered to the orientation of “consolidating basics and strengthening foundation with solid and steady steps” to push forward the project layout and capacity building, with construction of key projects met expectations; the Company has firmly promoted management reform and steadily implemented various measures centering on the BU mechanism reform, with integration and localization of production, sales and R&D showing initial effectiveness, and operational efficiency been improved significantly; the Company has proactively fulfilled its social responsibilities, adhered to sustainable development commitments and continuously improved ESG governance capabilities. Public welfare projects such as the “澳门太阳集团城9728 Liver Transplant Program for Children” have won extensive recognition from thesociety.

Overall development and foundation are stabilized, while the direction and momentum are moving forward. In the new year, the Company will continue to firmly undertake the original mission of “making 澳门太阳集团城9728 stronger, better and bigger, and participating in the international competition on behalf of the IC industry”. Planning the current business layout from the perspective of future development, examining the existing gaps from the perspective of benchmarking leading enterprises, choosing the companions from the perspective of industrial ecosystem, the Company will continue to focus on “capacity stabilization, cost control, technology leadership and customer first” as four pivots to make the core competitiveness with leading technology, manufacturing capability and optimal cost. Facing the fierce competition in the global semiconductor market and the profound changes in China’s semiconductor industry, the Company will continue to provide more value to markets and users domestically and globally, forge ahead to realize people’s happy life and the sustainable development of the society, and strive unremittingly to create a new chapter int he IC development history of China!

Liu Xunfeng

Chairman of the Board

Shanghai, China March 28, 2024