Corporate Value and Return Enhancement Action Plan 2024
of
Amlogic (Shanghai) Co., Ltd.
Amlogic (Shanghai) Co., Ltd. (Hereinafter referred to as "Amlogic " or "the
Company") believes that Amlogic, as a listed company, has the responsibility to
improve our quality, increase investors' returns, and enhance investors' sense of gain.
The Company hereby formulates the “Corporate Value and Return Enhancement Action
Plan 2024 of Amlogic (Shanghai) Co., Ltd.,” which was reviewed and approved in the
ninth meeting of the third Board of Directors of the Company on April 11, 2024, to
practice the "investor-oriented" concept, safeguard the interests of all shareholders,
continuously optimize operations, regulate governance, and actively reward investors.
The Action Plan is detailed as follows:
I. Enhancing Technological Innovation Capability and Maintaining the Stability
of the R&D Team
1) Maintaining Heavy Investment in R&D to Promote New Product Development
Technology R&D and innovation are the core competitiveness of modern
enterprises, and the key factors to promote the sustainable development of enterprises.
Amlogic attaches great importance to technology R&D and innovation, and promotes
it as the enterprise's development strategy.
In 2024, the Company will adopt the following plans and measures to achieve the
development goals:
(1) Product Development Plan
With the continuous development and maturity of consumer electronics related
technologies, the demand for chip products in the above-mentioned field is further
released. Therefore, the Company will continue to strengthen and improve chip design
and development capabilities to meet the needs of downstream manufac turers, brands
and operators for chip products with higher integration, better performance and more
security. At the same time, the Company will maintain heavy investment in R&D in the
field of new products, and give full play to the expansion, innovation and applicatio n
of the Company's core technologies in new fields, accelerating the transformation of
core technologies, and speeding up the formation of new profit growth points.
(2) Technology R&D Plan
Based on the combination of medium- and long-term planning with near-term
goals and forward-looking technology research with product application developme nt,
the Company will carry out technology R&D and product innovation and improve the
innovation mechanism by taking the technology R&D center as a platform and the
market as a guide. The Company's sustainable innovation ability is secured in terms of
manpower, financial resources, materials, and management mechanisms, facilita ting
the continuous development of the Company's new technology and new products.
2) Promoting the Transformation of R&D Results and Improving Intellectual
Property Protection
Since its establishment, the Company has conducted in-depth R&D of core
technologies in the industry segments. By increasing the investment in technology
research and product development, and continuously improving and innovating
products and technologies, the Company's product functions and technical level have
been continuously improved and perfected. In the process of R&D, the Company uses
patent rights and other forms to protect the property rights of some valuable R&D and
innovation results. In 2023, the Company applied for 52 new intellectual properties,
including 30 invention patents, and obtained 80 newly authorized intellectual properties,
including 54 invention patents.
In 2024, the Company will continue to apply for patents to legally protect R&D
and innovation results. It is expected that no less than 40 new patents will be filed.
3) Strengthening Industry-Unive rsity-Research Collaboration to Share Cutting-
edge Technologies and New Industry Forces
In 2023, the Company continued to promote the joint laboratory project with the
School of Communication & Electronic Engineering under East China Normal
University, and the joint training project with Xidian University, separately. Some
excellent graduates from Xidian University joined the Company to bring new forces for
the Company's talent echelon construction.
In 2024, the Company will continue to explore a new model of campus-enterpr ise
cooperation in cooperation with colleges and universities to improve the talent echelon,
actively establish cooperative relations with colleges and universities, promote talent
training, technological innovation and knowledge sharing, jointly explore cutting- ed ge
technologies, and cultivate new forces in the industry.
4) Optimizing the Talent Incentive Mechanism and Maintaining the Stability of
the R&D Team
Talent is the core resource for corporate development. The Company always
adheres to the business philosophy that R&D capability constitutes a primary
productive force and considers the talent team as the core asset of the Company. By the
end of 2023, Amlogic had 1,579 R&D personnel, increasing 99 people compared with
the same period of last year, with a year-on-year growth of 6.69%. The average salary
of R&D personnel increased to 595,700 yuan/person, with a year-on-year growth of
7.99%.
At the same time, the Company has established a sound long-term incentive
mechanism to fully motivate employees and attract and retain outstanding talents. The
interests of shareholders, the Company and employees are effectively combined to
bring the Company's long-term development into focus. As of December 31, 2023, the
Company has implemented four phases of the equity incentive plan (restricted stock
incentive plan in 2019, 2021, 2023, and 2023 (phase II)). In 2023, the total amount of
confirmed share payment fee for equity-based incentive was RMB 157 million.
In 2024, the Company will continue to prioritize the acquisition and cultiva tio n
of talents, maintain high-intensity R&D investment, continuously optimize the R&D
team, and maintain a high-level development platform for talents. When the market
conditions and internal conditions are appropriate, the Company will consider using
equity tools to further strengthen the medium-to- long-term incentives for employees
and build a community of interests for employees, the Company and shareholders.
II. Focusing on the Main Business and Actively Engaging in Market Development
Amlogic, a leading fabless semiconductor system design manufacturer in China
with a global layout, is mainly engaged in the research and development (R&D), design,
and sales of the system on chips (SoCs) and peripheral chips. Currently, the Company
provides main products including multimedia intelligent terminal SoCs, wireless
connectivity chips, and automotive electronics chips, offering master control chips
(SoCs) and system-level solutions for numerous consumer electronics sectors. The
Company's products have been widely used in home, automotive, office, education,
physical fitness, industry, commerce, agriculture, entertainment, warehousing and other
fields. The Company boasts rich experience in the whole process design of SoCs, and
is committed to the development of core software and hardware technologies such as
ultra-high definition multimedia codec and display processing, content security
protection, and system IP, integrating industry- leading CPU/GPU technologies and
advanced process technology, realizing cost, performance and power optimizatio n,
providing complete system solutions based on various open platforms, and helping
global operators, OEMs, ODMs and other customers to quickly deploy the market.
The Company's business has covered the Chinese mainland, Hong Kong, North
America, Europe, Latin America, Asia-Pacific, Africa and other major economic
regions in the world. Relying on long-term technology application, continuous R&D of
new technologies and new application fields, as well as global location advantages and
market resources, the Company has accumulated a stable and high-quality customer
base around the world.
In 2023, the Company's R&D expenditure was RMB 1.283 billion, up 8.21% from
the same period in 2022, accounting for 23.88% of the operating revenue. In the context
of an industry downturn, the Company's counter-cyclical heavy investment in R&D
takes effect gradually. Recently, the Company succeeded in the trial production of its
first 6nm commercial chip. In addition, the new Wi-Fi product has been successfully
trial-produced (tri-mode combination Wi-Fi 6 + BT 5.4 + 802.15.4, which supports
Thread/Zigbee and can be used in end products such as Matter controllers and IoT
gateways). The 8K chip has passed the operators' bidding certification test and will soon
be extensively used in the domestic operator market.
In 2024, the Company will continue to focus on the intensive cultivation of main
businesses, maintain heavy investment in R&D, and constantly improve the market
competitiveness of products and technology leadership, to comprehensively enhance
the core competitiveness, profitability and brand influence of the Company. Specifica lly,
the following aspects are included:
1) Market Development Plan
The Company has established a long-term cooperative relationship with many
customers. The Company will continue to upgrade the existing chip products to meet
customer demand for chip products with higher integration, more powerful
performance and higher security. In addition, the Company will deeply explore market
demand and customer demand, continuously improve the independent R&D and
innovation capabilities through technology R&D center construction, and enhance
market competitiveness.
2) Enhancing Market Expansion and Retaining Efforts
The Company is always customer-centric and strives to optimize customer
relationship management (CRM). In 2023, the Company introduced the CRM system
to optimize the sales process, enhance customer satisfaction, and improve sales
efficiency and business decision quality through the functions of real-time reporting,
future forecasting, and online process management provided by CRM system, bringing
greater business value and competitive advantage to the Company.
In 2024, the Company will further consolidate the cooperation with existing
customers in advantageous fields, extend the previous successful experience to new
customers and regions, actively expand the new application scenarios of advantageous
products, continuously enhance the market share of advantageous products, and further
increase the incremental market share and customers. At the same time, in the field of
new products, the Company will actively get close to and deeply understand customer
needs, use new products to bring new value to customers, achieve new growth for the
Company, and transform dominant core technologies into the competitiveness of new
products.
III. Accelerating Investment Projects
On August 8, 2019, the Company was listed on the Sci-Tech Innovation Board of
the Shanghai Stock Exchange and raised a total of RMB 1.58312 billion. Since listing,
the Company has used the raised funds to invest in projects such as "R&D and
industrialization of AI ultra-HD audio and video processing chips and applicatio ns ",
"Upgrade of standard integrated intelligent main chip for global digital-ana lo g
television", "Upgrade of international/domestic standard 8K codec chip", and
"Construction of R&D centers". By the end of 2023, the four projects mentioned above
have been completed. By the end of 2023, the Company had invested a total of RMB
1.476 billion, and the investment progress reached 97.47%.
In September 2021, in accordance with the Fundraising Management System, the
Company invested the development and technology reserve funds for the "Multimed ia
intelligent terminal chip upgrading project" based on the industry trend and the
Company's strategic development plan. The investment period of this project is 3 years.
In 2024, the Company will accelerate the promotion of investment projects under the
Development and Science & Technology Reserve Fund Project. It is expected to reach
the usable status no later than the end of 2024. During the implementation of investme nt
projects, the Company will strictly abide by the regulations on the management of the
raised funds, prudently use the raised funds, and guarantee the smooth progress of
investment projects as planned.
IV. Enhancing Profitability and Capital Efficiency Through Comprehensive
Financial Management Optimization
1）Diversified Growth Strategy and Precision Operations to Boost Profitability
Amlogic has long been committed to the R&D, design, and sales of the SoCs and
peripheral chips. Our current product portfolio includes a wide range of chips, such as
multimedia intelligent terminal SoCs, wireless connectivity chips, and automotive
electronics chips. We promote a product diversification strategy by enriching product
lines and application scenarios. The application fields include home, automobile, office,
education, sports and fitness, industry, commerce, agriculture, entertainme nt,
warehousing, and so on. Our business spans major economic regions worldwide,
including the Chinese mainland, Hong Kong, North America, Europe, Latin America,
Asia-Pacific, and Africa, with a solid and loyal customer base established globally.
In the future, we will continue to adhere to the product diversification strategy and
further strengthen our existing product lines and market positions. At the same time,
through continuous technological advancements, innovation and refined operation, we
will continue to expand our customer base, enter new markets, and develop new
applications to further increase our market share and profitability.
2）Strengthening Accounts Receivable and Inventory Management and Improve
Operational Efficiency
In recent years, the Company has been strictly enforcing the credit policy and
closely monitoring the collection of accounts receivable, thus ensuring a steady cash
flow for business activities. By the end of 2023, our accounts receivable balance stood
at RMB 218,028,600, with the turnover rate increasing from 23.93 times in 2022 to
30.79 times in 2023.
To boost our asset returns, we have implemented real-time monitoring and
predictive analysis of inventory to maintain optimal stock levels. We have also
strengthened our collaboration with suppliers to jointly manage our supply chain,
thereby mitigating the risk of excess inventory. Moreover, we have optimized our
production plans and sales forecasts to minimize the risk of inventory buildup due to
market fluctuations. By the end of 2023, our inventory balance was RMB
1,244,553,400, marking a decrease of RMB 272,995,300 from the previous year and a
year-on-year drop of 17.99%. Our days sales of inventory in 2023 was around 146 days,
with a healthy inventory structure.
In 2024, we will further strengthen accounts receivable management and reduce
accounts receivable balance. Specifically, (1) we have established a relative ly
comprehensive accounts receivable management process and system, including aging
analysis of accounts, collection policy, reconciliation system and risk early warning
mechanism. (2) We have implemented the management responsibility of accounts
receivable, formulated and optimized a series of measures to collect accounts receivable,
and strengthened the credit investigation of customers, accounts receivable
management and accounts receivable collection. (3) We have strengthened the interna l
process of accounts receivable management and appraisal management, and directly
linked the collection of accounts receivable to the performance appraisal of the relevant
responsible persons to facilitate the collection of accounts receivable.
In 2024, we will further optimize inventory management, reasonably control the
scale of inventory, and improve the inventory turnover rate by taking measures such as
accelerating the purchase and sale, shortening the procurement cycle, and accelerating
the turnover of inventory.
3）Prudent Use of Idle Funds to Improve Capital Efficiency
The Company wisely manages the planning and utilization of idle funds to ensure
optimal capital efficiency. We have also enhanced our management of cash flow to
maintain stability. By the end of 2023, our cash reserves amounted to RMB
2,506,951,100. While prioritizing our operational safety, we implement several
measures to maximize returns on our capital. First, without affecting our normal
operations, we invest our idle funds in safe and profitable financial products to optimize
our capital utilization. This approach allows us to utilize our idle funds wisely and
generate additional returns for the Company and our shareholders. Second, we share a
portion of our profits with our shareholders through cash dividends. During the first
three quarters of 2023, we distributed cash dividends totaling RMB 208.1595 millio n.
The Company's cumulative cash dividends for the year 2023 accounted for 41.80% of
the net profit attributable to the listed company's shareholders in the 2023 consolidated
financial statements. Finally, we are committed to strengthening our core business and
staying ahead in technological advancements. We utilize our idle funds to engage in
investment and collaboration both in China and internationally to strategica lly
introduce advanced technologies and premium products. This approach enhances our
overall competitiveness and facilitates high-quality growth.
In 2024, on the premise of not affecting the main business, we will remain
committed to prudent cash management and the sound allocation and utilization of idle
funds to enhance our capital efficiency with the following initiatives:
(1) Strengthen capital budgeting and planning and formulate refined capital
budgets and plans to ensure the reasonable allocation of funds in different business
areas and avoid idle funds and wasteful use of funds. (For example, the Company and
its controlling subsidiaries will use temporarily idle proprietary funds with an amount
not exceeding RMB 1 billion to purchase low-risk wealth management products with
high security and good liquidity). At the same time, the Company will pay close
attention to the flow of funds and make timely adjustments to the capital plan based on
market changes and business needs.
(2) Optimize the fund structure, reduce the cost of funds and improve the
efficiency of fund usage through rational allocation of short-term and long-term funds.
In addition, we will strengthen the risk management of funds to ensure the safe and
sound operation of funds. (For example, the Company and its controlling subsidiar ies
will use proprietary funds and bank credits with an amount not exceeding USD 200
million to carry out foreign exchange hedging business with banks and other financ ia l
institutions.)
(3) Strengthen internal communication and collaboration. We will establish a
cross-departmental and cross-level fund communication mechanism that enables
information sharing and synergy between departments. By strengthening interna l
communication and collaboration, we can optimize fund management and improve
management efficiency.
V. Enhancing Training for Directors, Supervisors, and Senior Management while
Continuously Improving Governance Structure to Elevate Governance Standards
Amlogic continuously refines the corporate governance structure in accordance
with relevant laws, regulations, and guidelines, such as the Company Law of the
People's Republic of China, the Securities Law of the People's Republic of China, the
Code of Corporate Governance of Listed Companies, and the Guidelines on the Articles
of Association of Listed Companies. Our structure is built around key elements such as
the shareholders' meeting, the board of directors, the supervisory board, independent
directors, and senior management. Moreover, the coordination, checks and balances
among our power structure, decision-making body, supervisory body, and manageme nt
team ensure that our operations are efficient, stable, and compliant.
1) Enhancing Training Depth and Frequency for Directors, Supervisors, and
Senior Management
To bolster the expertise of our directors, supervisors, and senior management, we
conducted 11 specialized training sessions in 2023, with a 100% attendance rate.
In 2024, we will continue to firmly support the active participation of our directors,
supervisors, and senior management in online and offline training programs hosted by
regulatory bodies. Additionally, we will arrange relevant training sessions for our
directors, supervisors, and senior management in response to significant regulator y
changes. We are committed to enhancing the understanding of securities market laws
and regulations, gaining deeper familiarity with the complexities of the securities
market, keeping abreast of regulatory developments, continuously enhancing the ability
of our directors, supervisors, and senior management to perform duties as well as the
professional knowledge of the business personnel, and continuously strengthening their
self-discipline awareness. These efforts will enable Amlogic to achieve sustained and
standardized operations and effectively avoid the risks of corporate governance.
2) Updating and Optimizing Internal Systems
To implement the reform of the independent director system and other relevant
requirements, in 2024, the Company will revise 17 internal systems and formulate the
Accounting Firms Hiring System. Among them, the revisions of 7 internal systems need
to be submitted to the shareholders' meeting for consideration. After the completion of
system revisions, we will publicize the updated systems for employees at differe nt
levels by means of written materials, meetings and training, and implement them into
the specific work of each department.
We will closely monitor changes in laws, regulations, and regulatory policies, and
promptly update our internal management systems to ensure compliance with laws and
regulations, thereby protecting the rights and interests of investors.
3) Improving Internal Control System
The Company assesses, updates, and refines the internal control system as
necessary to comply with regulations set forth by the China Securities Regulator y
Commission and the Shanghai Stock Exchange, as well as relevant laws such as the
Company Law of the People's Republic of China, and the provisions outlined in the
Articles of Association. Additionally, guided by our Basic Norms for Enterprise Internal
Control and the associated guidelines, we assess and enhance our internal control
system based on considerations of both internal and external factors, as well as the
Company's specific developmental context. This approach not only boosts the
efficiency of our corporate management and decision- making processes but also
ensures the legal compliance of our business operations and management, as well as
the safety of our assets. Consequently, it effectively facilitates the implementation of
our corporate development strategies.
In 2024, the Company will continue to comprehensively review the existing
management systems based on the specific situation and prioritize innovation while
ensuring compliance with internal control standards. We aim to establish a dynamic
internal control management system tailored to our specific needs. This effort will
involve clarifying the roles and authorities of relevant departmental personnel, fostering
a culture of comprehensive management, and encouraging widespread employee
participation. Through these measures, we will establish an internal control system that
promotes collaboration, checks and balances among employees.
4) Enhancing the Internal Governance Mechanism
In 2024, the Company will position Environmental, Social, and Governance (ESG)
efforts as a cornerstone of corporate management. We will refine our ESG governance
mechanism, with the Board of Directors assuming primary responsibility, to drive the
Company's long-term sustainable development.
VI. Improving Information Disclosure Effectiveness and Normalizing Investor
Communication
Strengthening information disclosure and managing investor relations effective ly
are key steps for us to enhance our governance standards, boost our market transparency,
and maintain a positive corporate image. The Company always attaches great
importance to information disclosure and fulfills disclosure responsibilities strictly in
accordance with relevant regulations, such as the Rules for Listing on the Sci-Tech
Innovation Board of the Shanghai Stock Exchange and our internal Information
Disclosure Management System policy. We are committed to ensuring truthful, accurate,
complete, timely, and effective disclosure of the Company's periodic reports, interim
announcements, and other material information.
Our information disclosure received an A rating in the 2022-2023 evaluation of
listed companies by the Shanghai Stock Exchange. In 2023, we issued 91 interim
announcements, 4 regular reports, and held 3 performance briefings. We also published
ESG reports for three consecutive years.
In 2024, we plan to further enhance our information disclosure and investor
relations management through the following steps:
1) Improving Clarity in Information Disclosure
In 2024, the Company will release periodic reports and interpret periodic reports
and interim announcements in the form of performance briefings, graphic presentations,
and so on. By enhancing the intuitiveness and intelligibility of information, we can help
investors better understand our operating results, financial situation and developme nt
strategies.
Moreover, we will refine the language and structure of our information disclosure
by using simpler expressions and avoiding overly technical or obscure terms. This will
ensure clarity in communication.
2) Refining Sustainability Reporting and Management Syste m
In 2024, utilizing our past practices, we will continue to optimize the ESG report
and effectively integrate ESG into corporate management and business operations to
boost economic, social and environmental sustainability. We will work for the organic
combination of industrial management and capital operations and be committed to
building an international first-class enterprise that is responsible and makes signific a nt
contributions. In this way, we can respond more comprehensively to the concerns of the
capital market and the public about the Company's sustainable development. We will
improve the ESG governance mechanism and work responsibilities at all levels, and
carry out ESG management in an institutional, standardized and systematic manner.
Moreover, we will continuously improve the ESG governance structure and
strengthen the supervision and participation of the Board of Directors in ESG matters.
The Board of Directors is responsible for making suggestions for the ESG matters and
supervising and guiding the implementation of the ESG matters. We will be committed
to promoting the scientific nature of corporate development planning and strategic
decisions and enhancing corporate sustainability.
3) Enhancing Investor Communication
Since our listing, the Company has been actively engaging with investors through
dedicated service lines, promptly responding to investor emails, and addressing
messages on the interactive platform of the Shanghai Stock Exchange at
https://sns.sseinfo.com/. Following the disclosure of our regular reports, we hold
investor communication sessions to explain our business performance and interpret the
reports. We also visualize our financial reports on our official website. We execute our
information disclosure management system in accordance with relevant laws,
regulations, and regulatory requirements to ensure truthful, accurate, complete, timely,
and fair disclosure of information.
In 2024, Amlogic will proactively schedule investor receptions as requested by
investors outside of sensitive statutory quiet periods. For example, investors will be
invited to visit the Company and engage in discussions with us to gain insight into our
operations. After the release of regular reports, we will hold performance briefings at
which our company executives will be invited to interpret our performance and address
investor inquiries. Additionally, we will conduct investor relations management tasks
through various channels, including our official website, dedicated investor service
lines, investor mailbox, and the Shanghai Stock Exchange E-Interactive platform. We
are dedicated to improving our communication and interaction with investors while
ensuring smooth channels for investor communication.
4) Establishing an Investor Opinion Solicitation and Feedback Mechanism
The Company will continually improve the mechanism for soliciting and
addressing investor feedback, while also bolstering transparency in informa tio n
disclosure. We aim to fully grasp and respond to investors' specific needs through
multiple channels. In compliance with laws and regulations, we ensure that investors
have comprehensive and timely insights into our business operations, developme nt
strategies, and other pertinent information. Strengthening communication and
interaction with investors will foster their trust and support for the Company.
VII. Increasing Investor Returns
The Company prioritizes investor returns. In the first three quarters of 2023, we
distributed cash dividends totaling RMB 208.1595 million. The Company's cumulative
cash dividends for the year 2023 accounted for 41.80% of the net profit attributable to
the listed company's shareholders in the 2023 consolidated financial statements. Based
on the profit distribution plan for the first three quarters of 2023, the Company intends
not to repeat the profit distribution at the end of 2023 and not to increase the share
capital by capital surplus. The profit distribution plan for 2023 is yet to be submitted to
the shareholders' meeting for consideration.
In 2024, we aim to establish a sustainable, stable, and scientifically-dr ive n
shareholder return mechanism based on our profitability, financial needs, and
development plans. This mechanism will prioritize both short-term gains and long- term
benefits for our shareholders in compliance with relevant laws, regulations, and the
Company's Articles of Association. Consequently, it will enhance overall investor
satisfaction.
VIII. Strengthening the Shared Responsibility, Mutual Benefits, and Checks and
Balances Between Management and Shareholders
The Remuneration and Appraisal Committee, operating under the Company's
Board of Directors, is responsible for outlining the guiding principles for our
compensation plans. This committee reviews and approves the annual performance
appraisals and performance bonus schemes for senior management in alignment with
the Company's relevant criteria. Subsequently, the results are submitted to the Board of
Directors for final approval. The compensation and bonuses for senior management are
determined based on the Company's annual business performance and their individ ua l
performance appraisals. In 2023, our executive compensation remained in line with the
Company's business performance and industry benchmarks.
In 2024, we will conduct performance appraisals of our senior management based
on various factors, including our annual financial status and overall business
performance. Their compensation will be linked to the Company's business
performance to incentivize their enthusiasm, initiative, and creativity, thus ensuring the
long-term stability and growth of the Company.
IX. Other Matters
The Company will consistently evaluate the progress of the "Corporate Value and
Return Enhancement Action Plan" Action Plan while fulfilling our obligation to
disclose information promptly. We will stay focused on our main business activities
while enhancing our competitiveness, profitability, and risk management capabilities.
Our goal is to protect investor interests by ensuring effective business manageme nt,
standardized corporate governance, and satisfactory returns. We are committed to
fulfilling our duties as a listed company responsibly and efficiently. We aim to mainta in
a positive market image, reward investors' trust, and contribute to the stable and healthy
development of the capital market.
Please note that the future plans and strategies mentioned in this document are
forward-looking statements and do not constitute binding commitments to investors.
Investors are advised to be aware of associated risks.
The Board of Directors of Amlogic (Shanghai) Co., Ltd.
April 12, 2024
This report has been prepared in Chinese and English respectively. In case of
discrepancy in the interpretation of this report, the Chinese version shall prevail.
