Source of the performance data of some companies in the semiconductor industrial chain in the first half of 2024: Choice
Processed by Zhang Wenzhi
Prepared by Fan Yulu
The earnings season kicks into high gear for A-share companies as they report semi-annual performances. According to rough statistics from the reporter of Shanghai Securities News, nearly 100 STAR Market companies had disclosed their semi-annual data for 2024 as of the evening of August 19. Among them, 81 companies or over 80% went into the black in the first half of the year, 53 realized year-on-year growth in net profit, and 11 reported earnings turnaround.
Overall, companies in the semiconductor industry recorded an upbeat performance due to cyclical recovery of the industry. Semiconductor material, equipment and chip makers such as Nexchip Semiconductor Corporation, Galaxycore Inc., Nanya New Material Technology Co., Ltd., Henan Shijia Photons Technology Co., Ltd., Espressif Systems (Shanghai) Co., Ltd., Crystal Growth & Energy Equipment Inc. And Hygon Information Technology Co., Ltd. reported growth in both revenue and net profit. Some companies made a turnaround. Many recorded a much higher growth rate in net profit than in revenue, signaling significant improvement in profitability by cost reduction, increased efficiency, R&D innovation and adjustment in product mix.
Market Recovery Boosts Both Production and Sales
A rising demand in consumer electronics has driven remarkable results in companies along the industrial chain. On the evening of August 19, Shaanxi Lighte Optoelectronics Material Co., Ltd., the leading OLED material maker disclosed a rising downstream consumer demand and a sharp growth in OLED material sales revenue year-on-year due to a recovering demand in consumer electronics and the sustained increase in OLED penetration rate. In the first half of the year, the company reported RMB 246 million in revenue, up 73.65% year-on-year; RMB 92.4845 million in net profit, up 111.43% year-on-year.
Also benefiting from the combined impact of sales growth and price uptick of copper clad laminates and adhesive sheets, Nanya New Material Technology Co., Ltd. reported in the first half RMB 1.611 billion in revenue, up 9.34% year-on-year, and RMB 55.2913 million in net profit, turning losses into profits.
"In 2024, due to industry integration and a recovery in downstream demand driven by artificial intelligence and consumer electronics, global semiconductor sales have bottomed out and bounced back. In the first half of the year, our orders were sufficient, and the production remained at full capacity since March," stated in the semi-annual report of Nexchip Semiconductor Corporation which specializes in wafer foundry. In the first half of 2024, the company reported RMB 4.398 billion in revenue, up 48.09% year-on-year, and RMB 187 million in net profit, turning losses into profits.
Thinkon Semiconductor Jinzhou Corp. focuses on the R&D, production and sales of monocrystalline silicon materials for semiconductors, with its core products being the essential consumables for wafer manufacturing. In the first half, benefiting from the cyclical recovery of the semiconductor industry, Thinkon's orders have increased. The company reported RMB 125 million in revenue, up 58.84% year-on-year and RMB 4.7621 million in net profit, turning losses into profits.
Chip industry is gaining steam with the release of new technologies and products. The reporter noticed that Hygon Information Technology Co., Ltd., which is China's leading CPU producer, Espressif Systems (Shanghai) Co., Ltd., which is a global WiFi chip leader, Amlogic (Shanghai) Co., Ltd. which specializes in digital SoC chips, and Henan Shijia Photons Technology Co., Ltd. which mainly produces optical chips and devices all recorded good business performance in the first half.
In the first half of 2024, Amlogic reported RMB 3.016 billion in revenue, up 28.33% year-on-year and RMB 362 million in net profit, up 96.06% year-on-year. "The market has gradually recovered since the beginning of this year. Seizing the favorable factors in the market, we have adopted a proactive sales strategy and maintained a high growth rate in sales revenue and profit," said Amlogic.
Hygon Information Technology Co., Ltd. also benefited from the rising demand and efforts to expand the market. In the first half, its revenue was RMB 3.763 billion, with a year-on-year growth rate of 44.08%; net profit was RMB 853 million, with a year-on-year growth rate of 25.97%. In the same period, Henan Shijia Photons Technology Co., Ltd.’s net profit turned positive compared with last year. The company's passive and active chips and devices, indoor optical cables and cable polymer materials all recorded year-on-year growth to varying degrees, driving a rise in revenue. In the first half, the company reported RMB 449 million in revenue, with a year-on-year increase of 36.07% and RMB 11.9563 million in net profit.
In terms of special equipment for semiconductors, the number of batch orders delivered in the period saw an increase thanks to the expansion in sales. Crystal Growth & Energy Equipment Inc. recorded RMB 199 million in revenue in the first half, up 73.76% year-on-year and RMB 35.0017 million in net profit, up 131.99% year-on-year.
More Investment in R&D to Increase Profit
The reporter noticed that in addition to external factors such as the market recovery, there are internal drivers boosting performance of STAR Market companies. Semi-annual reports show that many companies in the semiconductor industry increased their R&D investment by more than 20% year on year in the first half of 2024. The resulting product upgrading, product diversification and structural optimization have enhanced their competitiveness and profitability.
"Our revenue largely came from classic products in past years. Since last year, new sub-categories have significantly grown to inject new earnings momentum." After recent disclosure of its semi-annual report, Espressif Systems (Shanghai) Co., Ltd. accepted surveys by many institutions. In the first half of the year, the company reported RMB 920 million in revenue, up 37.96% year-on-year and RMB 152 million in net profit, up 134.85% year-on-year.
The semi-annual report show that compared with the same period last year, both the company's new and existing customers contributed to its business growth. The cost-effective product lines ESP32-C3 and ESP32-C2 in the new sub-categories as well as the high-performance product line ESP32-S3 were all in a stage of rapid growth. The expanded product matrix was able to meet the application needs of a wider range of customers, which ultimately led to overall revenue growth. In the first half of the year, the company invested RMB 219 million in R&D, up 22.73% year on year. "The company's gross profit margin is over 40%, achieving the preset target. Therefore, when the revenue growth rate exceeds 20%, the operating leverage effect comes into play and profits increase rapidly," said the company.
Nexchip Semiconductor Corporation also reported a high R&D investment. In the first half of 2024, the company's R&D investment reached RMB 614 million, registering a year-on-year increase of 22.27% and accounting for 13.97% of the company's revenue. Meanwhile, 151 new invention patents and 36 utility model patents were obtained. "The company's R&D has progressed smoothly. Remarkable results have been achieved and new products have been gradually introduced into the market," said Nexchip Semiconductor Corporation.
At the same time, the company has enriched its product categories and optimized its product mix to increase the gross profit level. In the first half of the year, the contribution of CIS (CMOS image sensor) to the company's revenue rose significantly. As a result, CIS became the company's second most important product and CIS production was at full capacity. The company noted that it currently has a wafer foundry that can produce up to 115,000 pieces per month and plans to expand the production capacity by 30,000 to 50,000 pieces per month in 2024, with high-order CIS as the main direction.
Galaxycore Inc., a CIS manufacturer, reported RMB 2.79 billion in revenue in the first half of the year, up 42.94% year-on-year, and RMB 77.4895 million in net profit, turning losses into gains year on year. In the first half, benefiting from the recovery of the global mobile phone market and the continuous cost optimization by downstream customers, the company became more competitive in single-chip high-pixel products, which promoted its revenue in cellphone CIS business to RMB 1.564 billion, up 81.32% year on year.
The remarkable performance of Amlogic (Shanghai) Co., Ltd. is also driven by improved performance of its new products. The semi-annual report showed that in the first half of 2024, the company's T series products continued to gain important customers and make breakthroughs in the market, with sales revenue increasing by about 70% year on year. After the first W series Wi-Fi 6 product was launched, it quickly gained market recognition and orders increased rapidly. At the same time, the company’s new 6nm commercial chips based on next-generation ARMV9 architecture and self-developed edge AI capabilities has secured the first commercial orders; the company's 8K chips performed well in the first bulk bidding for commercial use by domestic operators.
In the first half of 2024, the company spent RMB 674 million on R&D, a year-on-year increase of RMB 66 million. "Positive factors continue to emerge in the overall global consumer electronics market, and the company's active sales strategy and potential-unleashing measures continue to take effect. As a result, new products continue to be launched with growing sales, and new markets are explored. Driven by them, the company will continue to maintain growth," said Amlogic.
The above information is provided for reference purposes only and does not constitute investment advice.
