ZTE CORPORATION 中興通訊股份有限公司 (a joint stock limited company incorporated in the People's Republic of China with limited liability) 16 September 2025 ZTE Corporation (the "Company") – Notice of Publication of 2025 Interim Report ("Current Corporate Communication") The English and Chinese versions of the Company's Current Corporate Communication are available on the Company's website at www.zte.com.cn and the HKEXnews website of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") at www.hkexnews.hk. ...

ZTE CORPORATION 中興通訊股份有限公司 (a joint stock limited company incorporated in the People's Republic of China with limited liability) （於中華人民共和國註冊成立的股份有限公司） (Stock Code / 股份代號：00763) Dear registered holder, 16 September 2025 ZTE Corporation (the "Company") – Notice of Publication of 2025 Interim Report ("Current Corporate Communication") The English and Chinese versions of the Company's Current Corporate Communication are available on the Company's website at www.zte.com.cn and the HKEXnews website of The Stock E ...

[Glossary](index=4&type=section&id=Glossary) This chapter defines key terms and technical vocabulary used in the report, covering 5G, AI, network technology, data processing, energy, and terminals, to aid reader comprehension - The report includes multiple 5G-related technical terms, such as AAU (Active Antenna Unit), NTN (Non-Terrestrial Network), and AgentGuard (a business assurance solution based on 5G-A base station native intelligence)[8](index=8&type=chunk)[9](index=9&type=chunk) - AI-related terms include AI-UPF (User Plane Function optimized with AI technology), AI Agent (Artificial Intelligence Agent), large models, and multimodal AI, indicating the company's emphasis on AI technology[8](index=8&type=chunk)[11](index=11&type=chunk) - Data center and network infrastructure terms such as DPU (Data Processing Unit), CDN (Content Delivery Network), and OTN (Optical Transport Network) reflect the company's extensive layout in the ICT field[8](index=8&type=chunk)[9](index=9&type=chunk) [Chapter 1 Company Profile and Summary of Key Financial Data](index=8&type=section&id=Chapter%201%20Company%20Profile%20and%20Summary%20of%20Key%20Financial%20Data) This chapter outlines ZTE Corporation's basic information, industry, and main businesses, providing a summary of key financial data for H1 2025, including operating revenue, net profit, asset-liability status, and per-share metrics, while explaining the impact of accounting standard changes - The company belongs to the telecommunications equipment manufacturing industry, offering complete end-to-end products and solutions in the ICT sector, integrating "design, development, production, sales, and service," focusing on "carrier networks, government and enterprise businesses, and consumer businesses" with no significant changes in main operations during the reporting period[12](index=12&type=chunk) [1.1 Company Profile](index=8&type=section&id=1.1%20Company%20Profile) This section details ZTE Corporation's basic company information, including legal name, registered address, industry, main businesses, A/H share listing information, contact details, and information disclosure channels, highlighting the company's comprehensive layout in the ICT industry - ZTE Corporation is registered in Shenzhen, China, with shares listed on the Shenzhen Stock Exchange Main Board (A-share code: 000063) and the Hong Kong Stock Exchange Main Board (H-share code: 00763)[5](index=5&type=chunk)[12](index=12&type=chunk) - The company's legal representative is Xu Ziyang, and its headquarters and office address are located in ZTE Building, Keji South Road, High-tech Industrial Park, Nanshan District, Shenzhen, Guangdong Province, China[12](index=12&type=chunk) [1.2 Summary of Key Financial Data](index=9&type=section&id=1.2%20Summary%20of%20Key%20Financial%20Data) This section presents ZTE Corporation's key financial data and indicators for H1 2025, showing a 14.51% year-on-year increase in operating revenue, but a decrease in net profit attributable to ordinary shareholders and non-recurring net profit, and a significant reduction in net cash flow from operating activities, also explaining the retrospective adjustment of H1 2024 data due to accounting policy changes - The company prepares financial reports in accordance with Chinese Enterprise Accounting Standards and retrospectively adjusted "Operating Costs" and "Selling Expenses" for H1 2024 to comply with the provisions of "Interpretation No. 18 of Enterprise Accounting Standards"[14](index=14&type=chunk)[15](index=15&type=chunk) 2025 H1 Key Financial Data and Indicators (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 71,552,734 | 62,487,098 | 14.51% | | Net Profit Attributable to Ordinary Shareholders of the Listed Company | 5,057,571 | 5,732,446 | (11.77%) | | Net Profit Attributable to Ordinary Shareholders of the Listed Company After Deducting Non-recurring Gains and Losses | 4,103,900 | 4,963,643 | (17.32%) | | Net Cash Flow from Operating Activities | 1,299,408 | 7,000,399 | (81.44%) | | Total Assets (2025.6.30 vs 2024.12.31) | 216,310,325 | 207,323,230 | 4.33% | | Total Liabilities (2025.6.30 vs 2024.12.31) | 141,200,521 | 134,212,948 | 5.21% | | Owners' Equity Attributable to Ordinary Shareholders of the Listed Company (2025.6.30 vs 2024.12.31) | 74,838,209 | 72,808,483 | 2.79% | 2025 H1 Per-Share Metrics and Financial Ratios (Unit: Yuan/share, %) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 1.06 | 1.20 | (11.67%) | | Diluted Earnings Per Share | 1.06 | 1.20 | (11.67%) | | Basic Earnings Per Share After Deducting Non-recurring Gains and Losses | 0.86 | 1.04 | (17.31%) | | Net Cash Flow from Operating Activities Per Share | 0.27 | 1.46 | (81.51%) | | Net Assets Per Share Attributable to Ordinary Shareholders of the Listed Company (2025.6.30 vs 2024.12.31) | 15.64 | 14.72 | 6.25% | | Weighted Average Return on Net Assets | 6.85% | 8.28% | Decreased by 1.43 percentage points | | Weighted Average Return on Net Assets After Deducting Non-recurring Gains and Losses | 5.56% | 7.17% | Decreased by 1.61 percentage points | | Asset-Liability Ratio (2025.6.30 vs 2024.12.31) | 65.28% | 64.74% | Increased by 0.54 percentage points | 2025 H1 Non-recurring Gains and Losses and Amounts (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | | :--- | :--- | :--- | | Gains on Disposal of Non-current Assets | 3,846 | 67,365 | | Investment Income from Disposal of Long-term Equity Investments | 75,791 | 1,000 | | Gains and Losses from Changes in Fair Value of Financial Assets and Liabilities Held, and Gains and Losses from Disposal of Financial Assets and Liabilities | 385,680 | (141,560) | | Gains from Changes in Fair Value of Investment Properties | — | (145,522) | | Other Income (excluding specific tax refunds) | 106,543 | 185,922 | | Reversal of Impairment Provision for Individually Significant Accounts Receivable for Which Impairment Provisions Were Made Individually | 702 | 2,241 | | Net Other Non-operating Income and Expenses | 45,949 | (333) | | Other Profit and Loss Items That Meet the Definition of Non-recurring Gains and Losses | 502,469 | 935,935 | | Less: Income Tax Impact | 168,147 | 135,757 | | Impact on Minority Interests (after tax) | (838) | 488 | | Total | 953,671 | 768,803 | - Software product VAT refund income (**1.63 billion Yuan**) and personal income tax withholding service fee refund income (**34.0 million Yuan**) are classified as recurring operating items and do not belong to non-recurring gains and losses[22](index=22&type=chunk)[161](index=161&type=chunk) [Chapter 2 Board of Directors' Report](index=11&type=section&id=Chapter%202%20Board%20of%20Directors'%20Report) This chapter details ZTE Corporation's core technological innovations, operational review for H1 2025, and business outlook and operating risks for H2, emphasizing R&D investment, strengthening network connectivity, and embracing AI to become a leader in network connectivity and intelligent computing, despite increased revenue but decreased net profit - The company's strategy has upgraded from "connectivity" to "connectivity + computing power," aiming to become a leader in network connectivity and intelligent computing[24](index=24&type=chunk)[26](index=26&type=chunk)[71](index=71&type=chunk) - In H1 2025, the company's operating revenue increased by **14.51%** year-on-year, but net profit attributable to ordinary shareholders of the listed company decreased by **11.77%** year-on-year[71](index=71&type=chunk) [2.1 Core Technological Innovations in H1 2025](index=11&type=section&id=2.1%20Core%20Technological%20Innovations%20in%20H1%202025) This section highlights ZTE Corporation's technological innovations in H1 2025 across underlying core technologies like chips, databases, and operating systems, as well as high-speed networks, computing infrastructure, digital energy, and terminal products, actively embracing AI large models and generative AI to build full-stack, full-scenario intelligent computing solutions and extensively participating in standard setting and patent reserves - Based on forty years of technological accumulation in the DICT field, the company actively seizes opportunities in the digital wave, positioning itself as a "leader in network connectivity and intelligent computing power"[25](index=25&type=chunk)[26](index=26&type=chunk) - In the field of artificial intelligence, the company provides full-stack, full-scenario intelligent computing solutions from infrastructure to applications, with accumulated expertise in high-speed interconnection, in-network computing, computing power native, seamless migration, data processing, and algorithm optimization[26](index=26&type=chunk) [2.1.1 Sustained Long-term Investment, Mastering Underlying Core Technologies](index=12&type=section&id=2.1.1%20Sustained%20Long-term%20Investment,%20Mastering%20Underlying%20Core%20Technologies) ZTE Corporation continuously invests in three underlying core technologies: chips, databases, and operating systems, possessing industry-leading full-process chip design capabilities, with its self-developed GoldenDB database ranking first in the financial and carrier industries, and its operating system achieving leading levels in real-time performance, reliability, and security, widely applied across multiple industries - The company began chip R&D in 1996, possessing industry-leading chip full-process design capabilities, building a full-stack computing network foundation around "data, computing power, and network"[28](index=28&type=chunk) - Its self-developed GoldenDB database ranks first in the financial and carrier industries in the transactional database field, as published in the "China Database Industry Map (2025)" by the China Academy of Information and Communications Technology[29](index=29&type=chunk) - The company began independent R&D of operating systems in 2001, forming a full series of solutions covering embedded, server, desktop, and terminal device types, and has obtained multiple domestic and international certifications and awards[30](index=30&type=chunk) [2.1.2 Technology Innovation Leading, Continuously Enhancing Product Competitiveness](index=12&type=section&id=2.1.2%20Technology%20Innovation%20Leading,%20Continuously%20Enhancing%20Product%20Competitiveness) This section details ZTE Corporation's technological innovations and product competitiveness enhancements in high-speed networks (wireless, core network, wireline, AI integration, 5G-A evolution), computing infrastructure (servers and storage, switches, data centers, training and inference platforms), digital energy (communication energy, new energy), and terminals (smart home, mobile terminals, cloud PC), achieving leading positions in multiple niche markets and actively promoting the commercialization of cutting-edge technologies like AI and 5G-A - In wireless access, the company launched Super-N 2.0 power amplifier technology, ultra-high integration RF modules, and is accelerating the application of innovative technologies such as ultra-dual 10-gigabit networks, integrated sensing and communication, and integrated space-air-ground in 5G-A evolution[31](index=31&type=chunk)[34](index=34&type=chunk) - It launched the first AI-native core network, AIR Core, deeply integrating large language models, communication large models, and digital twin technologies to achieve "AI + cloud-native" evolution from cloud-native[32](index=32&type=chunk) - In fixed network access, it released the industry's first third-generation time-division 50G-PON and launched the "AI 10-Gigabit All-Optical Campus" solution[33](index=33&type=chunk) - In the computing infrastructure domain, it strengthened R&D of intelligent computing-related products, providing end-to-end, full-stack, full-scenario intelligent computing solutions, and ranked first globally for four consecutive quarters in OTN 800G pluggable port shipments[36](index=36&type=chunk)[39](index=39&type=chunk) - In digital energy, it provides full-product, full-scenario, full-lifecycle end-to-end power supply solutions and achieved breakthroughs in new energy, signing a large order for a **128MW** solar power plant with Turk Telekom[45](index=45&type=chunk) - In terminal products, PON CPE and IP set-top box shipments ranked first globally, 5G FWA & MBB market share ranked first globally for four consecutive years, and cloud PC ranked first in the Chinese desktop cloud terminal market[46](index=46&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) [2.1.3 Building Intelligent Platforms, Converging Core Capabilities to Empower Internally and Externally](index=18&type=section&id=2.1.3%20Building%20Intelligent%20Platforms,%20Converging%20Core%20Capabilities%20to%20Empower%20Internally%20and%20Externally) This section describes how ZTE Corporation builds intelligent platforms and converges core capabilities to empower internal and external digital and intelligent transformation through its Digital Nebula 4.0 platform, self-developed ZTE Nebula large models, XR metaverse engine, and trusted data space solution "Digital Matrix," achieving multiple leading positions in large model evaluations and implementing applications in various industries - Launched Digital Nebula 4.0, enabling assembly-based development capabilities, providing rich corpus management tools, and creating an intelligent agent factory to help industry users build AI applications in "minutes"[54](index=54&type=chunk) - Self-developed ZTE Nebula large models include foundational large models, R&D large models, communication large models, and industry large models, with the R&D large model ranking first in inference and second overall in domestic authoritative third-party evaluations[55](index=55&type=chunk) - The XR metaverse engine's core capabilities continue to evolve, launching AI content generation algorithms, being rated as a five-star metaverse supplier in China, and implementing projects in digital cultural tourism and educational research[56](index=56&type=chunk) - Released the trusted data space solution "Digital Matrix" and AI application firewall, actively participating in data standard construction and trusted data space pilot projects, strengthening data security[57](index=57&type=chunk) [2.1.4 Empowering Industrial Transformation, Creating Value Together with Industries](index=18&type=section&id=2.1.4%20Empowering%20Industrial%20Transformation,%20Creating%20Value%20Together%20with%20Industries) ZTE Corporation focuses on high-value scenarios, leveraging the Digital Nebula 4.0 platform to create over 100 industry digital and intelligent innovation solutions, implementing benchmark projects in industrial, metallurgical steel, mining, power, transportation, and government sectors, assisting industrial transformation and upgrading, and earning multiple industry honors - Nanjing Binjiang Intelligent Manufacturing Base was evaluated by the China Academy of Information and Communications Technology's CAICT Certification Center and awarded the first five-star 5G factory in China[59](index=59&type=chunk) - Partnered with Hegang Group to establish the Northern Joint Innovation Center, releasing an intelligent computing integrated machine for the steel industry and building a steel full-process large model[60](index=60&type=chunk) - In the mining sector, partnered with over **60** partners and more than **40** leading customers, implementing over **500** intelligent mining projects nationwide[61](index=61&type=chunk) - In the power sector, launched a digital power station solution and implemented 5G+AI smart power plant projects in Liaoning, Hunan, Yunnan, and other regions[61](index=61&type=chunk) - In the transportation sector, participated in the "Qingdao Metro Artificial Intelligence Joint Innovation Consortium," assisting in the release of the first artificial intelligence large model in China's urban rail transit industry[62](index=62&type=chunk) - In the government sector, provided the industry's only public-private integrated space-air-ground drone emergency rescue platform solution and served digital society construction[63](index=63&type=chunk) [2.1.5 Extensive Participation in Standard Work, Reserving Rich Value Patents](index=19&type=section&id=2.1.5%20Extensive%20Participation%20in%20Standard%20Work,%20Reserving%20Rich%20Value%20Patents) ZTE Corporation ranks among the top tier in global patent布局 and is a major contributor to global 5G technology research and standard setting; as of June 30, 2025, the company holds approximately 94,000 global patent applications, with over 50,000 cumulative authorized patents, and a large number of patents in chips and AI, actively participating in over 200 international standardization organizations and industry alliances - As of June 30, 2025, the Group holds approximately **94,000** global patent applications and over **50,000** cumulative global authorized patents[64](index=64&type=chunk) - In the chip domain, it holds approximately **5,700** patent applications and over **3,700** cumulative authorized patents; in the AI domain, it holds nearly **5,500** patent applications, with nearly half already authorized[64](index=64&type=chunk) - The Group is a member of over **200** international standardization organizations, industry alliances, scientific associations, and open-source communities such as ITU, 3GPP, and ETSI, and holds board memberships or important positions in multiple organizations[65](index=65&type=chunk) [2.2 Operational Review for H1 2025](index=20&type=section&id=2.2%20Operational%20Review%20for%20H1%202025) This section reviews the development of domestic and international ICT markets in H1 2025 and analyzes ZTE Corporation's business and financial performance, showing a 14.51% year-on-year increase in operating revenue but a decrease in net profit, with government and enterprise business revenue doubling in the domestic market and mobile product revenue growing by double digits in the international market, also detailing expenses, R&D investment, cash flow, assets and liabilities, and investment status - In H1 2025, facing a complex environment of slowing global economic growth, the Chinese ICT market demonstrated strong development resilience, with accelerated construction of computing infrastructure, and artificial intelligence transforming from a "new driving force" to a "core engine" leading industry development[66](index=66&type=chunk) - International telecom operators' capital expenditures are showing signs of recovery, with deepening connectivity capabilities of 5G and optical fiber networks, and the expansion of digital and intelligent businesses such as AI large models and computing power, jointly driving industry development[68](index=68&type=chunk)[70](index=70&type=chunk) - In H1 2025, the Group achieved operating revenue of **71.55 billion Yuan**, a year-on-year increase of **14.51%**; net profit attributable to ordinary shareholders of the listed company was **5.06 billion Yuan**, a year-on-year decrease of **11.77%**[71](index=71&type=chunk) [2.2.1 Industry Development Overview](index=20&type=section&id=2.2.1%20Industry%20Development%20Overview) This section analyzes the development trends of domestic and international ICT markets in H1 2025, noting stable basic communication services and accelerated computing infrastructure construction in the domestic market, with AI technology driving applications towards "user-friendly and practical" stages and smart terminals entering an era of scenario innovation; in the international market, telecom operator capital expenditures are recovering, 5G deployment is evolving differentially, and the popularization of generative AI is boosting data traffic, driving the expansion of the fixed network market, with green computing power becoming key for sustainable industry development - In H1, telecom business revenue reached **905.5 billion Yuan**, a year-on-year increase of **1%**, with fixed broadband and mobile phone users totaling **684 million** and **1.81 billion**, respectively[66](index=66&type=chunk) - Breakthroughs in large model technologies represented by DeepSeek have greatly propelled AI applications beyond the "usable" threshold into a new stage of "user-friendly and practical" solutions[67](index=67&type=chunk) - Global 5G deployment shows differentiated evolution characteristics, with developed markets shifting strategic focus to 5G SA mode, while emerging markets in Asia-Pacific and Latin America concentrate on expanding basic 5G coverage[68](index=68&type=chunk) - The popularization of generative AI is becoming a catalyst for boosting data traffic and driving the continuous expansion of the fixed network market, with comprehensive modernization of backbone networks towards 400G and higher speeds[70](index=70&type=chunk) [2.2.2 Business and Financial Analysis of the Group](index=21&type=section&id=2.2.2%20Business%20and%20Financial%20Analysis%20of%20the%20Group) This section provides an in-depth analysis of ZTE Corporation's business and financial performance in H1 2025, with operating revenue increasing by 14.51% year-on-year but net profit decreasing, government and enterprise business revenue doubling in the domestic market, and mobile product revenue growing by double digits in the international market, detailing revenue, costs, gross margin, expenses, R&D investment, cash flow, assets and liabilities, and investment status for each business segment, and explaining the issuance of H-share convertible bonds - In H1 2025, the Group achieved operating revenue of **71.55 billion Yuan**, a year-on-year increase of **14.51%**; net profit attributable to ordinary shareholders of the listed company was **5.06 billion Yuan**, a year-on-year decrease of **11.77%**[71](index=71&type=chunk) - Government and enterprise business revenue increased by **109.93%** year-on-year, becoming the core engine and driving force for the company's overall revenue growth[73](index=73&type=chunk)[79](index=79&type=chunk) - The company announced on July 29, 2025, its intention to issue **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030 under a general mandate[116](index=116&type=chunk) [2.2.2.1 Operating Revenue, Costs, and Gross Margin](index=21&type=section&id=2.2.2.1%20Operating%20Revenue,%20Costs,%20and%20Gross%20Margin) This section details ZTE Corporation's operating revenue, costs, and gross margin for H1 2025, segmented by industry, business, and region; total operating revenue increased by 14.51% year-on-year, but gross margin decreased by 7.99 percentage points; domestic market revenue grew by 17.55%, with government and enterprise business revenue doubling, while international market revenue grew by 7.77%; carrier network revenue decreased, while government and enterprise business and consumer business revenues increased 2025 H1 Operating Revenue, Costs, and Gross Margin (Unit: Thousand Yuan, %) | Operating Revenue Composition | Operating Revenue | Percentage of Operating Revenue | Operating Costs | Gross Margin | Year-on-year Change in Operating Revenue | Year-on-year Change in Operating Costs | Change in Gross Margin (percentage points) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **I. By Industry** | | | | | | | | | Telecommunications Equipment Manufacturing Industry | 71,552,734 | 100% | 48,333,217 | 32.45% | 14.51% | 29.86% | (7.99) | | **II. By Business Segment** | | | | | | | | | Carrier Networks | 35,063,905 | 49.00% | 16,500,879 | 52.94% | (5.99%) | (3.15%) | (1.38) | | Government and Enterprise Business | 19,254,243 | 26.91% | 17,661,629 | 8.27% | 109.93% | 146.17% | (13.50) | | Consumer Business | 17,234,586 | 24.09% | 14,170,709 | 17.78% | 7.59% | 8.95% | (1.03) | | **III. By Region** | | | | | | | | | China | 50,616,777 | 70.74% | 33,562,004 | 33.69% | 17.55% | 35.39% | (8.74) | | Asia (excluding China) | 8,063,704 | 11.27% | 5,819,537 | 27.83% | 6.99% | 20.00% | (7.83) | | Africa | 3,258,886 | 4.55% | 2,015,922 | 38.14% | 8.78% | 35.76% | (12.29) | | Europe, Americas, and Oceania | 9,613,367 | 13.44% | 6,935,754 | 27.85% | 8.10% | 13.79% | (3.61) | - Domestic market operating revenue was **50.62 billion Yuan**, a year-on-year increase of **17.55%**, accounting for **70.74%** of total operating revenue; gross margin was **33.69%**, a year-on-year decrease of **8.74** percentage points[74](index=74&type=chunk) - International market operating revenue was **20.94 billion Yuan**, a year-on-year increase of **7.77%**, accounting for **29.26%** of total operating revenue; gross margin was **29.45%**, a year-on-year decrease of **6.57** percentage points[75](index=75&type=chunk) - Carrier network operating revenue was **35.06 billion Yuan**, a year-on-year decrease of **5.99%**, mainly due to a decline in wireless access product revenue; government and enterprise business operating revenue was **19.25 billion Yuan**, a year-on-year increase of **109.93%**, mainly due to growth in server and storage revenue; consumer business operating revenue was **17.23 billion Yuan**, a year-on-year increase of **7.59%**, mainly due to growth in mobile phone products and cloud PC revenue[76](index=76&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [2.2.2.2 Expenses](index=24&type=section&id=2.2.2.2%20Expenses) This section discloses ZTE Corporation's expenses for H1 2025; R&D expenses were largely flat year-on-year, selling expenses increased due to higher market promotion investment, administrative expenses decreased due to improved management efficiency, financial expenses significantly decreased due to increased net interest income and exchange gains, and income tax expense increased due to higher subsidiary income tax expenses 2025 H1 Expenses (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun Note | Year-on-year Change | | :--- | :--- | :--- | :--- | | R&D Expenses | 12,664,812 | 12,725,895 | (0.48%) | | Selling Expenses | 4,383,807 | 4,166,612 | 5.21% | | Administrative Expenses | 2,130,082 | 2,236,650 | (4.76%) | | Financial Expenses | (444,697) | 46,305 | (1,060.36%) | | Income Tax Expense | 607,723 | 566,793 | 7.22% | - The Group's financial expenses for H1 2025 were **-444.70 million Yuan**, a year-on-year decrease of **1,060.36%**, mainly due to increased net interest income and exchange gains from exchange rate fluctuations in the current period, compared to a loss in the prior period[83](index=83&type=chunk) [2.2.2.3 R&D Investment](index=24&type=section&id=2.2.2.3%20R%26D%20Investment) This section discloses ZTE Corporation's R&D investment for H1 2025; total R&D investment increased slightly year-on-year, with a significant increase in capitalized amounts and a slight decrease in expensed amounts, while R&D investment as a percentage of operating revenue decreased 2025 H1 R&D Investment (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total R&D Investment | 13,540,820 | 13,428,930 | 0.83% | | Of which: Expensed R&D | 12,664,812 | 12,725,895 | (0.48%) | | Capitalized R&D | 876,008 | 703,035 | 24.60% | | R&D Investment as a Percentage of Operating Revenue | 18.92% | 21.49% | Decreased by 2.57 percentage points | | Capitalized R&D Investment as a Percentage of Total R&D Investment | 6.47% | 5.24% | Increased by 1.23 percentage points | [2.2.2.4 Other Items in Profit Composition](index=24&type=section&id=2.2.2.4%20Other%20Items%20in%20Profit%20Composition) This section lists other items in ZTE Corporation's profit composition for H1 2025 and their changes; investment income and fair value change gains both turned from loss to gain, non-operating income significantly increased, while asset impairment losses significantly decreased, and gains on disposal of assets substantially declined 2025 H1 Other Items in Profit Composition (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Other Income | 1,792,903 | 1,800,310 | (0.41%) | | Investment Income | 150,909 | (183,125) | 182.41% | | Gains from Changes in Fair Value | 159,402 | (416,539) | 138.27% | | Credit Impairment Losses (losses presented as negative) | (114,916) | 74,715 | 253.81% | | Asset Impairment Losses (losses presented as negative) | (285,227) | (600,582) | (52.51%) | | Gains on Disposal of Assets | 3,846 | 67,365 | (94.29%) | | Non-operating Income | 97,087 | 35,078 | 176.77% | | Non-operating Expenses | 51,138 | 35,411 | 44.41% | - The Group's investment income for H1 2025 was **150.91 million Yuan**, a year-on-year increase of **182.41%**, mainly due to increased income from structured deposits and increased profits from joint ventures and associates in the current period[88](index=88&type=chunk) - The Group's asset impairment losses for H1 2025 were **285.23 million Yuan**, a year-on-year decrease of **52.51%**, mainly due to a decrease in inventory write-downs in the current period[88](index=88&type=chunk) [2.2.2.5 Cash Flow](index=25&type=section&id=2.2.2.5%20Cash%20Flow) This section analyzes ZTE Corporation's cash flow for H1 2025; net cash flow from operating activities significantly decreased year-on-year, mainly due to increased cash payments for goods purchased and services received; net cash flow from investing activities increased year-on-year, mainly due to a decrease in purchases of time deposit products; net cash flow from financing activities significantly increased year-on-year, mainly due to increased net borrowings 2025 H1 Cash Flow (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Subtotal of Cash Inflows from Operating Activities | 78,227,584 | 73,969,283 | 5.76% | | Subtotal of Cash Outflows from Operating Activities | 76,928,176 | 66,968,884 | 14.87% | | Net Cash Flow from Operating Activities | 1,299,408 | 7,000,399 | (81.44%) | | Subtotal of Cash Inflows from Investing Activities | 64,708,107 | 26,301,631 | 146.02% | | Subtotal of Cash Outflows from Investing Activities | 72,375,836 | 37,685,028 | 92.05% | | Net Cash Flow from Investing Activities | (7,667,729) | (11,383,397) | 32.64% | | Subtotal of Cash Inflows from Financing Activities | 58,957,973 | 130,449,669 | (54.80%) | | Subtotal of Cash Outflows from Financing Activities | 54,875,251 | 129,412,462 | (57.60%) | | Net Cash Flow from Financing Activities | 4,082,722 | 1,037,207 | 293.63% | | Net Increase in Cash and Cash Equivalents | (2,285,056) | (3,281,292) | 30.36% | - The Group's net cash flow from operating activities for H1 2025 decreased year-on-year, mainly due to increased cash payments for goods purchased and services received in the current period[90](index=90&type=chunk) - The Group's net cash flow from financing activities for H1 2025 increased year-on-year, mainly due to increased net borrowings in the current period[92](index=92&type=chunk) [2.2.2.6 Assets and Liabilities](index=26&type=section&id=2.2.2.6%20Assets%20and%20Liabilities) This section discloses changes in ZTE Corporation's major asset and liability items as of June 30, 2025; accounts receivable, other current assets, and non-current liabilities due within one year all showed significant growth; the book value of fixed assets slightly decreased, and investment properties are measured at fair value; the company also disclosed asset pledges and contingent liabilities 2025 June 30 Major Asset and Liability Item Changes (Unit: Thousand Yuan, %) | Item | Amount as of 2025 June 30 | Percentage of Total Assets | Amount as of 2024 Dec 31 | Percentage of Total Assets | Year-on-year Change (percentage points) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 216,310,325 | 100.00% | 207,323,230 | 100.00% | — | | Cash and Cash Equivalents | 39,470,343 | 18.25% | 43,885,348 | 21.17% | (2.92) | | Accounts Receivable | 29,201,211 | 13.50% | 21,288,393 | 10.27% | 3.23 | | Inventories | 42,056,940 | 19.44% | 41,257,657 | 19.90% | (0.46) | | Other Current Assets | 12,199,180 | 5.64% | 8,899,348 | 4.29% | 1.35 | | Short-term Borrowings | 8,577,542 | 3.97% | 7,027,070 | 3.39% | 0.58 | | Accounts Payable | 23,400,704 | 10.82% | 22,371,792 | 10.79% | 0.03 | | Contract Liabilities | 10,745,743 | 4.97% | 12,859,416 | 6.20% | (1.23) | | Non-current Liabilities Due Within One Year | 7,965,830 | 3.68% | 5,592,740 | 2.70% | 0.98 | | Long-term Borrowings | 46,358,614 | 21.43% | 44,058,915 | 21.25% | 0.18 | - As of June 30, 2025, the Group's accounts receivable were **29.20 billion Yuan**, an increase of **37.17%** from the end of the previous year, mainly due to an increase in domestic short-term accounts receivable in the current period[94](index=94&type=chunk) - As of June 30, 2025, the Group's non-current liabilities due within one year were **7.97 billion Yuan**, an increase of **42.43%** from the end of the previous year, mainly due to an increase in long-term borrowings due within one year in the current period[95](index=95&type=chunk) - As of June 30, 2025, the book value of assets pledged by the Group was **552.22 million Yuan**, primarily used to obtain bank loans[99](index=99&type=chunk) [2.2.2.7 Liquidity and Capital Structure](index=27&type=section&id=2.2.2.7%20Liquidity%20and%20Capital%20Structure) This section analyzes ZTE Corporation's liquidity and capital structure; the company has sufficient funds for debt repayment and operations, with healthy current and quick ratios; the asset-liability ratio increased; debt primarily consists of short-term and long-term bank loans, ultra-short-term financing bonds, and medium-term notes, with no significant seasonal demand; the company also disclosed capital expenditures and capital commitments - The Group's current ratio for H1 2025 was **1.75**, and quick ratio was **1.24**, indicating sufficient funds for repaying maturing debts, capital expenditures, and normal production and operations[101](index=101&type=chunk) - As of June 30, 2025, the Group's asset-liability ratio was **47.4%**, an increase of **3.1** percentage points from **44.3%** as of December 31, 2024[102](index=102&type=chunk) 2025 June 30 Bank Loans and Medium-Term Notes by Short-term and Long-term (Unit: Thousand Yuan) | Item | 2025 June 30 | 2024 Dec 31 | | :--- | :--- | :--- | | Short-term Bank Loans | 15,411,629 | 11,475,033 | | Long-term Bank Loans | 46,358,614 | 44,058,915 | | Medium-term Notes | 4,377,055 | 1,004,880 | | Total | 66,147,298 | 56,538,828 | - The Group's capital expenditure for H1 2025 was **2.09 billion Yuan**, mainly for purchasing equipment assets, capitalizing R&D investments, and constructing self-use office buildings[111](index=111&type=chunk) 2025 June 30 Capital Commitments (Unit: Thousand Yuan) | Item | 2025 June 30 | 2024 Dec 31 | | :--- | :--- | :--- | | Contracted but not yet provided for capital expenditure commitments | 3,206,440 | 2,457,110 | | Investment commitments | 463,320 | 463,320 | | Total | 3,669,760 | 2,920,430 | [2.2.2.8 Share-related Matters](index=29&type=section&id=2.2.2.8%20Share-related%20Matters) This section discloses ZTE Corporation's share capital as of June 30, 2025, with no changes in total share capital; during the reporting period, the company and its subsidiaries did not repurchase, sell, or redeem any listed securities, nor did they hold any treasury shares - As of June 30, 2025, the company's total issued share capital was **4,783,534,887** shares (of which A-shares were **4,028,032,353** shares and H-shares were **755,502,534** shares), unchanged from the end of the previous year[115](index=115&type=chunk) - During the reporting period, the company and its subsidiaries did not repurchase, sell, or redeem any of the company's listed securities; the company held no treasury shares[115](index=115&type=chunk) [2.2.2.9 Post-reporting Period Events](index=29&type=section&id=2.2.2.9%20Post-reporting%20Period%20Events) This section discloses significant events that occurred after ZTE Corporation's reporting period, specifically the company's completion of H-share convertible bond issuance in July 2025 to optimize capital structure and broaden financing channels - The company announced on July 29, 2025, its intention to issue **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030 under a general mandate[116](index=116&type=chunk) [2.2.3 Group Investment Status](index=29&type=section&id=2.2.3%20Group%20Investment%20Status) This section details ZTE Corporation's investment status for H1 2025, including equity investments, major controlled subsidiaries and associates, securities investments, derivative transactions, and entrusted wealth management; long-term equity investments slightly increased, but other external equity investments decreased; the company uses its own funds for entrusted wealth management and conducts hedging derivative transactions to manage exchange rate risks - As of June 30, 2025, the Group's long-term equity investments were **2.34 billion Yuan**, a **0.27%** increase from **2.33 billion Yuan** at the end of the previous year; other external equity investments were **786.93 million Yuan**, a **4.48%** decrease from **823.88 million Yuan** at the end of the previous year[117](index=117&type=chunk) - Shenzhen ZTE Software Co., Ltd.'s net profit accounted for over **10%** of the Group's consolidated net profit[118](index=118&type=chunk) - In H1 2025, the Group's derivative contracts for hedging incurred a loss of **137 million Yuan**, while the hedged items generated exchange gains of **282 million Yuan**, resulting in a net gain of **145 million Yuan**; the Group's derivative transactions were all for hedging purposes, largely achieving the expected risk management objectives[126](index=126&type=chunk) - As of June 30, 2025, the Group's outstanding balance of wealth management products purchased was **16.75 billion Yuan**, accounting for **7.74%** of the Group's total assets[132](index=132&type=chunk) [2.2.4 Other Disclosure Matters](index=33&type=section&id=2.2.4%20Other%20Disclosure%20Matters) This section states that, apart from the content already disclosed in this chapter, there are no other significant changes or matters required to be disclosed in ZTE Corporation's H1 2025 report according to Appendix D2 of the Hong Kong Stock Exchange Listing Rules, compared to the company's 2024 annual report - Apart from the content already disclosed in this chapter, other content required to be disclosed in the semi-annual report by Appendix D2 of the Hong Kong Stock Exchange Listing Rules has no significant changes compared to the company's 2024 annual report, and there are no other matters requiring disclosure in this report[135](index=135&type=chunk) [2.3 Business Outlook and Operating Risks for H2 2025](index=33&type=section&id=2.3%20Business%20Outlook%20and%20Operating%20Risks%20for%20H2%202025) This section outlines ZTE Corporation's business outlook for H2 2025, expressing confidence in returning to revenue growth and detailing development strategies for carrier networks, government and enterprise businesses, and consumer businesses, while also identifying and analyzing operating risks such as country-specific risks, AI technology risks, intellectual property risks, exchange rate risks, interest rate risks, and customer credit risks - The company expects revenue to return to a growth trajectory in H2 2025, achieving stable operations by solidifying its first-curve businesses (wireless, wireline products) and accelerating the expansion of its second-curve businesses (computing power, mobile phones)[136](index=136&type=chunk)[139](index=139&type=chunk) - The company faces operating risks including country-specific risks, AI technology risks, intellectual property risks, exchange rate risks, interest rate risks, and customer credit risks[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) [2.3.1 Business Outlook for H2 2025](index=33&type=section&id=2.3.1%20Business%20Outlook%20for%20H2%202025) This section outlines ZTE Corporation's business outlook for H2 2025, with the company confident in returning to full-year revenue growth by maintaining a "steady progress, upholding integrity, and embracing innovation" operating philosophy, consolidating market share in first-curve businesses (wireless, wireline products), and accelerating the expansion of second-curve businesses (computing power, mobile phones) - The company is confident that its full-year revenue for 2025 will return to a growth trajectory, achieving stable operations by solidifying its first-curve and developing its second-curve businesses[136](index=136&type=chunk)[139](index=139&type=chunk) - In the carrier network domain, the company will continue to tap the potential of traditional carrier network products, promote 5G-A and 50G PON access upgrades, and deepen cooperation with carriers in computing networks, cloud-network convergence, and intelligent networks[137](index=137&type=chunk) - In the government and enterprise business domain, the company will deepen strategic cooperation with leading internet and financial industry customers, promoting the scaled application of general computing, intelligent computing, and Xinchuang servers[138](index=138&type=chunk) - In the consumer business domain, the company adopts "AI for All" as its core strategy, leveraging an innovative product matrix including AI home, AI mobile phones, mobile internet products, and cloud PCs[139](index=139&type=chunk) [2.3.2 Operating Risks Faced](index=34&type=section&id=2.3.2%20Operating%20Risks%20Faced) This section identifies and analyzes six major operating risks faced by ZTE Corporation: country-specific risks, AI technology risks, intellectual property risks, exchange rate risks, interest rate risks, and customer credit risks; the company has implemented corresponding measures, such as establishing a compliance management system, strengthening ethical AI review, enhancing intellectual property protection, and using financial instruments to hedge risks, to identify, assess, and manage these risks - The company faces country-specific risks, committed to identifying and complying with the laws, regulations, trade, and tax policies of its operating countries by establishing a complete compliance management system[140](index=140&type=chunk) - AI technology risks include deviations between AI model effects and expectations, and issues of authenticity and security of AI-generated content; the company adheres to principles of responsible innovation and AI for good, strengthening technology integration and risk prevention and control[141](index=141&type=chunk) - Intellectual property risks may lead to disputes with other telecom equipment manufacturers, patent licensing companies, and cooperating carriers; the company adopts various forms of protection, such as applying for patent rights or copyright registration[142](index=142&type=chunk) - Exchange rate risks primarily arise from foreign currency exposures from sales, purchases, and financing settled in non-RMB; the company mitigates exchange rate risks through business strategies, internal settlement management, financing structure design, and foreign exchange derivative hedging[143](index=143&type=chunk) - Interest rate risks primarily arise from interest-bearing debt; the company mainly uses total interest-bearing debt control and structured management to reduce interest rate risks, supplemented by derivative financial instruments such as interest rate swaps[144](index=144&type=chunk) - Customer credit risk is identified and managed through internal credit management measures such as customer credit investigations, credit ratings and granting, credit limit management, and overall risk control[145](index=145&type=chunk) [Chapter 3 Corporate Governance, Environmental Performance, and Social Responsibility](index=36&type=section&id=Chapter%203%20Corporate%20Governance,%20Environmental%20Performance,%20and%20Social%20Responsibility) This chapter describes ZTE Corporation's practices in corporate governance, environmental performance, and social responsibility, including continuously improving governance structure, complying with regulatory requirements, actively implementing the "Quality and Return Dual Enhancement" action plan, promoting green enterprise operations and supply chain, building a green digital intelligence foundation, and engaging in public welfare services such as education, medical assistance, low-carbon environmental protection, and rural revitalization through the ZTE Foundation - The company continuously improves its corporate governance structure by regularly reviewing its governance system in accordance with regulatory requirements such as the "Company Law of the People's Republic of China," "Guidelines for Corporate Governance of Listed Companies," and the Listing Rules of the Shenzhen and Hong Kong Stock Exchanges[147](index=147&type=chunk) - The company actively implements the "Quality and Return Dual Enhancement" action plan, adhering to R&D innovation, accelerating expansion from "connectivity" to "connectivity + computing power," and driving the company's revenue back to a growth trajectory[188](index=188&type=chunk) - The company lays a "digital green path" through four dimensions: green enterprise operations, green supply chain, green digital intelligence foundation, and green industry empowerment, achieving a year-on-year decrease of over **10%** in electricity consumption per unit output in H1 2025[189](index=189&type=chunk) [3.1 Corporate Governance Overview](index=36&type=section&id=3.1%20Corporate%20Governance%20Overview) This section outlines ZTE Corporation's corporate governance structure, including the general meeting of shareholders, board of directors, and management, and details shareholder information, share changes, profit distribution, board composition, changes in directors and senior management and their shareholdings, employee information, and the implementation of the "Quality and Return Dual Enhancement" action plan; the company has abolished the supervisory board, with its functions now exercised by the audit committee - The company's "Articles of Association" revision, abolishing the supervisory board and transferring its functions to the audit committee, and establishing one employee director, was approved at the first extraordinary general meeting of shareholders on April 24, 2025[147](index=147&type=chunk) - As of June 30, 2025, the company had a total of **499,891** shareholders, including **499,598** A-share shareholders and **293** H-share shareholders[150](index=150&type=chunk) - The company's 2024 annual profit distribution plan was approved at the 2024 annual general meeting of shareholders, with a total profit distribution of approximately **2.95 billion Yuan** (tax inclusive), and the company completed dividend distribution in April 2025[166](index=166&type=chunk) - As of June 30, 2025, the Group had a total of **66,790** employees; the Group's total employee compensation for the reporting period was approximately **16.9 billion Yuan**[184](index=184&type=chunk) [3.2 Environmental Performance](index=44&type=section&id=3.2%20Environmental%20Performance) This section describes ZTE Corporation's environmental protection efforts, promoting sustainable development through four dimensions: green enterprise operations, green supply chain, green digital intelligence foundation, and green industry empowerment; the company achieved a year-on-year decrease of over 10% in electricity consumption per unit output in H1 2025 and actively collaborates with upstream and downstream supply chain partners to accelerate green transformation - In green enterprise operations, the company reduces operational emissions within its organizational boundaries and operating locations by practicing ecological priority green operations, achieving a year-on-year decrease of over **10%** in electricity consumption per unit output in H1 2025[189](index=189&type=chunk) - In green supply chain, the company collaborates with partners to build ZTE Corporation's green supply chain through key initiatives such as organizing supplier energy-saving and carbon reduction training camps and creating green material demonstration sites[189](index=189&type=chunk) - ZTE Communications (Nanjing) Co., Ltd. was included in the list of enterprises required to disclose environmental information by law[191](index=191&type=chunk) [3.3 Social Responsibility](index=45&type=section&id=3.3%20Social%20Responsibility) This section details ZTE Corporation's social responsibility practices, primarily through the ZTE Foundation, which provides public welfare services such as education assistance, medical aid, low-carbon environmental protection, and rural revitalization; the company achieved positive results in multiple areas and encourages employee participation in volunteer services - The ZTE Foundation, upholding the vision of "let kindness reach every corner," actively carries out services such as education assistance, medical aid, low-carbon environmental protection, and rural revitalization[192](index=192&type=chunk) - In H1 2025, it supported **1,107** disadvantaged high school students in Gansu, Qinghai, Hunan, Shaanxi, Anhui, and other regions, and organized **31** lectures on topics such as communication and psychology, along with **9** student discussion sessions[192](index=192&type=chunk) - In supporting low-carbon environmental protection, it collaborated with volunteer teams to carry out afforestation in Xiaobazi Township, Fengning, Hebei, and Baihuahe Forest Farm, Yichun, Heilongjiang, planting a cumulative total of **19,830** Scots pines and Korean pines, greening **435.54 mu** of land[193](index=193&type=chunk) - As of the end of June 2025, employee volunteers reached **18,682** individuals, with cumulative on-site service hours of **48,290.5**; in H1 2025, a total of **244** various volunteer services were carried out, with **4,244** participants[193](index=193&type=chunk) [Chapter 4 Significant Matters](index=46&type=section&id=Chapter%204%20Significant%20Matters) This chapter discloses ZTE Corporation's significant matters in H1 2025, including major lawsuits and arbitrations, significant related party transactions, major contracts and their performance, fulfillment of commitments, non-operating fund occupation, integrity status, and penalties and rectification; the company had no major lawsuits but disclosed one non-major lawsuit; related party transactions were primarily for daily operations, and the company's controlling shareholder committed to avoiding horizontal competition - In H1 2025, the Group had no major lawsuits or arbitrations as defined by the Listing Rules of the Shenzhen Stock Exchange and the Hong Kong Stock Exchange[194](index=194&type=chunk) - One non-major lawsuit was disclosed: Hengyang Jinliuyuan Real Estate Development Co., Ltd. sued Hunan ZTE Netcom Technology Co., Ltd. on July 7, 2025, requesting termination of the project cooperation development agreement and return of cooperation funds, payment for infrastructure construction investment and losses, and expected interest losses, totaling approximately **300 million Yuan**[194](index=194&type=chunk) - In H1 2025, the Group had no significant related party transactions with any single related party where the cumulative transaction amount exceeded **30 million Yuan** and accounted for more than **5%** of the net assets in the latest audited period[196](index=196&type=chunk) [4.1 Major Lawsuits and Arbitrations](index=46&type=section&id=4.1%20Major%20Lawsuits%20and%20Arbitrations) This section discloses that ZTE Corporation had no major lawsuits or arbitrations in H1 2025, but one non-major lawsuit was disclosed, involving a real estate cooperation development contract dispute with Hunan ZTE Netcom Technology Co., Ltd., with a case amount of approximately 300 million Yuan - In H1 2025, the Group had no major lawsuits or arbitrations as defined by the Listing Rules of the Shenzhen Stock Exchange and the Hong Kong Stock Exchange[194](index=194&type=chunk) - On July 7, 2025, Hengyang Jinliuyuan Real Estate Development Co., Ltd. filed a lawsuit requesting the termination of the "Project Cooperation Development Agreement" and "Supplementary Agreement" with Hunan ZTE Netcom Technology Co., Ltd., and requesting a judgment for Hunan Netcom to return cooperation cash, pay for infrastructure construction investment and losses, and expected interest losses, totaling approximately **300 million Yuan**[194](index=194&type=chunk) [4.2 Significant Related Party Transactions](index=46&type=section&id=4.2%20Significant%20Related%20Party%20Transactions) This section discloses ZTE Corporation's related party transactions related to daily operations in H1 2025; the company engaged in transactions such as raw material procurement, labor services, and product sales with its controlling shareholder and its subsidiaries, companies where related natural persons hold positions and their subsidiaries, and joint ventures and associates, with transaction prices based on market rates - In H1 2025, the Group had no significant related party transactions with any single related party where the cumulative transaction amount exceeded **30 million Yuan** and accounted for more than **5%** of the net assets in the latest audited period[196](index=196&type=chunk) 2025 H1 Procurement of Raw Materials and Services from Related Parties (Unit: Ten Thousand Yuan) | Related Party | Transaction Content | Actual Transaction Amount in 2025 H1 | Percentage of Similar Transactions | | :--- | :--- | :--- | :--- | | ZTE New and its subsidiaries, companies with 30% or more equity interest | Procurement of raw materials | 12,339.0 | 0.27% | | Huatong Technology Co., Ltd. | Personnel leasing and project outsourcing services | 3,128.4 | 17.56% | | Nanchang Zhongzhan Digital Intelligence Technology Co., Ltd. | Personnel leasing and project outsourcing services | 3,349.0 | 18.80% | - The Group sold government and enterprise full-line products to related parties, with Aerospace Ouhua Information Technology Co., Ltd. having an actual transaction amount of **113.38 million Yuan**, accounting for **0.59%** of similar transactions[198](index=198&type=chunk) [4.3 Major Contracts and Their Performance](index=47&type=section&id=4.3%20Major%20Contracts%20and%20Their%20Performance) This section discloses ZTE Corporation's external guarantees in H1 2025; as of June 30, 2025, the Group's actual external guarantee balance was approximately 2.70 billion Yuan (converted to RMB), accounting for 3.60% of net assets attributable to ordinary shareholders of the listed company, primarily consisting of company guarantees to subsidiaries - In H1 2025, the Group had no significant entrustment, contracting, or leasing matters, no entrusted loans, no loans provided to external third parties, and no financial assistance or guarantees provided to joint ventures or associates[201](index=201&type=chunk) 2025 H1 Overall External Guarantee Status (Unit: Ten Thousand Yuan) | Item | Approved External Guarantee Limit During Reporting Period | Actual External Guarantee Amount Incurred During Reporting Period | Approved External Guarantee Limit at End of Reporting Period | Actual External Guarantee Balance at End of Reporting Period | | :--- | :--- | :--- | :--- | :--- | | Guarantees to third parties outside the Group | — | — | — | — | | Company guarantees to subsidiaries | 1,863,836.00 | 205,917.17 | 2,349,052.59 | 252,615.76 | | Subsidiary guarantees to subsidiaries | 89,607.50 | 17,052.31 | 89,607.50 | 17,052.31 | | Total | 1,953,443.50 | 222,969.48 | 2,438,660.09 | 269,668.07 | - As of June 30, 2025, the Group's actual external guarantee balance was approximately **2.70 billion Yuan** (converted to RMB), accounting for **3.60%** of net assets attributable to ordinary shareholders of the listed company as of June 30, 2025[201](index=201&type=chunk) [4.4 Fulfillment of Commitments](index=48&type=section&id=4.4%20Fulfillment%20of%20Commitments) This section discloses the fulfillment of commitments by ZTE Corporation's controlling shareholder, including commitments to avoid horizontal competition and commitments regarding shareholding reduction; during the reporting period, these commitments were all normally fulfilled, with no overdue unfulfilled situations - ZTE New and the company signed an "Agreement on Avoiding Horizontal Competition" on November 19, 2004, where ZTE New committed to avoiding any form of horizontal competition with the company; this commitment was normally fulfilled in H1 2025[205](index=205&type=chunk)[206](index=206&type=chunk) - ZTE New committed on December 10, 2007, that if it plans to sell its unlisted tradable shares of the company through the securities trading system in the future, and the reduction amount reaches more than **5%** within six months from the first reduction, it will disclose a pre-announcement of sale through the company within two trading days before the first reduction; this commitment was normally fulfilled in H1 2025[207](index=207&type=chunk)[208](index=208&type=chunk) [4.5 Non-operating Fund Occupation, Integrity Status](index=48&type=section&id=4.5%20Non-operating%20Fund%20Occupation,%20Integrity%20Status) This section states that ZTE Corporation had no non-operating occupation of company funds by controlling shareholders or other related parties in H1 2025, nor did it fail to fulfill obligations determined by effective legal documents from courts - In H1 2025, there was no non-operating occupation of company funds by controlling shareholders or other related parties[209](index=209&type=chunk) - The company and its controlling shareholder had no situations where they failed to fulfill obligations determined by effective legal documents from courts or had large outstanding debts that were due and unpaid[209](index=209&type=chunk) [4.6 Penalties and Rectification Status](index=49&type=section&id=4.6%20Penalties%20and%20Rectification%20Status) This section states that in H1 2025, ZTE Corporation and its directors, supervisors, senior management, and controlling shareholder were not subject to criminal penalties or significant administrative penalties, nor were they subjected to compulsory measures or investigations - In H1 2025, the company and its directors, supervisors, senior management, and controlling shareholder were not suspected of crimes and subjected to compulsory measures according to law; were not subject to criminal penalties, suspected of violations and investigated by the China Securities Regulatory Commission, or subject to administrative penalties by the China Securities Regulatory Commission, or subject to significant administrative penalties by other competent authorities[211](index=211&type=chunk) [4.7 Other Significant Matters](index=49&type=section&id=4.7%20Other%20Significant%20Matters) This section states that ZTE Corporation's H1 2025 financial report is unaudited, and the company did not dismiss or change its accounting firm, had no bankruptcy reorganization related situations, and no other significant matters that should have been disclosed but were not - The Group's 2024 annual financial report was audited by Ernst & Young Hua Ming LLP and received a standard unqualified audit opinion; the H1 2025 financial report is unaudited, thus the Board of Directors does not need to provide explanations regarding "non-standard audit reports"[212](index=212&type=chunk) - In H1 2025, the company did not dismiss or change its accounting firm; the company had no bankruptcy reorganization related situations; apart from the matters disclosed in this report, the company and its controlled subsidiaries had no other significant matters that should have been disclosed but were not, or significant social security issues[212](index=212&type=chunk) [Chapter 5 Bond-Related Information](index=50&type=section&id=Chapter%205%20Bond-Related%20Information) This chapter details ZTE Corporation's bond-related information, including the issuance and maturity of non-financial enterprise debt financing instruments and H-share convertible bonds, as well as key accounting data and financial indicators for the past two years; the company has issued multiple tranches of medium-term notes and ultra-short-term financing bonds, and issued H-share convertible bonds after the reporting period - The company has independently issued ultra-short-term financing bonds and medium-term notes within the registration validity period; all **21** tranches of ultra-short-term financing bonds issued in H1 2025 have matured and been repaid, totaling **26.5 billion Yuan**[213](index=213&type=chunk) - The company announced on July 29, 2025, its intention to issue **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030 under a general mandate[217](index=217&type=chunk) [5.1 Non-financial Enterprise Debt Financing Instruments](index=50&type=section&id=5.1%20Non-financial%20Enterprise%20Debt%20Financing%20Instruments) This section discloses ZTE Corporation's issued non-financial enterprise debt financing instruments; the company has independently issued ultra-short-term financing bonds and medium-term notes within the registration validity period, with all 21 tranches of ultra-short-term financing bonds issued in H1 2025 having matured and been repaid, and 4 tranches of medium-term notes not yet due - The company has independently issued ultra-short-term financing bonds and medium-term notes within the registration validity period; all **21** tranches of ultra-short-term financing bonds issued in H1 2025 have matured and been repaid, with a total issuance amount of **26.5 billion Yuan**[213](index=213&type=chunk) Information on Ultra-short-term Financing Bonds and Medium-term Notes Issued and Not Yet Due as of Report Disclosure Date in 2025 (Unit: 100 Million Yuan) | Bond Name | Bond Abbreviation | Bond Code | Issue Date | Accrual Date | Maturity Date | Bond Balance | Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 2024 First Tranche Medium-term Note | 24 ZTE MTN001 (Sci-Tech Innovation Bond) | 102483530 | 2024-08-14 | 2024-08-16 | 2029-08-16 | 5 | 2.25% | | 2024 Second Tranche Medium-term Note | 24 ZTE MTN002 (Sci-Tech Innovation Bond) | 102485311 | 2024-12-05 | 2024-12-09 | 2029-12-09 | 5 | 2.18% | | 2025 First Tranche Medium-term Note | 25 ZTE MTN001 (Sci-Tech Innovation Bond) | 102580635 | 2025-02-18 | 2025-02-19 | 2030-02-19 | 10 | 1.93% | | 2025 Second Tranche Medium-term Note | 25 ZTE MTN002 (Sci-Tech Innovation Bond) | 102581654 | 2025-04-16 | 2025-04-17 | 2030-04-17 | 10 | 1.98% | | 2025 Third Tranche Medium-term Note | 25 ZTE MTN003 (Sci-Tech Bond) | 102582645 | 2025-06-25 | 2025-06-26 | 2030-06-26 | 10 | 1.79% | | 2025 Fourth Tranche Medium-term Note | 25 ZTE MTN004 (Sci-Tech Bond) | 102582670 | 2025-06-26 | 2025-06-27 | 2030-06-27 | 3.5 | 1.90% | | 2025 Twenty-second Tranche Ultra-short-term Financing Bond | 25 ZTE SCP022 | 012581690 | 2025-07-16 | 2025-07-17 | 2025-09-26 | 5 | 1.45% | | 2025 Twenty-third Tranche Ultra-short-term Financing Bond | 25 ZTE SCP023 | 012581693 | 2025-07-16 | 2025-07-17 | 2025-09-26 | 10 | 1.45% | | Total | — | — | — | — | — | 58.5 | — | [5.2 H-share Convertible Bonds](index=50&type=section&id=5.2%20H-share%20Convertible%20Bonds) This section discloses ZTE Corporation's issuance of H-share convertible bonds after the reporting period; the company completed the issuance of RMB 3.584 billion zero-coupon USD-settled H-share convertible bonds due 2030 in July 2025, which were listed on the Hong Kong Stock Exchange in August 2025, aiming to optimize capital structure and broaden financing channels - On July 28, 2025, the company signed a subscription agreement with the lead manager for the issuance of **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030[217](index=217&type=chunk) - The initial conversion price of the convertible bonds was **HKD 30.25** per H-share (adjustable); the convertible bonds were issued on August 5, 2025, and began trading on the Hong Kong Stock Exchange on August 6, 2025[217](index=217&type=chunk) [5.3 Key Accounting Data and Financial Indicators of the Group in the Past Two Years](index=51&type=section&id=5.3%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20of%20the%20Group%20in%20the%20Past%20Two%20Years) This section presents ZTE Corporation's key accounting data and financial ind

Core Insights - The "Top 100 Innovative Large Enterprises in China 2025" has been released for the fifth consecutive year, with Huawei Investment Holding Co., Ltd. ranking first for five years in a row [1][2] - The ranking is based on criteria such as having over 100 invention patents, a research and development intensity of over 0.6%, and annual revenue exceeding 20 billion yuan [1] Group 1: Rankings and Criteria - The top 10 companies in the 2025 ranking include Huawei, ZTE Corporation, Trip.com Group, NetEase, Ant Group, State Grid Corporation, Chengdu Tianqing Pharmaceutical Group, China Information Communication Technology Group, Midea Group, and BOE Technology Group [1] - The selection process utilized a weighted scoring system based on R&D expenses, R&D intensity, number of invention patents, total patents, and income profit margins [1] Group 2: R&D Investment and Innovation Quality - The total R&D expenditure of the 2025 Top 100 Innovative Enterprises is 1.03 trillion yuan, remaining stable compared to the previous year [2] - The average R&D intensity increased from 5.27% to 5.61%, a rise of 0.34 percentage points [2] - The number of effective patents and effective invention patents stands at 1.7242 million and 897,500 respectively, with invention patents constituting 52.05% of all patents [2] Group 3: Geographic and Industry Distribution - The 2025 Top 100 Innovative Enterprises are distributed across 18 provinces, autonomous regions, and municipalities, with Guangdong having 25 companies, Beijing 22, Shandong 8, and Shanghai and Zhejiang each having 7 [2] - The companies span 37 industries, an increase of 3 industries from the previous year, with communication equipment manufacturing and automotive parts manufacturing each accounting for 13% [2] Group 4: Ownership Structure - Among the 2025 Top 100 Innovative Enterprises, there are 46 state-owned enterprises and 54 private enterprises [2]

Core Insights - Oracle reported strong performance in its cloud business with a backlog of $455 billion in remaining performance obligations (RPO), an increase of $317 billion from the end of last year, representing a year-over-year growth of 359% [2][4] - The growth in orders is primarily driven by data center-related orders from clients such as OpenAI, xAI, Meta, and NVIDIA [2][4] - For FY2026, Oracle's cloud infrastructure IaaS revenue is expected to grow by 77% to reach $18 billion, with projections for the following four years being $32 billion, $73 billion, $114 billion, and $144 billion respectively [2][4] Industry Developments - NVIDIA launched the Rubin CPX GPU, designed to enhance inference performance and efficiency for contexts exceeding 1 million tokens, featuring 128GB GDDR7 memory and AI computing power of 30 PFLOPS [3] - Lixun introduced Co-packaged Copper (CPC) technology at the 2025 Shenzhen Optical Expo, aimed at addressing high-performance, low-cost interconnect challenges in the AI and computing era [3] - Taiwanese AI server ODM manufacturers reported a monthly revenue of NT$121.39 billion in August, a year-over-year increase of 16.71%, with Wistron achieving a remarkable 198.14% increase [4] - China Unicom received a satellite communication business operating license, accelerating the development of satellite internet infrastructure in China [4] - The communication index rose by 3.00% this week, with the Shanghai and Shenzhen 300 index increasing by 1.38%, indicating a relative performance gain of 1.62% [4] Investment Recommendations - The global cloud service provider (CSP) AI arms race is accelerating, with new product launches from companies like Apple and Huawei, and events such as the Open Data Center Conference and META Developer Conference [5] - Continued focus on optical devices and modules, communication equipment, and liquid cooling technologies is recommended [5] - The three major telecom operators remain important assets for dividend allocation, with stable operations and increasing dividend payout ratios [5]

Summary of the 2025 Taiwan AI Forum Insights Industry Overview - **Industry**: Greater China Technology Hardware - **Event**: 2025 Taiwan AI Forum - **Date**: September 12, 2025 - **Analysts Involved**: Howard Kao, Sharon Shih, Irene Yen from Morgan Stanley Key Insights 1. **Conventional ABF Supply**: Conventional ABF (Advanced Build-up Film) is expected to remain oversupplied, particularly with the entry of new competitors [6] 2. **Advanced ABF Substrate**: Although currently oversupplied, the advanced ABF substrate market may reach a more balanced supply-demand situation by calendar year 2026-2027 [6] 3. **PCB Design Trends**: There is a noticeable trend in AI accelerator server PCB designs shifting towards HDI (High-Density Interconnect) or HDI+HLC (High Layer Count) hybrid designs [6] 4. **Rubin Ultra ABF**: The Rubin Ultra ABF is projected to double in area size compared to the original Rubin, featuring a higher layer count but lower yields, necessitating approximately double the production capacity [6] 5. **CoWoP Technology**: CoWoP (Chip-on-Wafer-on-Panel) will utilize mSAP (Modified Semi-additive Process) PCB technology with line/space as small as 15µm to integrate RDL (Redistribution Layer) interposers into the SLP (System-in-Package). However, the larger area size of the platform PCB compared to the substrate may require T glass, which is currently constrained in supply [6] 6. **Fiber Cloth Shortages**: - T glass (low CTE glass cloth) is anticipated to remain in undersupply until 2027, with new capacity expected to come online from Nittobo in the second half of 2026 [6] - Level-1 low Dk (Dielectric Constant) glass cloth is currently oversupplied [6] - Level-2 low Dk glass cloth supply constraints are gradually easing [6] 7. **Operational Costs in Thailand**: The operational costs in Thailand are approximately 15% higher than in China, compounded by weaker logistical support and lower efficiency, making profitability challenging for some companies in the initial two years [6] Additional Considerations - **Industry View**: The overall view of the Greater China Technology Hardware industry is categorized as "In-Line" by Morgan Stanley, indicating expectations of performance in line with the broader market [4] - **Analyst Certification**: Analysts Howard Kao and Sharon Shih certify that their views on the companies discussed are accurately expressed and that they have not received compensation for specific recommendations [11] This summary encapsulates the critical insights and trends discussed during the 2025 Taiwan AI Forum, highlighting the current state and future expectations of the Greater China Technology Hardware industry.

Core Insights - The meeting between Hunan Provincial Party Secretary Shen Xiaoming and ZTE Corporation Chairman Fang Rong focused on enhancing cooperation in artificial intelligence and digital transformation [3][4] - ZTE Corporation is committed to leveraging its technological, product, and talent advantages to support Hunan's high-quality development [3] Group 1: Meeting Overview - Shen Xiaoming welcomed Fang Rong and expressed gratitude for ZTE's long-term support to Hunan [3] - The discussion emphasized the importance of collaboration to achieve mutual benefits and explore further cooperation potential [3] Group 2: Strategic Initiatives - Shen Xiaoming highlighted Hunan's efforts in building "three high grounds" and encouraged ZTE to enhance the capacity and efficiency of its R&D and production base in Changsha [3] - ZTE Corporation plans to actively participate in the construction of a global R&D center in Changsha and contribute to the development of an artificial intelligence industry chain ecosystem [3]

Investment Rating - The report maintains an "Outperform" rating for the communication industry [5] Core Insights - Oracle's cloud business shows strong growth with a remaining performance obligation (RPO) of $455 billion, a year-over-year increase of 359% [11][12] - The AI infrastructure sector is rapidly evolving, highlighted by NVIDIA's launch of the Rubin CPX GPU, which enhances performance for large context AI models [26][31] - Taiwanese AI server ODM manufacturers reported a monthly revenue of NT$121.39 billion in August, reflecting a year-over-year growth of 16.71% [34][41] Summary by Sections Industry News Tracking - Oracle's RPO reached $455 billion, up $317 billion from the previous quarter, driven by significant contracts with major clients like OpenAI and NVIDIA [11][12] - NVIDIA introduced the Rubin CPX GPU, designed for high-performance AI tasks, featuring 30 petaFLOPS of computing power and 128GB of GDDR7 memory [26][31] - Taiwanese ODM manufacturers, including Hon Hai and Quanta, reported strong revenue growth, with TSMC's August revenue increasing by 33.84% year-over-year [34][41] Investment Recommendations - Continuous focus on AI computing infrastructure development is advised, with recommendations for companies involved in optical devices and communication equipment [72] - The three major telecom operators are considered important assets for dividend allocation, with stable operations and increasing dividend payouts [72] - Key recommended stocks for the upcoming week include China Mobile, Zhongji Xuchuang, ZTE, and Yinvik [72]

Group 1 - The "Digital Bangladesh" vision aims to enhance the country's communication and IT infrastructure, promoting digital development and economic growth [1] - The modernization of Bangladesh's communication network, undertaken by ZTE, supports the provision of modern and low-cost high-speed internet and services like IP telephony, laying the groundwork for 4G, 5G, and IPTV [3][4] - The project has completed significant milestones, including the renovation of 42 large data centers, installation of hardware at 725 sites, and over 4,400 kilometers of optical cable laid [4] Group 2 - The national broadband policy aims for 65% 4G & 5G population coverage, 75% smart terminal penetration, 60% household broadband penetration, and 25% broadband village coverage by 2025 [5] - The collaboration between Chinese enterprises and Bangladesh has led to the training of numerous digital talents, enhancing local expertise in ICT project planning and execution [7] - The integration of advanced digital technologies is expected to boost productivity across various industries, driving economic growth and prosperity in Bangladesh [7]

Summary of Key Points Core Viewpoint - ZTE Corporation experienced a block trade on September 12, with a transaction volume of 46,000 shares and a transaction value of 2.047 million yuan, indicating a premium of 0.95% over the closing price of the day [2]. Trading Details - The block trade details include a transaction volume of 46,000 shares, a transaction amount of 2.047 million yuan, and a transaction price of 44.50 yuan, which is a 0.95% premium relative to the closing price of 44.08 yuan [2]. - The buyer was Southwest Securities Co., Ltd. Shaanxi Branch, while the seller was China Post Securities Co., Ltd. Xi'an Kaiyuan Road Securities Business Department [2]. Market Performance - On the same day, ZTE's closing price was 44.08 yuan, reflecting an increase of 0.78%, with a daily turnover rate of 5.50% and a total transaction amount of 9.823 billion yuan [2]. - The net outflow of main funds for the day was 88.3319 million yuan, while the stock has seen a cumulative increase of 5.40% over the past five days, with a total net inflow of 237 million yuan [2]. Margin Trading Data - The latest margin financing balance for ZTE is 10.215 billion yuan, which has increased by 738 million yuan over the past five days, representing a growth rate of 7.78% [2].