Summary of the Conference Call for 山石网科 (ShanShi Network Technology) Company Overview - **Company**: 山石网科 (ShanShi Network Technology) - **Industry**: Cybersecurity and AI Technology Key Financial Performance - **Revenue Growth**: 2025 H1 revenue reached 4.17 billion CNY, a year-on-year increase of approximately 9.46% [3] - **Gross Margin**: Main business gross margin stood at around 71%, leading in the cybersecurity industry [3] - **Net Profit**: Net loss of 76.55 million CNY, but a year-on-year reduction in loss by 4%, with a 53% reduction in Q2 alone, indicating improved profitability [2][3] Strategic Initiatives - **Double A Strategy**: Implementation of "Double A Strategy" (ASEC and AI) to enhance computing power through self-developed ASIC chips and optimize processes using AI, aiming for profitability recovery [2][6] - **ASIC Chip Development**: Self-developed ASIC chips have entered mass production, with expected testing in Q4 2025, laying the groundwork for entering the 信创 (Xinchuang) market [2][7] - **Channel Sales Growth**: Channel sales contracts reached 154 million CNY, a 53% year-on-year increase, with the number of platinum partners rising to 49 [2][7] Operational Efficiency - **Cost Control**: Overall expenses decreased by 7%, with sales expenses down by 25% and R&D expenses down by approximately 5% [4] - **Productivity Improvement**: Overall employee efficiency improved by about 26%, with AI technology enhancing R&D code efficiency by over 20% [4][12] Market Expansion - **Overseas Market Growth**: Hong Kong market grew by 46% in H1 2025, with a target of 50% growth in overseas business by 2026 [4][21] - **Focus on Southeast Asia and Americas**: Strategic localization efforts in Southeast Asia and the Americas, with a focus on government and financial sectors [22][24] Future Development Plans - **Two-Step Strategy**: A two-phase development strategy focusing on brand transformation and platform switching to ISC hardware platform by Q4 2025 [8][10] - **Data Security Growth Target**: Aiming to achieve sales of 100 million CNY in data security and services within three years [9] AI and Technology Integration - **AI for Process**: Significant improvements in R&D efficiency through AI, with a focus on enhancing internal operations and customer solutions [30][31] - **AI Product Acceptance**: Market acceptance of AI products is still developing, with expectations for rapid growth in the next 5 to 10 years [34][35] Challenges and Outlook - **Profitability Outlook**: Optimistic about Q4 2025 performance, with expectations for significant loss reduction and potential profitability [44][45] - **Impact of AI Policies**: Government policies on AI are expected to positively influence the company's data security business [46] Conclusion 山石网科 is strategically positioned to leverage its technological advancements in ASIC and AI to enhance operational efficiency, expand its market presence, and improve profitability in the coming years. The company's focus on cost control, channel partnerships, and international market growth will be critical to achieving its ambitious targets.

Core Viewpoint - The company has launched a new ASIC & AI strategic product line, aiming to become one of the top five security vendors in China by 2028, focusing on integrated network security solutions [1] Group 1: Product Launch and Strategy - The company introduced several new products, including next-generation firewalls and AI-driven security systems, as part of its ASIC & AI strategy [1] - The core strategy is "ASIC as the foundation, AI as the guide," which aims to drive the next generation of network security [5] - The company plans to complete the mass production of its self-developed 28nm ASIC chips by October 2023, with a full platform switch expected by mid-2024 [4][5] Group 2: Technological Innovation - The successful one-time tape-out of the ASIC chip is attributed to the company's innovative technology roots, with a history dating back to its founding by alumni from Tsinghua University [3] - The ASIC chip project, named "Venus," has been developed in four years, making the company the third globally to use ASIC chips for firewall and data encryption [4] - The new architecture design and fully domestic production process have significantly improved the performance of domestic firewalls, particularly in critical infrastructure sectors like finance and energy [4] Group 3: Market Position and Future Outlook - The company has seen a 40% year-on-year increase in profitability in its Hong Kong and Macau operations, with significant breakthroughs in government and financial sectors [9] - The strategic partnership with Digital China has enhanced the company's sales efficiency by approximately 90% and allowed for a more focused industry strategy [9] - The company anticipates a significant increase in market share and profitability following the launch of its ASIC products, with a strategic adjustment period from 2023 to 2025 and a growth phase from 2026 to 2028 [9] Group 4: AI Integration and Security Ecosystem - The company is leveraging AI technology to enhance its security operations, creating intelligent defense systems that improve efficiency and risk management [8] - The "Security AI" strategy aims to reshape the security ecosystem, covering device operation, data security, and security operations [8] - Approximately 10% of the company's research and development efforts are currently driven by AI, indicating a strong commitment to integrating AI into its product offerings [8]

Group 1 - The event "2025 Vitality West Bank: From Urban Renewal to Living Model" was successfully held, focusing on the development of a world-class central vibrant area in Xuhui District, Shanghai [1] - Over 60 industry representatives attended the event, discussing the concept of a "7×24-hour lifestyle showcase" in the West Bank [1] Group 2 - WeWork China's Shanghai and new first-tier cities general manager highlighted the importance of "vitality" in the West Bank, noting that 35% of member companies are from the technology sector and 30% from arts and education [3] - WeWork China has established partnerships with companies like Ruian Office and NIO, connecting nearly 100 collaborative office spaces [3] - The operational team and local enterprises have significantly improved the dining experience in the West Bank, transforming it from a challenge to a bustling area with long queues even on weekdays [3]

Group 1 - The core idea of the news is the transformation of the Xuhui District in Shanghai into a vibrant hub for talent, investment, and entrepreneurship, driven by a series of urban renewal initiatives [1][3] - The "One Port, One Valley, One City, One Heart" strategy is being implemented, creating a world-class waterfront that attracts over a million square meters of financial capital and innovation [1] - The West Bank Financial City is positioned as a reservoir for capital, while the Digital Valley and Media Port serve as platforms for talent value transformation, fostering new forces in hard technology and culture [1][3] Group 2 - The West Bank area is characterized by a multidimensional connection of consumption, technology, art, media, and lifestyle, making it a fertile ground for entrepreneurship and a paradise for young people [3] - A virtuous cycle is being established in the West Bank, where talent drives innovation, capital empowers industries, and entrepreneurship activates the ecosystem [3] - A thematic dialogue event titled "2025 Vitality West Bank: From Urban Renewal to Living Model" is scheduled for June 10, 2025, focusing on topics such as commercial secrets and the parallel development of cultural industries and urban renewal [3] Group 3 - The dual strategy of "ART (Art) and AI (Artificial Intelligence)" is expected to bring iterative upgrades to the industrial ecosystem of the West Bank, with discussions on high-quality urban development in the Yangtze River Delta region [3] - The event will feature roundtable discussions among corporate management on the path to elevating urban capabilities and achieving high-quality development [3]