Core Viewpoint - The market focus is shifting from "AI computing power" to "AI terminals," with GoerTek being a key beneficiary of the surge in XR/AI glasses shipments [1] Financial Performance - GoerTek reported a net profit of 1.417 billion yuan for the first half of 2025, a year-on-year increase of 15.65% [2] - Revenue for the second quarter reached 21.24 billion yuan, showing a year-on-year growth of 0.8% and a significant quarter-on-quarter increase of 30.30% [2] - The precision components business generated 7.604 billion yuan in revenue, up 20.54% year-on-year, with a gross margin improvement to 23.49% [2] - The smart hardware business contributed 20.341 billion yuan in revenue, a year-on-year increase of 2.49%, with a gross margin of 11.51% [2] Inventory and Stock Incentives - The ending inventory balance was 13.449 billion yuan, a 28.3% increase from the beginning of the year, with over 60% consisting of raw materials and work-in-progress [3] - GoerTek launched a stock option incentive plan in May 2025, involving 6,302 employees and aiming for revenue of no less than 129.848 billion yuan in 2025 [3] Capital Movements - The controlling shareholder of GoerTek increased their stake by acquiring 47,439,630 shares, representing 1.36% of the total share capital, with an investment of nearly 1 billion yuan [4] - GoerTek initiated a share repurchase plan with a budget of 500 million to 1 billion yuan, having repurchased 16.1328 million shares for 338 million yuan by July 31 [4] AI Terminal Wave - In the first half of 2025, GoerTek's smart hardware business generated 20.341 billion yuan, accounting for 54.17% of total revenue, marking a significant shift towards the XR sector [6] - The global smart glasses shipment volume more than doubled year-on-year, with an AI functionality penetration rate of 78% [8] - GoerTek's optical subsidiary launched the world's first SRG-etched waveguide module, indicating its leading position in the industry [8] Product Innovations - GoerTek showcased the Mulan 2 and Wood 2 AR glasses at CES 2025, with Mulan 2 being the lightest AR glasses globally at 36 grams [9] - The company is a core manufacturer for Meta's smart glasses and has collaborated with domestic brands like Xiaomi, enhancing its strategic position in the AI glasses supply chain [9] Future Outlook - The upcoming catalysts include the third-quarter guidance, initial sales data from Meta and Xiaomi's new products, and potential consumer electronics upgrade subsidy policies [10] - GoerTek's growth momentum appears poised for acceleration, transitioning from a manufacturing leader to a technology ecosystem leader in the long term [11]