Core Viewpoint - Tongfu Microelectronics (002156.SZ) has made significant progress in the development of large-size FCBGA, entering mass production for large-size FCBGA and completing preliminary research for ultra-large size FCBGA, which is now in formal engineering assessment stage [1] Group 1 - The company has achieved important advancements in large-size FCBGA development, with large-size FCBGA entering mass production [1] - The ultra-large size FCBGA has completed preliminary research and is now undergoing formal engineering assessment [1] - The company has addressed product warping and heat dissipation issues for ultra-large size products through optimization of product structure design, material selection, and process improvements [1] Group 2 - The company has made breakthrough progress in the technology development of optical-electrical integrated packaging (CPO), with related products passing initial reliability testing [1]

Core Insights - The company reported a revenue of 18.605 billion yuan for the first half of 2025, representing a year-on-year increase of 20.14%, while the net profit attributable to shareholders decreased by 23.98% to 471 million yuan [1] - The global semiconductor sales reached 346 billion USD in the first half of 2025, showing a year-on-year growth of 18.9%, indicating a positive recovery trend in the industry [1] - The company is focusing on high-value applications such as automotive electronics, high-performance computing, storage, and 5G communications, with significant growth in automotive electronics and industrial sectors [2] Financial Performance - In the first half of 2025, the company achieved a gross margin of 13.47%, a slight increase of 0.11 percentage points year-on-year [1] - The second quarter of 2025 saw a gross margin of 14.31%, reflecting a quarter-on-quarter improvement of 1.68 percentage points, indicating a recovery in profitability [1] - The company expects to maintain strong performance in the second half of the year by improving capacity utilization, product structure, and internal management [1] Strategic Focus - The company continues to innovate in advanced packaging technologies, with breakthroughs in key areas such as glass substrates and large-size FCBGA [1] - The automotive electronics segment experienced a year-on-year growth of 34.2%, while the industrial and medical sectors grew by 38.6% [2] - The company is enhancing its technical advantages in automotive semiconductor packaging and is progressing well in capacity construction, with a new factory in Shanghai nearing completion [2] Profit Forecast - The company forecasts net profits attributable to shareholders for 2025-2027 to be 1.642 billion, 2.316 billion, and 3.034 billion yuan, with respective year-on-year growth rates of 2.01%, 41.04%, and 31.03% [3] - The current stock price corresponds to price-to-earnings ratios of 41.47, 29.40, and 22.44 for the years 2025, 2026, and 2027, respectively [3] - Given the recovery trend in the semiconductor industry and the company's extensive layout in advanced packaging and high-value sectors, a "buy" rating is maintained [3]

Investment Rating - The report maintains a "Buy" rating for Tongfu Microelectronics with a target price of 41.68 RMB [4][6]. Core Insights - Tongfu Microelectronics reported a revenue of 13.038 billion RMB for 1H25, representing a year-over-year increase of 17.67%. The net profit attributable to shareholders was 412 million RMB, up 27.72% year-over-year [1][6]. - In Q2, the company achieved a revenue of 6.946 billion RMB, reflecting a year-over-year growth of 19.80% and a quarter-over-quarter increase of 14.01%. The gross margin was 16.12%, with a year-over-year increase of 0.12 percentage points [1][6]. - The growth in performance is attributed to structural growth in the global semiconductor industry and improved capacity utilization, particularly in mid-to-high-end product revenue [1][2]. Summary by Sections 1H25 Review - The significant growth in revenue was driven by major client AMD, with notable increases in demand for AMD's latest "Zen 5" architecture and gaming products. Client and gaming business revenues grew by 67.5% and 73.2% year-over-year, respectively [2]. - Tongfu Microelectronics completed the acquisition of a 26% stake in Jinglong Technology, which is expected to enhance its competitive edge in high-end integrated circuit testing and contribute to future revenue growth [2]. 2H25 Outlook - The company is focused on expanding capacity and technological advancements, with large-size FCBGA entering mass production and breakthroughs in CPO technology. These developments are anticipated to open new growth avenues [3]. - The Power DFN-clip source down dual-sided cooling product has been developed to meet high current, low power, and high reliability requirements, with mass production already achieved [3]. Financial Projections - The report forecasts a net profit of 1.12 billion RMB for 2025, with upward revisions for 2026 and 2027 net profit estimates to 1.416 billion RMB and 1.717 billion RMB, respectively [4][9]. - The expected EPS for 2025, 2026, and 2027 is projected at 0.74 RMB, 0.93 RMB, and 1.13 RMB, respectively [4][9].

Core Insights - The company reported a revenue of 13.038 billion yuan for the first half of 2025, marking a year-on-year increase of 17.67% and a net profit attributable to shareholders of 412 million yuan, up 27.72% year-on-year [2] - In Q2 2025, the company achieved a record high quarterly revenue of 6.946 billion yuan and a net profit of 311 million yuan, demonstrating strong growth momentum and operational resilience [2] Business Expansion - In the first half of 2025, the global semiconductor market exhibited "technology-driven growth with increasing regional differentiation," which the company capitalized on by enhancing market share in mobile, home appliance, and automotive sectors [3] - The company became a strategic partner for several key clients in hot consumer electronics areas such as WiFi, Bluetooth, and MiniLED TV display drivers, while solidifying its collaboration with mobile terminal SOC clients [3] - The strong performance of major client AMD, particularly in data center, client, and gaming businesses, provided robust support for the company's revenue growth [3] Capacity and R&D Developments - The company invested 756 million yuan in R&D during the first half of 2025, a 12.43% increase year-on-year, achieving significant progress in large-size FCBGA development and breakthroughs in optical-electrical packaging technology [5] - The company successfully expanded production capacity in response to the growing demand for AI, high-performance computing products, and automotive driving chips, while onboarding multiple new clients [4] - The company is advancing its Nantong 2D+ advanced packaging upgrade project and the transformation of the Tongfu Tongke testing center, enhancing its international operational resilience [6]

Core Viewpoint - Tongfu Microelectronics reported a significant increase in net profit and revenue for the first half of 2025, indicating strong operational performance and advancements in product development [1] Financial Performance - The company achieved a revenue of 13.038 billion yuan, representing a year-on-year growth of 17.67% [1] - The net profit attributable to shareholders was 412 million yuan, reflecting a year-on-year increase of 27.72% [1] Product Development - The company made important progress in the development of large-size FCBGA, which has entered the mass production stage [1] - Research and engineering assessment for ultra-large size FCBGA has been completed [1] - The company addressed product warping and heat dissipation issues through optimization of product structure design, material selection, and process improvements [1] Technological Advancements - Breakthroughs were achieved in the field of Chip-on-Package (CPO) technology, with related products passing preliminary reliability tests [1]