Core Viewpoint - The recent financial report of ZTE Microelectronics (卓胜微) for the first half of 2025 shows significant declines in revenue and net profit, indicating financial distress and challenges in operational performance [1]. Financial Performance - Total revenue for the first half of 2025 was 1.704 billion yuan, a decrease of 25.42% year-on-year [1]. - The net profit attributable to shareholders was -147 million yuan, down 141.59% compared to the previous year [1]. - In Q2 2025, total revenue was 948 million yuan, a decline of 13.43% year-on-year, with a net profit of -101 million yuan, reflecting a 164.35% decrease [1]. - Gross margin was 28.75%, down 31.73% year-on-year, while net margin was -8.68%, a drop of 156.18% [1]. - Total operating expenses (sales, management, and financial expenses) amounted to 131 million yuan, accounting for 7.69% of revenue, an increase of 52.9% year-on-year [1]. - The company reported a significant increase in accounts receivable, which reached 627 million yuan, representing 155.95% of the latest annual net profit [1]. Cash Flow and Debt - Operating cash flow per share was 0.48 yuan, an increase of 188.95% year-on-year, indicating improved cash generation despite losses [1]. - The company’s interest-bearing debt rose to 2.532 billion yuan, a 56.74% increase compared to the previous year [1]. - The net cash flow from operating activities increased by 189.01% due to reduced inventory [3]. Business Outlook - The company is focusing on improving its production capabilities, particularly with the ramp-up of its 12-inch production line, which is expected to enhance performance in the future [8]. - The long-term outlook suggests that the company has developed comprehensive solutions for RF front-end products, which could strengthen its competitive position in the market [8]. Investment Sentiment - Analysts project that the company's performance for 2025 will yield a net profit of 392 million yuan, with an average earnings per share of 0.73 yuan [6]. - The largest fund holding ZTE Microelectronics is Wan Jia Growth Mixed Fund, which has maintained its position, reflecting investor confidence despite recent performance challenges [7].

Group 1: Company Overview and Business Model - The company has transitioned from a Fabless model to a Fab-Lite model, creating a complete resource platform through design, process, materials, devices, and integration capabilities [3] - The company has developed a full range of RF front-end product solutions, which is a core competitive advantage in the RF front-end market [3] Group 2: Short-term and Long-term Business Outlook - In the short term, the company faces pressure on performance due to seasonal factors and depreciation, but overall progress in team and technology continues [3] - For 2024, the company completed the 12-inch production line process and is actively advancing customer certification, with production capacity entering a ramp-up phase [3] - Long-term, the company aims to leverage emerging markets like AI to capture more opportunities with its comprehensive RF solutions [3] Group 3: Industry Trends and Competitive Landscape - The 5G construction phase is nearing completion, while the development of 6G and NTN is still exploratory, presenting opportunities for the global communication industry [3][6] - The global RF front-end market is primarily dominated by leading foreign companies, with increasing competition in the mid-to-low-end product segments [5][6] Group 4: Patent Disputes and Innovations - The company has initiated invalidation procedures for patents involved in disputes, asserting that its products are based on common industry technologies [4] - The company has achieved significant technological breakthroughs, including being the first to commercialize RF low-noise amplifiers based on RF CMOS technology [5] Group 5: Future Development and Strategic Vision - The company aims to enhance its high-end, customized, and differentiated capabilities in response to market demands [5] - The vision is to explore the boundaries of physical resources, adapting to unpredictable technological advancements and geopolitical uncertainties [7]