Core Viewpoint - The company reported Q2 2025 revenue of $566.1 million, an increase of 18.3% year-on-year and 4.6% quarter-on-quarter, meeting guidance. The gross margin was 10.9%, exceeding previous guidance of 7-9% [1][20][21]. Group 1: Financial Performance - Q2 2025 revenue was $566.1 million, driven by increased shipment volumes. Gross margin improved to 10.9%, benefiting from higher capacity utilization and average selling price (ASP) increases, partially offset by rising depreciation costs [1][20][21]. - Net profit attributable to shareholders was $8 million, up 19.2% year-on-year and 112.1% quarter-on-quarter [1][21]. - Operating expenses were $97.9 million, an increase of 8.4% year-on-year, mainly due to rising R&D and depreciation costs [21]. Group 2: Revenue Breakdown - Embedded non-volatile memory platform revenue reached $141.2 million, up 3% year-on-year and 8.5% quarter-on-quarter [2][23]. - Power device revenue was $166.7 million, a 9.4% increase year-on-year, driven by demand for super junction MOSFETs [2][23]. - Revenue from analog and power management ICs surged 59.3% year-on-year to $161.2 million, driven by increased demand for power management integrated circuits [2][23]. Group 3: Future Guidance - Q3 2025 revenue guidance is set between $620 million and $640 million, with a midpoint indicating a 19.7% year-on-year increase and an 11.3% quarter-on-quarter increase, supported by growth in AI and automotive sectors [1][20][25]. - Gross margin for Q3 is expected to be between 10% and 12%, with visibility for Q4 remaining low but still within this range [25][34]. Group 4: Capacity and Production - The new 12-inch production line in Wuxi is expected to reach full capacity by mid-2026, with half of the capacity already online [1][20]. - By the end of 2025, the utilization rate of the new plant is projected to reach 80-90% [25][35]. Group 5: Market Strategy - The company aims to enhance its competitive position in the wafer foundry industry by focusing on core competencies in product, process, R&D, and supply chain management [20][28]. - The strategy includes collaboration with domestic and international strategic customers to expand its global customer base [20][28].

Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for the sector's fundamentals and expected performance relative to the benchmark index [5]. Core Insights - The company reported a revenue of $566.1 million for Q2 2025, reflecting an 18.3% year-over-year increase and a 4.6% quarter-over-quarter increase, aligning with guidance [30][31]. - Gross margin for Q2 2025 was 10.9%, exceeding previous guidance of 7-9%, driven by improved capacity utilization and average selling price (ASP) increases [30][31]. - The company anticipates Q3 2025 revenue guidance of $620-640 million, representing a year-over-year increase of 19.7% and a quarter-over-quarter increase of 11.3%, primarily supported by growth in emerging sectors such as AI and automotive [3][38]. Summary by Sections Revenue and Profitability - Q2 2025 revenue reached $566.1 million, with a gross margin of 10.9%, and a net profit attributable to shareholders of $8 million, marking a 19.2% year-over-year increase [30][31][32]. - The company achieved an overall capacity utilization rate of 108.3%, up 5.6 percentage points from the previous quarter [30]. Product Performance - Revenue from embedded non-volatile memory platforms was $140 million, up 3% year-over-year and 8.5% quarter-over-quarter [2]. - Power device revenue was $166.7 million, reflecting a 9.4% year-over-year increase, driven by demand for super junction MOSFETs [2][36]. - Significant growth was observed in analog and power management ICs, with revenue of $161.2 million, up 59.3% year-over-year [2][36]. Capacity and Future Outlook - The new production line in Wuxi is expected to reach full capacity by mid-2026, focusing on high-value-added products [4][50]. - The company plans to maintain a focus on high-margin products such as PMICs and super junction MOSFETs in future capacity expansions [4][50]. Market Dynamics - The company reported that the Chinese market contributed $469.7 million, accounting for 83% of total revenue, with a year-over-year growth of 21.8% [33]. - North American revenue was $53 million, up 13.2% year-over-year, driven by demand for integrated circuit products [33]. Strategic Initiatives - The company is focusing on enhancing its core competencies in product technology, process, and supply chain management to improve operational efficiency [30]. - The strategy includes collaboration with domestic and international strategic customers to expand its global customer base [30].

Financial Data and Key Metrics Changes - Sales revenue for Q1 2025 was $541 million, a 17.6% increase year-over-year and a 0.3% increase quarter-over-quarter [5][8] - Gross margin was 9.2%, up 2.8 percentage points year-over-year but down 2.2 percentage points quarter-over-quarter [9] - Net loss for the period was $52.2 million, compared to a loss of $25.3 million in Q1 2024 and a loss of $96.3 million in Q4 2024 [11] - Basic earnings per share was $0.20, compared to $0.19 in Q1 2024 and a loss of $1.5 cents in Q4 2024 [11] Business Line Data and Key Metrics Changes - Revenue from embedded non-volatile memory was $130.3 million, a 9.3% increase year-over-year [13] - Revenue from standalone non-volatile memory was $42.9 million, a 38% increase year-over-year [13] - Revenue from Power Discrete was $162.8 million, a 13.5% increase year-over-year [13] - Revenue from analog and power management IC was $136.8 million, a 34.8% increase year-over-year [13] Market Data and Key Metrics Changes - Revenue from China was $442.5 million, contributing 81.8% of total revenue, a 21% increase year-over-year [12] - Revenue from North America was $56.4 million, a 22% increase year-over-year [12] - Revenue from Europe decreased by 30% year-over-year to $15.2 million [12] - Revenue from Japan decreased by 62.1% year-over-year to $1 million [12] Company Strategy and Development Direction - The company plans to accelerate effective capacity expansion, enhance R&D capabilities, and manage supply chain disturbances while reducing costs and improving efficiency [6][7] - The company aims to optimize its product portfolio and maintain full capacity utilization [6] Management Comments on Operating Environment and Future Outlook - Management noted that the semiconductor industry faces greater uncertainties due to recent global changes and policies affecting customer demand and procurement costs [6] - The company expects revenue for Q2 2025 to be in the range of $550 million to $570 million, with a projected gross margin of 7% to 9% [16] Other Important Information - Capital expenditures in Q1 2025 were $510.9 million, with significant investments in manufacturing [14] - Cash and cash equivalents decreased to $4.08 billion as of March 31, 2025, from $4.46 billion at the end of 2024 [15] Q&A Session Summary Question: Impact of new tariffs on customers - Management indicated that the recent tariffs have not had a meaningful impact on the business, as most customers are domestic design houses [20][22] Question: Growth in analog and PMIC sales - Management noted that the analog and PMIC platforms are growing due to competitive offerings and increasing domestic demand [24][28] Question: Price increase possibilities - Management stated that while there is pricing pressure on 8-inch wafers, 12-inch prices are gradually increasing, and customer acceptance of price increases is expected as demand exceeds supply [35][36] Question: Outlook for the second half of the year - Management expects a gradual recovery in demand, with consumer segments remaining weaker compared to industrial segments [49][50] Question: Competition and pricing strategies - Management acknowledged the competitive landscape but emphasized the company's technological advantages and ability to meet customer needs [58][60] Question: Equipment procurement and tariff impact - Management reported minimal impact from tariffs on equipment procurement, as most manufacturing occurs outside the U.S. [74][76] Question: Demand cycle for power devices - Management expressed confidence in the power device segment, citing strong competition but also a solid technological foundation [78][80] Question: Gross margin trends - Management indicated that gross margin pressures are expected due to new capacity ramp-up but remains optimistic about future improvements [96][102] Question: Embedded NOR flash platform performance - Management acknowledged the need for improved offerings in embedded NOR flash and expects growth as new technologies are introduced [104][106]