Summary of the Conference Call for 卓胜微 (Zhuosheng Micro) Company Overview - **Company**: 卓胜微 (Zhuosheng Micro) - **Industry**: Semiconductor, specifically focusing on RF (Radio Frequency) components and modules Key Financial Metrics - **Revenue**: - For the first three quarters of 2025, revenue was 2.769 billion CNY, a decrease of 17.77% year-on-year [1] - Third quarter revenue was 1.065 billion CNY, an increase of 12.36% quarter-on-quarter [1] - **Net Profit**: - Net loss for the first three quarters was 171 million CNY, a decline of 140.13% year-on-year [1] - Third quarter net loss was 23.34 million CNY, a significant reduction of 76.84% quarter-on-quarter [1] - **Gross Margin**: - Overall gross margin was 26.68%, down 13.84% year-on-year [1] - Improvement in gross margin expected as production capacity utilization increases [1] Operational Insights - **Product Segmentation**: - RF discrete devices accounted for approximately 53% of revenue, while RF modules accounted for about 44% [1] - **R&D and Depreciation**: - R&D investment for the first three quarters was 644 million CNY, with depreciation amounting to 485 million CNY [2] - Full-year depreciation expected to be between 700 million to 750 million CNY [2] - **Inventory Management**: - Inventory stood at 3.016 billion CNY, a 19.64% increase year-on-year, to support production ramp-up and supply chain security [2] Industry Dynamics - **Market Competition**: - The merger of Skyworks and Corning is expected to impact the RF market, potentially reducing the number of major suppliers and creating opportunities for Zhuosheng Micro [8][9] - Concerns about over-competition and excess capacity in the domestic RF market were raised, with many companies competing for market share [17] - **Technological Advancements**: - Zhuosheng Micro is focusing on enhancing its technology capabilities in high-performance RF components and modules [5][6] - The company is also investing in special processes for 6-inch and 12-inch wafers to improve product offerings [6][7] Future Outlook - **Market Opportunities**: - The company anticipates growth in the fourth quarter due to improved product delivery and market demand [5][10] - There is a focus on developing customized products to meet client needs, particularly in the smartphone sector [49] - **Challenges**: - The company faces challenges related to high depreciation costs and competition from other domestic RF manufacturers [10][26] - The impact of AI on raw material supply chains continues to be a concern, affecting production capabilities [33] Additional Insights - **Patent Issues**: - The company is involved in patent disputes but believes its patents are robust and innovative [3] - **Customer Relationships**: - Strong relationships with major clients are crucial, and the company is working to enhance its product offerings to meet evolving customer demands [49] This summary encapsulates the key points discussed during the conference call, highlighting the financial performance, operational strategies, industry dynamics, and future outlook for Zhuosheng Micro.

Group 1: Company Overview and Performance - The company focused on developing high-performance RF front-end chips and modules, establishing a foundation for diversified product applications and cross-industry integration [2][3] - In the first three quarters of 2025, the company achieved revenue of CNY 2.769 billion, a year-on-year decrease of 17.77%, and a net profit attributable to shareholders of -CNY 171 million, a decline of 140.13% [4] - The overall gross margin was 26.68%, down 13.84% year-on-year, primarily due to depreciation, market competition, and changes in product structure [4] Group 2: Quarterly Performance Insights - In Q3 2025, the company reported revenue of CNY 1.065 billion, a quarter-on-quarter increase of 12.36%, with a net profit of -CNY 23.336 million, a significant reduction in losses by 76.84% [4] - The impact of self-produced wafer costs on gross margin improved compared to Q2, with expectations of further enhancement as production capacity utilization increases [4] Group 3: Market and Competitive Landscape - The domestic RF front-end product market is becoming increasingly competitive, particularly in low-end products with severe homogenization [4] - Emerging communication demands such as 6G and satellite communications will drive the need for enhanced RF front-end chip capabilities, requiring companies to maintain advanced technical reserves [4] Group 4: Product Development and Technology - The company is advancing three core technology platforms: 6-inch specialty processes, 12-inch heterogeneous silicon-based processes, and advanced heterogeneous integration [3] - As of the report date, the company’s 6-inch and 12-inch production lines are operating at high capacity utilization, with significant improvements in product yield and line efficiency [5][7] Group 5: Inventory and Supply Chain Management - The company’s inventory stood at approximately CNY 3.016 billion, a year-on-year increase of 19.64%, primarily to support rapid production ramp-up and delivery of key module products [6]

Core Viewpoint - The company reported a revenue of 1.703 billion yuan and a net profit attributable to shareholders of -147 million yuan for the first half of 2025, indicating short-term performance pressure due to global economic challenges, but it is focusing on product structure optimization, technological breakthroughs, and production line construction to lay a solid foundation for future profitability recovery [1] Group 1: Revenue and Product Performance - The revenue from RF modules increased to 44.35% of total revenue in the first half of 2025, up from 36.34% in the same period last year, demonstrating the company's enhanced competitiveness in integrated and modular products [2] - The L-PAMiD product, which is the highest integration RF front-end module, has entered mass production and delivery, marking a breakthrough in the company's capabilities in the high-end RF front-end sector [2] - The company has established two new growth areas beyond the traditional mobile phone market: large-scale production of WiFi7 front-end modules and successful client validation of Bluetooth front-end modules and UWB chips, positioning itself in the IoT precise positioning market [2] Group 2: Production and R&D Investment - The company is advancing its production line construction and R&D investment, with a monthly capacity of 5,000 wafers for the 12-inch production line and high product yield rates [3] - R&D investment for the first half of 2025 was 407 million yuan, maintaining a high intensity despite a year-on-year decline, with a total of 200 patents obtained, including 198 domestic patents [3] - The company reported a debt-to-asset ratio of 30% and a net cash flow from operating activities of approximately 257 million yuan, providing strong support for future R&D and capacity expansion [3]

Core Viewpoint - Jiangsu Maxscend Microelectronics Company Limited reported a significant decline in revenue and net profit for the first half of 2025, indicating challenges in the RF integrated circuit market and a need for strategic adjustments to maintain competitiveness [3][10]. Financial Performance - The company's revenue for the reporting period was approximately 1.70 billion yuan, a decrease of 25.42% compared to the same period last year [3]. - The net profit attributable to shareholders was a loss of approximately 147.39 million yuan, a decline of 141.59% year-on-year [3]. - The basic earnings per share were -0.2757 yuan, down 141.54% from the previous year [3]. - The total assets at the end of the reporting period were approximately 14.33 billion yuan, showing a slight increase of 0.68% from the previous year [3]. Business Overview - The company specializes in RF integrated circuits, focusing on the research, development, production, and sales of RF switches, low-noise amplifiers, filters, and power amplifiers, primarily for mobile smart terminals [4][10]. - The company has established a complete ecosystem in the RF field, integrating design, research, process, device, material, and integration technology resources [4][10]. Industry Context - The global semiconductor market is expected to grow by 11.2% in 2025, reaching approximately 697.1 billion USD, driven by advancements in AI, 5G, IoT, and other emerging technologies [11]. - The integrated circuit industry in China is transitioning from a major importer to a self-sufficient producer, with a focus on enhancing domestic capabilities and reducing reliance on foreign technology [11][12]. - The RF front-end market is highly concentrated, with international firms dominating, but domestic companies are increasingly making breakthroughs and competing effectively [16]. Strategic Focus - The company is committed to enhancing its core technology and resource platform, aiming to become a leading RF solution provider in China [4][10]. - The company is leveraging its Fab-lite business model to optimize production processes and reduce dependency on external foundries, thereby enhancing supply chain stability [9][10]. - The company aims to expand its market presence in high-end RF module products and capitalize on emerging opportunities in communication base stations, automotive electronics, and IoT applications [10][16].