Summary of Guangli Micro's Conference Call Company Overview - **Company**: Guangli Micro - **Acquisition**: Acquired Belgian company Luxida to enhance capabilities in device simulation, link simulation, and PDK services, solidifying its position in the optical communication sector [2][4] Industry Insights - **Silicon Photonics Market**: Expected to grow at over 45% CAGR until 2033, driven by increasing bandwidth demands [2][6] - **Optical Chip Solutions**: There is a pressing demand for efficient, low-cost optical chip solutions, with traditional EML technology facing challenges [5][6] Financial Performance - **2025 H1 Financials**: - Revenue: Approximately 1.2 billion CNY, up 15% YoY - Net Profit: 280 million CNY, up 20% YoY - Software business growth: Over 50% - Hardware business growth: 38% - Overall revenue growth: Restored to over 43% [3][20][22] Business Developments - **New Orders**: New orders reached approximately 310 million CNY, a 60% increase YoY, with total orders nearing 500 million CNY [22] - **DFT Business**: Revenue doubled YoY, with a new team established for DFT and DFM tool development, expecting multiple tool launches by year-end [2][26][27] Acquisition Impact - **Luxida Acquisition**: - Enhances Guangli Micro's global capabilities in device simulation and PDK services, crucial for improving silicon photonics yield and reducing manufacturing costs [5][9] - Plans to integrate Luxida's technology with teams from MIT and other partners to create a complete industrial ecosystem [5][12] Market Position and Strategy - **Market Share**: Luxida holds over 50% market share in its segment, with plans for further acquisitions to enhance capabilities [8][9] - **Revenue Goals**: Aiming for Luxida to contribute approximately 200 million USD in revenue within 3-5 years, leveraging partnerships and domestic collaborations [9][10] Challenges and Risks - **Overseas Market Expansion**: Slow progress in overseas markets, particularly in hardware sales in South Korea, but software sales are more stable [4][34] - **Geopolitical Factors**: Potential impacts from US-China relations on business dynamics, particularly concerning overseas clients [17] Future Outlook - **R&D Expansion**: Plans to establish several R&D centers in China post-acquisition, while retaining core teams in Belgium [35] - **Revenue Composition**: Anticipated revenue sources include 70% from licensing, 20-30% from design services, and 10-20% from royalties in the long term [15][16] Conclusion Guangli Micro is strategically positioned to capitalize on the growing silicon photonics market through its recent acquisition of Luxida, robust financial performance, and a clear focus on expanding its product offerings and market reach. The company is actively addressing challenges in overseas markets while enhancing its domestic capabilities to drive future growth.

Core Viewpoint - The article discusses the ongoing U.S. export restrictions targeting Chinese semiconductor companies, particularly focusing on Changxin Memory Technologies, Yangtze Memory Technologies, and SMIC, highlighting the implications for China's semiconductor industry and the potential for innovation in response to these challenges [2][5]. Group 1: U.S. Export Restrictions - The U.S. Department of Commerce is considering adding Changxin Memory Technologies to the export restriction entity list, along with evaluating the potential listing of SMIC and Yangtze Memory Technologies [2]. - This move is seen as a continuation of the U.S. strategy to target key areas in the semiconductor industry, including DRAM, NAND flash, and advanced process foundries [2]. - The entity list requires companies to apply for licenses to purchase U.S. equipment, with an approval rate of less than 15% [2]. Group 2: Impact on Chinese Semiconductor Companies - Changxin Memory Technologies is the only domestic manufacturer capable of mass-producing 17nm DRAM, with plans to capture 10% of global capacity after its second-phase expansion [2]. - Yangtze Memory Technologies has achieved a market share of over 5% in NAND flash, utilizing its Xtacking® architecture for 232-layer 3D NAND production [2]. - SMIC's monthly production capacity for 14nm technology is 50,000 wafers, with 5nm technology development entering the verification stage [2]. Group 3: Technical Dependencies and Risks - If restrictions are implemented, Changxin Memory Technologies faces risks of supply disruption for KLA's T3500 series detection equipment, which is critical for its 12-inch wafer production [3]. - Yangtze Memory Technologies relies heavily on Applied Materials' PVD equipment for its 192-layer NAND flash development, with domestic alternatives showing a 12% performance gap [3]. - SMIC's 5nm technology development requires Synopsys' DFT tools, and being placed on the entity list could extend its verification cycle by 6-8 months [3]. Group 4: Global Industry Reactions - The U.S. has issued warnings against using American AI chips for training Chinese models, indicating severe consequences for violations [4]. - Global supply chain disruptions are evident, with SK Hynix halting technology transfers to Changxin Memory Technologies due to concerns over technology leakage [4]. - Equipment suppliers like Lam Research and KLA are lobbying the U.S. government to ease restrictions, as their revenue from China remains significant [4]. Group 5: Growth Amidst Challenges - Despite the sanctions, China's semiconductor exports have increased, with a total export value of 931.17 billion yuan from January to October 2024, marking a 21.4% year-on-year growth [4]. - The share of memory chips in exports has risen to 38%, indicating effective domestic substitution strategies [4]. - The article suggests that the U.S. restrictions may inadvertently drive innovation within China's semiconductor sector, as companies adapt to the challenges [5].