Persistent tightness in upstream wafer foundry capacity is rapidly reshaping the profitability landscape for chip design firms. China Micro Semicon (Shenzhen) Limited reported a nearly 60% year-on-year increase in first-quarter revenue for 2026, with adjusted net profit more than doubling, indicating a significant high-quality expansion in its core operations.
The company's quarterly report, disclosed on April 22, shows first-quarter revenue reached 325 million yuan, up 57.47% compared to the same period last year. Net profit attributable to shareholders was 51.2484 million yuan, an increase of 48.89%. After excluding non-recurring gains and losses, net profit surged to 69.0405 million yuan, a substantial year-on-year increase of 111.91%. Net cash flow from operating activities was 90.3355 million yuan, growing 60.87%, reflecting healthy collection of receivables.
The core driver of this quarter's strong performance was a structural supply-demand imbalance caused by continued tightness in upstream capacity. Shipments reached approximately 1.2 billion units, a year-on-year increase of about 38%. Product selling prices rose concurrently, leading to a comprehensive gross margin of approximately 38%, an improvement of about 4 percentage points from the same period last year and about 2.7 percentage points from the previous quarter. It is noteworthy that the company recorded a fair value loss of approximately 27.5923 million yuan on its holdings of Elec-Tech International stock, which weighed on net profit growth, causing it to be lower than the growth in adjusted net profit.
The effect of product price increases driven by the supply-demand imbalance, combined with the buffering effect of the company's prior strategic inventory stocking against rising costs, jointly supported the significant gross margin expansion this quarter. Whether the tight upstream capacity situation persists will be a key variable determining the duration of this favorable pricing environment.
Volume and price increases jointly drove the rapid revenue growth. First-quarter revenue grew 57.47% year-on-year to 325 million yuan, a result of dual drivers: shipment growth and rising product prices. In terms of volume, quarterly shipments were approximately 1.2 billion units, an increase of about 320 million units or 38% year-on-year. Shipments of higher-value MO and MO+ series products grew by about 48%, exceeding the company's overall shipment growth rate, indicating continued optimization of the product mix towards higher-value segments.
Insufficient supply from upstream wafer foundries was a key backdrop for this revenue growth. Capacity constraints led to structural shortages for the company, increasing its backlog of unfilled orders and thereby granting it greater pricing power to pass on cost increases to downstream customers. The simultaneous expansion in shipment volume and increase in selling prices jointly supported the quarter's high revenue growth.
Adjusted net profit of 69.0405 million yuan, representing 111.91% growth, was approximately double the revenue growth rate, demonstrating significant operating leverage and particularly突出 improvement in the profitability of core operations.
However, the growth in net profit attributable to shareholders (48.89%) was noticeably lower than the adjusted net profit growth. The primary reason was the fluctuation in the share price of Elec-Tech International, in which the company holds a stake, leading to a recognized fair value loss of approximately 27.5923 million yuan. This non-recurring item created a one-time drag on net profit. Excluding this non-operational factor, the profit growth logic of the core business becomes clearer.
Gross margin expansion was supported by a dual foundation of price pass-through and strategic inventory. The comprehensive gross margin for the first quarter was approximately 38%, up about 4 percentage points year-on-year and 2.7 percentage points quarter-on-quarter. The rationale for gross margin improvement consists of two layers.
First, tight upstream capacity created a supply shortage, translating into upward pressure on selling prices, with price adjustments realized ahead of cost increases. Second, the company's earlier strategic inventory procurement locked in raw materials and processing capacity at lower costs, providing a buffer during the current cycle of rising costs. The company noted that due to processing lead times, increases in raw material and processing costs lag behind selling price adjustments. This timing difference was a crucial supporting factor for gross margin expansion this quarter.
Cash flow continued to improve, while R&D investment expanded in absolute terms. Net cash flow from operating activities was 90.3355 million yuan, up 60.87% year-on-year, primarily benefiting from increased collections driven by revenue growth and the company's continued efforts to strengthen accounts receivable management.
Regarding R&D investment, first-quarter R&D expenses were 30.8137 million yuan, an increase of 33.24% year-on-year, mainly due to increased personnel costs from new R&D hires. R&D expenses as a percentage of revenue were 9.48%, down from 11.20% in the same period last year, primarily due to the high revenue growth diluting the ratio; the absolute amount of R&D investment still maintained a growth trend.
In terms of assets and liabilities, as of the end of the reporting period, the company's total assets were 3.514 billion yuan, and equity attributable to shareholders was 3.228 billion yuan. A short-term loan of approximately 199.8 million yuan existing at the end of the previous quarter was fully repaid during this reporting period, resulting in a net cash outflow of approximately 207 million yuan from financing activities, further stabilizing the overall asset-liability structure.
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