Advanced Micro-Fabrication Equipment Inc. China (AMEC) delivered impressive first-quarter results, driven by its dual growth engines of etching and thin film equipment.
The company reported its Q1 2026 financial results on April 27, 2026. During the reporting period, revenue reached 2.915 billion yuan, a year-on-year increase of 34.13%, continuing its trend of over 35% average annual growth for the past 14 years. Net profit attributable to shareholders surged 197.20% to 930 million yuan. Basic earnings per share jumped significantly to 1.48 yuan, compared to 0.50 yuan in the same period last year.
However, the triple-digit profit growth was not entirely from core operations. Excluding an approximately 397 million yuan after-tax net gain from the sale of Piotech Inc. shares, the net profit after deducting non-recurring gains and losses was 478 million yuan, representing a still-robust 60.09% year-on-year increase. This figure more accurately reflects the profitability of the company's core business. The 60% growth was driven by the continued scaling of etching equipment production and the rapid ramp-up of new thin film equipment product lines.
Notably, net cash flow from operating activities turned negative, dropping to -159 million yuan from a positive 377 million yuan a year earlier. This was primarily due to increased procurement, inventory build-up, and staff compensation expenses amid rapid business expansion, indicating the company is still in a phase of significant investment for capacity growth. Concurrently, R&D expenditure hit a new high of 908 million yuan for the quarter, accounting for 31.14% of revenue—far exceeding the average for STAR Market-listed companies—demonstrating the company's strategic commitment to investing in future technologies.
**Revenue Growth: Advanced Etching Scales Up, Thin Film Equipment Emerges as New Engine**
The 34% year-on-year revenue growth was primarily driven by two main factors. In etching equipment, the company made continuous breakthroughs in Ultra-High Aspect Ratio (UHAR) etching processes for advanced memory devices. Over 300 reactors of its fully self-developed UHAR etchers are now in stable, large-scale production at client sites. The next-generation 90:1 UHAR low-temperature CCP etcher has been shipped for customer validation, with the company stating it now comprehensively covers various UHAR requirements for memory etching applications. For its ICP product line, the second-generation Primo Angnova™ achieved a 140:1 etch result in 3D DRAM applications and has been shipped to a leading domestic memory customer for certification. Furthermore, the new chemical vapor etching equipment, Primo Domingo™, achieved a super-high selectivity of over 700:1 for SiGe/Si, performing excellently in key process verifications for GAA and 3D DRAM, with several process metrics reaching industry-leading levels. The thin film equipment business line has become the most significant variable for growth. Following full-year 2025 revenue growth of approximately 224%, this segment continued its rapid expansion in Q1 2026. Multiple products, including LPCVD, ALD, EPI, PVD CuBS, and PECVD, are accelerating their penetration into advanced memory and logic markets. Among them, the ALD series products developed for metal gate applications have reached internationally leading performance levels and demonstrate higher production efficiency. Reduced-pressure EPI equipment has been successfully validated by clients using mature process nodes, with some advanced processes entering mass production validation stages.
**Profit Quality: One-Time Gain Contributes Nearly Half of Increment**
While quarterly net profit attributable to shareholders increased by 617 million yuan year-on-year, nearly 400 million yuan originated from the sale of Piotech shares. Details from non-recurring items show that the disposal of non-current assets contributed a 467 million yuan pre-tax gain, resulting in an approximately 397 million yuan after-tax net gain, accounting for about 43% of the total net profit. This implies that excluding this one-time gain, core business net profit was approximately 533 million yuan, corresponding to a year-on-year growth rate of around 70%—still excellent, but notably different from the headline figure of nearly 200% growth, a distinction investors should note rationally. The 60% growth in profit after excluding non-recurring items has a cleaner source: revenue expansion drove a gross profit increase of approximately 260 million yuan. During the same period, selling expenses increased by 28 million yuan and R&D expenses increased by 34 million yuan. The increase in expenses was smaller than the gross profit increment, indicating some operating leverage.
**Cash Flow: Operating Cash Flow Turns Negative, R&D and Capital Expenditures Increase**
Net cash flow from operating activities was -159 million yuan this quarter, a sharp 142% decrease from the positive 377 million yuan recorded a year earlier. The company attributed this primarily to increased cash payments for goods and services received (approximately 1.988 billion yuan, up about 290 million yuan year-on-year) and employee compensation expenses (636 million yuan, up 72 million yuan) amid sustained business growth. This aligns with high inventory levels of 7.259 billion yuan and an increase in accounts receivable from 1.987 billion yuan to 2.566 billion yuan, reflecting typical characteristics of a business expansion phase. Regarding investing activities, capitalized R&D expenditure for the quarter was high at 342 million yuan (compared to 157 million yuan a year earlier). Reflected on the balance sheet, the development expenditure item increased by approximately 367 million yuan from the beginning of the year to 1.902 billion yuan, representing significant capitalized R&D investment alongside fixed asset spending. The combined total of fixed assets and construction-in-progress was approximately 3.8 billion yuan, with construction-in-progress increasing significantly by 145 million yuan since the start of the year, indicating that capacity expansion efforts have not slowed. Financing activities generated a cash inflow of 491 million yuan, mainly from capital absorption related to employee stock ownership plans or the exercise of equity incentives.
**MOCVD: Consolidating GaN Leadership, Expanding into Power Devices and MicroLED**
In the compound semiconductor equipment sector, AMEC maintained its leading position in the international GaN-based MOCVD market and actively expanded into new applications like SiC/GaN power devices and Micro-LED. This quarter, four new MOCVD products—including MOCVD systems for SiC and GaN power devices, a dedicated GaN MOCVD for Micro-LED, and a GaAs MOCVD for red/yellow LEDs—have all entered the customer validation stage, with some already receiving volume orders, accelerating the commercialization pace.
**Balance Sheet: Steady Equity Expansion, Stable Shareholder Structure**
As of March 31, 2026, the company's total assets were 31.270 billion yuan, an increase of 4.77% from the start of the year. Net assets attributable to shareholders were 24.309 billion yuan, up 7.11%. The asset-liability ratio was only 22.17%, indicating a稳健的财务结构 (steady financial structure). The weighted average return on equity was 4.00%, an improvement of 2.43 percentage points from the same period last year, although the absolute level remains relatively low. Whether this can improve with the continued release of profitability will be a key metric for market observers. Regarding shareholder structure, the top three shareholders—Shanghai Venture Capital (13.93%), Hong Kong Securities Clearing Company (HKSCC) (10.53%), and Xunxin (Shanghai) Investment (10.22%)—collectively hold over 34% of shares, indicating relatively concentrated ownership. The National Integrated Circuit Industry Investment Fund Phase II holds a 3.49% stake through Huaxin Investment, a clear sign of state-level endorsement.
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