Tongfu Microelectronics Co., Ltd. (002156.SZ), a leading domestic semiconductor packaging and testing firm, recently reported stellar Q3 2025 results. The financials revealed revenue of RMB 20.116 billion and net profit attributable to shareholders of RMB 860 million for the first three quarters, both setting historical highs for the same period.
The company’s Q3 standalone performance was particularly robust, with net profit surging 95% year-on-year (YoY), driven by industry recovery and volume growth in mid-to-high-end products. Concurrently, its stock price soared over 56% in Q3, hitting an all-time high in early October. However, market divergence emerged as Hong Kong Securities Clearing Company ("Northbound Trading") maintained bullish positions while the National Integrated Circuit Industry Investment Fund ("Big Fund Phase I") and some mutual funds turned net sellers. This split reflects profit-taking at peak valuations and raises a critical question: Can Tongfu Microelectronics extend its high-growth momentum into Q4 amid record-high comparables?
**Record-Breaking Performance** Tongfu Microelectronics posted Q1-Q3 revenue of RMB 20.116 billion (+17.77% YoY) and net profit of RMB 860 million (+55.74% YoY). Q3 net profit alone reached RMB 448 million (+95.08% YoY, +13.05% QoQ), though revenue growth slowed to 1.9% QoQ (vs. 14.01% previously) at RMB 7.078 billion.
As a key player in IC packaging, Tongfu serves AI, HPC, big data storage, display drivers, and 5G sectors. The semiconductor cycle’s recovery phase has spurred demand in AI and NEVs, while memory, communications, automotive, and industrial segments are gradually rebounding. Tongfu’s growth stems from two drivers: 1. **Mid-to-high-end product expansion**, notably from its top client AMD (Advanced Micro Devices), whose data center and gaming businesses fueled revenue. This underscores Tongfu’s strategic gains in advanced packaging, capitalizing on AI-driven demand. 2. **Operational efficiency**: Operating cash flow surged 77.63% YoY to RMB 5.466 billion, outpacing profit growth. Q3 expense ratio dipped to 9.28% (-0.58pp YoY, -0.46pp QoQ), aided by lower R&D spending (-0.39pp QoQ).
However, aggressive capacity expansion has elevated financial leverage. Q1-Q3 investment cash outflow hit RMB 5.971 billion due to fixed-asset purchases and equity investments, pushing debt-to-asset ratio to 63.04%—a record high since listing.
**Institutional Divergence Intensifies** Tongfu’s stock rallied 56.79% in Q3, peaking at RMB 47.99 on October 10. While Northbound Trading raised holdings to 3.54% (adding 28.718 million shares), Big Fund Phase I sold 16.7102 million shares (fourth consecutive quarter of divestment), and Big Fund Phase II offloaded 3.0265 million shares. Mutual funds like CSI 500 ETF and ChinaAMC Semiconductor Chip ETF also trimmed positions, signaling caution at peak valuations.
The divergence hinges on Tongfu’s ability to sustain growth post-Q3’s high base. As AMD’s primary packaging partner (80%+ orders), Tongfu’s outlook ties closely to AMD’s collaboration with OpenAI to deploy 6GW of GPU chips for AI infrastructure. However, AMD faces rising competition—Qualcomm’s recent entry into data center AI chips (via AI200/AI250 accelerators) threatens its HPC stronghold.
Adding volatility, Tongfu’s parent HuaDa Microelectronics Group announced plans to sell up to 15.176 million shares (1% stake) from November 10, 2025, to February 7, 2026, potentially cashing out RMB 670 million at current prices. While framed as "operational needs," the timing—amid peak valuations and growth uncertainties—may fuel market skepticism.
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