Advanced Micro-Fabrication Equipment Inc. China disclosed its 2025 annual report on Monday. The company achieved annual operating revenue of 12.385 billion yuan, a significant increase of 36.62% year-over-year. Net profit attributable to shareholders reached 2.111 billion yuan, growing 30.69% compared to the previous year.
Analyzing the quarterly performance, both revenue and profit peaked in the fourth quarter. Q4 revenue was 4.322 billion yuan, and Q4 net profit was 900 million yuan, representing the highest figures for the year. The pace of equipment shipments and revenue recognition accelerated noticeably in the second half of the year.
In terms of business segments, etching equipment remained the primary growth driver. Sales of etching equipment reached 9.832 billion yuan in 2025, up 35.12% year-over-year. More notably, thin film equipment began contributing significantly to growth. Sales of LPCVD equipment surged to 506 million yuan, a massive 224.23% increase. The company reported receiving repeat orders for several new thin film equipment models, with cumulative shipments of thin film reaction chambers exceeding 300 units, indicating a clearer轮廓 for its second growth curve.
The company simultaneously announced a shareholder return proposal involving both a cash dividend and a bonus share issue. It plans to distribute a cash dividend of 3.50 yuan per 10 shares (before tax), totaling approximately 219 million yuan. Additionally, it will issue 4.9 bonus shares for every 10 shares held, which will increase the total number of shares from 626 million to 933 million.
Revenue Analysis: Fourth Quarter Surge Drives Full-Year Growth
Quarterly revenue showed a sequential increase throughout 2025: Q1 revenue was 2.173 billion yuan, Q2 was 2.787 billion yuan, Q3 was 3.102 billion yuan, and Q4 reached 4.322 billion yuan. Net profit followed a similar pattern: 313 million yuan in Q1, 393 million yuan in Q2, 505 million yuan in Q3, and 900 million yuan in Q4. Fourth-quarter revenue accounted for approximately 35% of the annual total, reflecting the seasonal characteristics of semiconductor equipment delivery, acceptance, and revenue recognition. This also indicates the company successfully aligned with customer capacity expansion and production ramp-up schedules more smoothly in the latter half of the year.
Operating cash flow also strengthened later in the year. It was negative 174 million yuan in Q2 but turned positive to 1.095 billion yuan in Q3 and 997 million yuan in Q4. Full-year operating cash flow totaled 2.295 billion yuan, a significant improvement from the negative 977 million yuan in 2023 and also higher than the 1.458 billion yuan in 2024. For equipment companies, such an improvement is typically associated with factors like delivery collections, improved structure of advances received and accounts receivable, and enhanced supply chain and delivery efficiency.
Business Structure: Etching Provides Stability, LPCVD Shows High Growth Momentum
The annual report provided a breakdown of key product categories:
Etching Equipment: Sales reached 9.832 billion yuan in 2025, a year-over-year increase of 35.12%. The company emphasized a significant rise in shipments of high-end products for key etching processes in advanced logic and memory chips. It has achieved large-scale mass production for various critical etching processes in advanced logic devices and advanced memory devices. LPCVD Equipment: Sales soared to 506 million yuan in 2025, a staggering 224.23% year-over-year increase. This type of acceleration, from initial adoption to broader production line implementation, often signifies a transition from the validation phase to wider adoption. The company also disclosed an increase in repeat orders for thin film equipment, with cumulative shipments of reaction chambers surpassing 300 units.
From an industry perspective, advanced logic chip manufacturing, facing limitations in lithography, relies more heavily on multi-patterning techniques, which increases the number of etching and thin film deposition steps. Concurrently, the push for higher layer counts in 3D NAND and increasing aspect ratio requirements elevate the importance and value contribution of etching and thin film deposition processes. This fundamentally explains why Advanced Micro-Fabrication Equipment Inc. China has been accelerating the development of its thin film portfolio, including LPCVD, ALD, and EPI, alongside its core etching business.
Net Profit Attributable to Shareholders Surges 30.69%
1) Strong Net Profit Margin, Rapid Increase in R&D Expenses
The 2025 net profit attributable to shareholders was 2.111 billion yuan, corresponding to a net profit margin of approximately 17%. After excluding non-recurring items, the net profit was 1.550 billion yuan, with a corresponding margin of about 12.5%. Despite substantial revenue growth, the company chose to significantly increase its R&D intensity. R&D investment reached 3.744 billion yuan, accounting for 30.23% of revenue, while R&D expenses amounted to 2.475 billion yuan, a 74.61% year-over-year increase.
This cost structure implies two key points:
In the short term, pressure on the profit margin stems from a proactive increase in expenses rather than weakening demand. In the medium to long term, the ability to consistently translate high R&D investment into customer validation, repeat orders, and规模化 equipment installation is crucial for valuation anchoring and profit elasticity.
2) Non-Recurring Items Amplify Reported Net Profit
The total impact of non-recurring gains and losses in 2025 was 562 million yuan, compared to 228 million yuan in 2024. Significant items included:
Gains on disposal of non-current assets: 446 million yuan. Gains from fair value changes and disposal of financial assets: 177 million yuan. Government grants: 39 million yuan.
The company also disclosed that the combined fair value gains and investment income from equity investments measured at fair value through profit or loss totaled approximately 661 million yuan in 2025, compared to about 198 million yuan in 2024. This explains why the growth rate of the reported net profit significantly outpaced the growth of the profit excluding non-recurring items – the "investment and disposal" component contributed more to the current period's profits. Investors should distinguish this when comparing annual profit quality.
Furthermore, under the company's disclosed metrics, the profit excluding non-recurring items is also affected by share-based compensation expenses, which amounted to 513 million yuan in 2025. If the impact of share-based payment is excluded, the adjusted net profit attributable to shareholders would be 2.063 billion yuan, which is closer to the underlying operational profit trend.
Product Progress and Strategic Moves: Advanced Nodes, Advanced Packaging, and "Dry + Wet" Process Integration
The product and customer progress disclosed in the annual report primarily points towards "increased penetration in advanced nodes + product portfolio expansion":
Etching Equipment (CCP/ICP): The company stated that its etching equipment now covers numerous applications from 65nm down to 3nm and more advanced processes. In 2025, annual shipments of CCP etching equipment exceeded 1,000 reaction chambers, with cumulative installations surpassing 5,000 chambers. The company highlighted that its ICP twin-stage system achieves etching rate control precision between chambers at a level of 0.2 Å per minute and has been validated in various thin film etching processes. Thin Film Equipment: Tungsten series CVD/HAR/ALD, metal gate series ALD TiN/TiAl/TaN, and others are progressing through customer validation and securing repeat orders. EPI equipment has entered the mass production validation stage at customer sites. MOCVD: The company reiterated its leading market share in GaN-based LED MOCVD equipment since 2017 and is advancing validation efforts in Mini-LED, Micro-LED, GaN power devices, and 8-inch SiC epitaxy. Advanced Packaging: TSV etching equipment continues to secure repeat orders for 2.5D/3D advanced packaging applications, with efforts ongoing to develop more platform-based equipment.
A move carrying significant "strategic signal" is the company's plan to acquire a controlling stake in Hangzhou Zhonggui Electronics Technology Co., Ltd. through a combination of share issuance, cash payment, and a supporting fundraising effort. This acquisition aims to enable a transition from offering primarily "dry" process equipment to providing integrated "dry + wet" process solutions. If finalized, this would move Advanced Micro-Fabrication Equipment Inc. China beyond competing on individual equipment points towards competing on capabilities involving "process synergy +成套 solution provision." This could potentially enhance customer stickiness and production line penetration speed, but it also brings challenges related to post-merger integration and R&D/product line synergy execution.
Dividend and Bonus Share Issue: Conservative Cash Return, Significant Share Capital Expansion
The proposed cash dividend of 3.50 yuan per 10 shares would total approximately 219 million yuan based on the current share capital. Roughly calculated against the 2025 net profit of 2.111 billion yuan, the cash dividend payout ratio is slightly over 10%, indicating an approach focused on "modest returns while retaining funds for R&D and capacity expansion."
Concurrently, the proposed bonus issue of 4.9 shares for every 10 shares held will increase the total shares from 626 million to 933 million. For the secondary market, a bonus issue itself does not alter the company's intrinsic value but changes the presentation of per-share metrics. It often reflects management's expectations for medium-to-long-term business expansion and capital operation prospects.
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