Jcet Group Co.,Ltd. (ASX: 600584) is currently facing pressure on its earnings growth. Influenced by factors such as declining revenue from the communications electronics market and a slowdown in consumer electronics revenue growth, the company's annual revenue entered single-digit growth territory last year and turned negative in the first quarter of this year.
It is noted that the pressure on the company's profitability last year stemmed from both short-term cost disturbances like rising raw material prices and production ramp-up at new facilities, as well as a decline in net profit from key subsidiaries. Coupled with the inherent characteristics of the packaging and testing sector—being downstream in the semiconductor supply chain with weak bargaining power—the company's gross margin has long remained low. At this critical juncture of industry transition to advanced packaging, the company is making a substantial investment of 7.8 billion yuan to build high-end packaging and testing capacity. However, from a market perspective, this concentrated industry-wide capacity expansion could intensify competition and bring the risk of future overcapacity.
Communications Segment Declines; Overseas Scale Lacks Strength
As an integrated circuit manufacturing and technology service provider, Jcet Group Co.,Ltd. (ASX: 600584) offers semiconductor clients comprehensive, one-stop chip finishing manufacturing solutions, covering services from micro-system integration and design simulation to wafer probing, chip packaging, final testing, product certification, and global logistics.
The latest annual and quarterly reports reveal alternating pressures on the company's revenue and net profit. In 2025, driven by factors including a recovery in domestic demand and domestic semiconductor substitution, the company achieved operating revenue of 38.871 billion yuan, a year-on-year increase of 8.09%. This growth rate slowed compared to the 21.24% increase in 2024.
Simultaneously, influenced by significant increases in international commodity prices, certain raw material costs placed considerable pressure on gross margins. Additionally, newly built factories were still in the product introduction and capacity ramp-up phases, not yet generating large-scale production revenue, while financial expenses increased, putting short-term profit performance under pressure.
In 2025, the company's net profit attributable to shareholders was 1.565 billion yuan, a year-on-year decrease of 2.75%; its non-GAAP net profit was 1.369 billion yuan, down 11.51% year-on-year. Net cash flow from operating activities was 4.652 billion yuan, a decrease of 20.26% year-on-year, indicating declines in both profit and cash flow. In the first quarter of 2026, while profitability improved somewhat, revenue declined. During the reporting period, the company's revenue was 9.171 billion yuan, down 1.76% year-on-year; net profit attributable to shareholders was 290 million yuan, an increase of 42.74% year-on-year.
Categorized by application market, communications electronics, consumer electronics, computing electronics, automotive electronics, and industrial & medical electronics accounted for 36.4%, 23.6%, 21.3%, 9.6%, and 9.1% of total revenue, respectively.
It was observed that revenue from communications electronics, the company's largest market segment, declined. In 2025, revenue from this segment was 14.149 billion yuan, a decrease of 12.17% year-on-year. Concurrently, revenue growth from the consumer electronics segment, the second-largest market, slowed. Revenue from this segment was 9.174 billion yuan, with its growth rate declining from 15.95% in 2024 to 5.86% in 2025.
Geographically, Jcet Group Co.,Ltd. (ASX: 600584) derives the majority of its revenue from overseas markets, with this proportion consistently exceeding 70%. In 2025, overseas sales revenue was 30.439 billion yuan, a year-on-year increase of 4.62%, a significant deceleration from the 25.15% growth in 2024. The gross margin for overseas markets was 12.2%, down 0.47 percentage points year-on-year.
It is important to note that while the scale of the company's overseas revenue is large, its gross margin is significantly lower than that of the domestic market, indicating a state of being large but not strong. During the reporting period, domestic sales revenue was 8.276 billion yuan, accounting for 21.29% of total revenue, with a business gross margin of 20.4%. Against this backdrop, the company's overall gross margin for its main business was 13.95% last year.
Persistently low gross margins have long been a pain point for Jcet Group Co.,Ltd. (ASX: 600584) and are viewed by the market as a core factor constraining profit growth. The fundamental reason lies in the packaging and testing sector's position downstream in the semiconductor industry chain, where the industry's overall bargaining power is weak, keeping the company's gross margins in a low range.
Key Subsidiary's Profit Halved; Funding Gap for Projects
It was noted that behind the pressure on Jcet Group Co.,Ltd.'s (ASX: 600584) profitability last year, the net profit of its key performance contributor, the subsidiary SCSP, was nearly halved. As a wholly-owned subsidiary of Jcet, SCSP achieved revenue of $1.72 billion in 2025, a year-on-year increase of 1.6%; its net profit was $127 million, a decrease of 51.7% year-on-year, primarily due to the establishment of a global operations center and increased investment in R&D and application innovation.
Apart from SCSP, Sandisk Semiconductor, a flash storage product packaging and testing factory acquired by Jcet for 4.5 billion yuan in 2024, also experienced profit pressure. Affected by product structure upgrades and adjustments, as well as tight supply of some raw materials, the factory's capacity utilization declined, leading to weaker profits. Its full-year net profit was 243 million yuan.
It should be pointed out that as high-performance chips increasingly adopt 2.5D/3D packaging, with substrate sizes growing (evolving towards 100mm×100mm) and layer counts increasing, technical complexity has risen significantly. The industry is accelerating its transition from traditional packaging to advanced packaging. Data from Yole Group indicates that the global advanced packaging market size was approximately $53.1 billion in 2025 and is projected to reach $79.4 billion by 2030.
Against this backdrop, Jcet Group Co.,Ltd. (ASX: 600584) continues to focus on advanced packaging and high-growth application areas, pushing forward with the introduction of key clients and applications. The 2025 annual report noted that the company's subsidiary, JCET Microelectronics, has achieved mass production of high-end advanced packaging products, and its capacity utilization has begun to ramp up. However, due to increased R&D and resource investment for future large-scale production, this subsidiary operated at a loss, with a net loss of 192 million yuan last year.
It was observed that to further accelerate the strategic layout of high-end advanced packaging capacity, Jcet Group Co.,Ltd. (ASX: 600584) plans to invest in the construction of a high-end advanced packaging and testing factory in the Wanxiang Industrial Park of the "Oriental Core Port" in Shanghai's Lingang area by investing in and establishing a controlling subsidiary. The total investment for this project is 7.8 billion yuan.
Industry insiders have also pointed out that if the new capacity comes online around 2028, the risk of supply-demand imbalance should not be underestimated. Currently, both domestic and international manufacturers are expanding their advanced packaging capacity, with companies like TSMC and ASE Technology Holding planning to release significant capacity in 2026-2027, while the growth rate of AI chip demand may gradually slow after 2027. Furthermore, competitors like Tongfu Microelectronics and Tianshui Huatian Technology each have their own strengths, meaning competitive pressure on Jcet will continue to intensify.
In addition to the high-end advanced packaging and testing project, Jcet Group Co.,Ltd. (ASX: 600584) currently has two other significant projects under construction: the Automotive Chip Finishing Manufacturing Packaging and Testing Project and the Wafer-Level Micro-System Integration High-End Manufacturing Project. As of the end of 2025, the cumulative investment for these two projects accounted for 8.53% and 88.01% of their respective budgets, with an additional 7.773 billion yuan required for subsequent investment. As of the end of the first quarter of 2026, the company's monetary funds stood at 7.687 billion yuan, which could still cover its short-term borrowings of 1.348 billion yuan but are insufficient to support the funds needed for the project constructions.
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