The semiconductor industry's annual report season reveals a landscape of stark contrasts. As companies disclose their 2025 performance, the sector finds itself at a complex crossroads.
Data shows that among 173 listed semiconductor companies, 118 have released preliminary or audited results. While over 80% reported revenue growth, profitability tells a different story, highlighting a sharp divergence within the industry.
On the positive side, 68 companies forecast strong earnings growth, primarily driven by the AI computing boom and the deepening trend of domestic substitution in supply chains. Companies like Zhende Technology led the pack with a nearly 600% surge in net profit, attributed to robust demand from specialized sectors and satellite internet applications.
The memory chip segment staged a remarkable collective turnaround. Firms such as Baiwei Storage and Demingli, after hitting a low early in 2025, capitalized on growing demand from AI servers and data centers. Demingli, for instance, reversed its losses in the fourth quarter amid rising memory prices, achieving a full-year net profit increase of over 96%. These successes underscore the rapid advancement in high-end semiconductor segments.
Conversely, 50 companies anticipate losses for 2025. Seven of these project deficits exceeding 500 million yuan. Wingtech Technology, for example, expects a substantial loss between 9 and 13.5 billion yuan due to unforeseen issues, including restrictions on its overseas assets.
Even industry leader National Silicon Industry Group Co.,Ltd. reported a loss of 1.47 billion yuan for 2025. The company acknowledged that while AI demand is strong, recovery in traditional sectors like consumer and industrial electronics remains sluggish. Additional pressures came from ramping up new production capacities, high depreciation costs, and continued heavy investment in research and development.
This performance split indicates that a broad-based recovery for the semiconductor sector is not yet imminent, with current growth being distinctly structural in nature.
Looking ahead to 2026, the market is being shaped by a new wave of price increases. After initial hikes in AI chips and memory, inflation has spread to manufacturing, packaging, testing, and upstream raw materials.
In late February, leading domestic power semiconductor manufacturer Xinjineng announced a 10% price increase for its MOSFET products, citing significant rises in wafer and packaging/test costs. Over ten other Chinese suppliers, including Zhongwei Semiconductor, China Resources Microelectronics, and NationalChip, followed with price adjustments, with some product categories seeing increases of up to 80%.
This industry-wide price surge is essentially a defensive move by companies facing intense cost pressures. Since 2025, prices of key metals for packaging, such as gold, silver, and copper, have soared, with copper up approximately 30% and precious metals seeing even steeper climbs.
For mid-to-low-end components like standard diodes and MOSFETs, metal materials constitute a large portion of packaging costs, making these price hikes a necessary measure for survival. Many companies highlighted this squeeze in their 2025 forecasts: caught between rising material costs and intense competition in traditional markets that suppresses selling prices and severely erodes profit margins.
However, for larger players with stronger market pricing power, these increases are an opportunity to restore profitability and fund capacity expansion. Companies like China Resources Microelectronics stated that the current price adjustments not only cover higher input costs but also effectively improve gross margins. Despite the price hikes, production lines remain fully utilized due to robust demand from emerging fields like AI.
Market analysts suggest this round of price increases is not short-term speculation but a result of broader global supply chain restructuring, combining persistent cost inflation with shifting demand patterns. This dynamic will continue to test the resilience of every semiconductor company throughout 2026.
In summary, the semiconductor sector is entering a new phase in 2026 characterized by simultaneous volume and price increases, alongside significant cost challenges. While the recovery pace in traditional segments remains uncertain, the AI-driven industrial transformation is irreversible. For domestic companies, the key to long-term survival will be navigating short-term cost volatility while achieving technological breakthroughs to gain an edge in high-value areas like computing chips and advanced packaging.
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