Advanced Micro-Fabrication Equipment Inc. China has emerged as one of the most significantly impacted companies in terms of profitability decline within China's semiconductor industry in 2025, as intense competition continues to pressure major players' profit margins. The former industry profit leader is gradually losing its competitive edge.
In 2025, Advanced Micro-Fabrication Equipment Inc. China achieved operating revenue of 12.385 billion yuan, representing a strong year-on-year increase of 36.62%. The company reported net profit attributable to shareholders of 2.111 billion yuan, up 30.69% compared to the previous year.
This substantial profit growth was supported by non-recurring gains and losses. Widely recognized in the industry for its investment prowess, Advanced Micro-Fabrication Equipment Inc. China benefited from favorable secondary market conditions in 2025, recording net investment income of 511 million yuan. This contributed to total non-recurring gains and losses reaching 562 million yuan, accounting for 27% of net profit attributable to shareholders.
Excluding these effects, the company's adjusted net profit attributable to shareholders stood at 1.55 billion yuan, representing an 11.64% year-on-year increase. This growth rate significantly lagged behind revenue expansion, indicating clear pressure on profit margins despite top-line growth.
The company's strategy of introducing new products at low prices has affected its gross margin, diminishing the advantages once held by the former "profit champion."
Advanced Micro-Fabrication Equipment Inc. China built its business on self-developed etching equipment, long maintaining a strategic focus perceived by the market as centered on a "single product category."
Typically, a single-category strategy allows for more concentrated R&D and sales resources, potentially yielding higher operational efficiency and profit margins. However, it also carries risks associated with customer concentration and limited growth potential. As Advanced Micro-Fabrication Equipment Inc. China progresses to a new development phase, transitioning into a platform-based provider has become an inevitable strategic move.
In recent years, the company has prioritized developing and introducing new product categories such as thin film equipment and MOCVD equipment. The former equipment supplier is actively transforming into a comprehensive solutions provider, with 2025 marking a year of significant breakthrough.
The advancement in thin film equipment represents a major achievement. The company explicitly stated in its annual report, "2025 witnessed explosive growth in our thin film equipment sales, with revenue surging approximately 224.23% year-on-year, becoming an important new engine for our performance growth."
Additionally, MOCVD equipment showed commercial traction. The company developed four new products during the year, covering SiC, GaN, Micro LED, and red-yellow LED applications, some of which have received bulk orders.
While Advanced Micro-Fabrication Equipment Inc. China's second and third revenue streams are taking shape, the associated costs have been substantial.
The global semiconductor equipment market has long been dominated by American, Japanese, and Dutch companies. For Advanced Micro-Fabrication Equipment Inc. China to enter this competitive landscape with new products, it must demonstrate sufficient "sincerity" to customers. Over the past two years, the company's gross margin has declined significantly, with the annual report attributing this to "providing certain sales discounts to some customers due to structural changes in our client base this year."
These price concessions have gradually eroded the company's competitive position in the increasingly fierce semiconductor competition, dimming its once prominent profitability advantage.
Between 2021 and 2025, Advanced Micro-Fabrication Equipment Inc. China's gross margin decreased by 6.57 percentage points cumulatively, ranking among the steepest declines leading domestic semiconductor equipment manufacturers. By comparison, fellow industry player NAURA Technology Group Co., Ltd. experienced a cumulative decline of 3.73 percentage points during the same period.
In 2022, Advanced Micro-Fabrication Equipment Inc. China's gross margin, net profit margin, and adjusted net profit margin exceeded NAURA's by 1.90 percentage points, 7.34 percentage points, and 4.99 percentage points, respectively. By 2025, Advanced Micro-Fabrication Equipment Inc. China's profitability metrics, except for net profit margin, had fallen below NAURA's, with gross margin and adjusted net profit margin lower by 0.94 percentage points and 1.06 percentage points, respectively.
Another issue facing Advanced Micro-Fabrication Equipment Inc. China is the persistent mismatch between profits and cash flow.
Over the past five years, while the company's net profit attributable to shareholders has consistently risen, its operating cash flow has been volatile, consistently trailing profit levels. The strengthening performance has not translated into improved cash回流 or shareholder returns. A notable example was 2023, when net profit attributable to shareholders surged 52.67% year-on-year, but operating cash flow turned deeply negative at -977 million yuan.
This discrepancy primarily stems from capital tied up in inventory and accounts receivable. As business scale expanded, accounts receivable grew from 509 million yuan in 2021 to 2.566 billion yuan in 2025, a five-fold increase, raising their proportion of total assets from 3% to 8%.
Simultaneously, inventory levels rose from 1.762 billion yuan in 2021 to 7.259 billion yuan in 2025, a four-fold increase, increasing their share of total assets from 10% to 23%. By the end of 2025, the combined total of these two asset categories reached 9.825 billion yuan, representing approximately one-third of the company's total assets, equivalent to 80% of its annual revenue, and four times its annual operating cash flow.
Notably, the cash flow situation worsened again in the most recent quarter.
According to the company's first-quarter 2026 report, quarterly revenue and adjusted net profit attributable to shareholders surged 34.13% and 60.09% year-on-year, respectively. However, operating cash flow turned negative again, at -159 million yuan, indicating renewed divergence between profit and cash flow performance, with the growth rate gap widening rapidly.
This suggests that the first-quarter 2026 growth may have been achieved by relaxing payment collection policies, potentially at the cost of liquidity. Whether this phenomenon is a temporary occurrence specific to the first-quarter reporting period or signifies a systemic deterioration due to compromises in collection policies requires further observation of subsequent payment collection performance for verification.
Amid weakening cash flow, Advanced Micro-Fabrication Equipment Inc. China is proceeding with the acquisition of Hangzhou Zhonggui.
On April 25, the company released a draft plan confirming the acquisition would utilize a combination of "share issuance and cash payment." The transaction price for a 64.69% equity stake in the target, Hangzhou Zhonggui, was set at 1.576 billion yuan, implying an overall valuation of 2.436 billion yuan.
The market interprets this transaction as a key strategic move for Advanced Micro-Fabrication Equipment Inc. China to enter the CMP wet processing equipment market. Currently, the company has a presence in the four highest-value segments: etching equipment, thin film equipment, lithography equipment, and metrology/inspection equipment. Although the wet processing equipment market is relatively smaller, expanding into this area helps complete the product portfolio, advance the platform strategy, and potentially enhance future earnings.
Data from the acquisition draft reveals that the target company, Hangzhou Zhonggui, has a relatively small revenue base and remains loss-making. In the short term, it is likely to weigh on consolidated financials, while its long-term competitiveness remains uncertain.
Founded in 2018, Hangzhou Zhonggui has undergone twelve rounds of capital increase and eight rounds of equity transfers, yet it failed to achieve profitability last year.
From 2024 to 2025, Hangzhou Zhonggui's operating revenue was 52.89 million yuan and 244 million yuan, respectively, with last year's revenue growing a remarkable 361.59%. Concurrently, its net loss attributable to shareholders narrowed significantly from -153 million yuan to -92.5 million yuan, indicating an overall improving operational trend.
However, compared horizontally within the industry, a significant gap remains between Hangzhou Zhonggui and its competitors.
Currently, the market focuses on relatively pure-play CMP equipment companies like Hwatsing Technology, Jingyi Jingwei, and Hangzhou Zhonggui. Jingyi Jingwei filed for a STAR Market listing in June 2023, passed the review in February 2024, but withdrew its application in July 2024 without proceeding to registration. According to its earlier application materials, its revenue reached 506 million yuan in 2022, double that of Hangzhou Zhonggui's revenue last year.
Hwatsing Technology is recognized as the CMP equipment market leader, having listed on the STAR Market in June 2022. In 2025, it reported revenue of 4.648 billion yuan and net profit attributable to shareholders of 1.084 billion yuan. Its revenue scale was 19 times that of Hangzhou Zhonggui during the same period, indicating a gap of an order of magnitude in their competitive foundations.
Advanced Micro-Fabrication Equipment Inc. China also cautioned in the acquisition draft that if the target company fails to accurately assess market dynamics and industry trends, or cannot innovate and develop products aligned with market demand, or if competitors introduce more competitive products, pricing, or services, the target company's business and operating performance could be adversely affected, highlighting the risk of intensifying market competition.
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