SMIC's revenue in 2025 increased by 36.6% year-over-year, net profit attributable to shareholders grew by 30.7%, and the company plans to distribute 3.50 yuan per 10 shares, with a bonus issue of 4.9 shares | Financial Report Highlights

Micro-Chem ( 中微公司 ) disclosed its 2025 annual report on Monday:

For the full year, it achieved operating revenue of RMB 12.385 billion, up 36.62% year over year; net profit attributable to shareholders was RMB 2.111 billion, up 30.69% year over year.

By pace, in the fourth quarter the company recorded standalone single-quarter revenue of RMB 4.322 billion and net profit attributable to shareholders of RMB 900 million, both hitting the highest levels within the year. Shipment and recognition schedules noticeably accelerated in the second half.

Breaking it down by structure, the “main engine” behind growth is still etching equipment: 2025 etching equipment sales were RMB 9.832 billion, up 35.12% year over year. Even more worth attention is that thin-film equipment has started to “scale up”—LPCVD equipment sales were RMB 506 million, up a whopping 224.23% year over year. The company said that multiple new thin-film devices received repeat orders, and cumulative shipment volume of thin-film equipment has already exceeded 300 reaction chambers, with the outline of a second growth curve becoming clearer.

The company also unveiled a “cash dividend + bonus share issuance (stock transfer)” plan: it plans to pay RMB 3.50 in cash per 10 shares (including tax), for an aggregate cash payout of about RMB 219 million; and to transfer 4.9 shares per 10 shares, increasing total share capital from 626 million shares to 933 million shares.

Revenue side: Fourth-quarter “scaling up” supports full-year high growth

From the quarterly breakdown, 2025 revenue rose sequentially: RMB 2.173 billion, RMB 2.787 billion, RMB 3.102 billion, and RMB 4.322 billion for Q1–Q4, respectively; net profit attributable to shareholders was RMB 313 million, RMB 393 million, RMB 505 million, and RMB 900 million, respectively. Fourth-quarter revenue accounted for about 35% of full-year revenue, reflecting the seasonality of semiconductor equipment delivery acceptance and revenue recognition. It also indicates that the company was able to take on customer capacity expansions and ramp-up schedules more smoothly in the second half.

Operating cash flow also showed “strengthening in the back end”: operating cash flow in Q2 was -RMB 174 million, but turned positive to RMB 1.095 billion and RMB 997 million in Q3 and Q4, respectively. Full-year total operating cash flow was RMB 2.295 billion, significantly stronger than 2023 (-RMB 977 million) and still higher than 2024 (RMB 1.458 billion). For equipment companies, this is typically related to factors such as delivery and collections, improvements in prepayments/accounts receivable structure, and enhanced supply chain and delivery efficiency.

Business structure: Etching as the steady base; LPCVD high growth “takes the baton”

In the annual report, the company provided a breakdown of key product categories:

• Etching equipment: 2025 sales were RMB 9.832 billion, up +35.12% year over year. The company emphasized that, for high-end products targeting key etching processes in advanced logic and memory, incremental shipped volume for new deployments increased significantly. It also achieved “large-scale mass production” across multiple key etching processes for advanced logic devices and advanced memory devices.
• LPCVD equipment: 2025 sales were RMB 506 million, up +224.23% year over year. This “accelerated path from 0 to 1 and then to N” usually means progress from validation to broader production-line adoption. The company also disclosed that repeat orders for thin-film equipment increased, and cumulative shipped reaction chambers surpassed 300.

From an industry logic perspective, because advanced logic is constrained by lithography, it relies more on multi-step template processes (more etching/thin-film steps). Combined with the push of 3DNAND toward higher stacking levels and rising demands for aspect ratio, the value contribution and process importance of etching and thin-film deposition continue to increase. This is also the fundamental reason Micro-Chem has, in recent years, accelerated the completion of a thin-film matrix such as LPCVD, ALD, and EPI in addition to its “etching main lane.”

Net profit attributable to shareholders surged 30.69%

1）Net margin remained strong; R&D expenses rose quickly

In 2025, net profit attributable to shareholders was RMB 2.111 billion, corresponding to a net margin attributable to shareholders of about 17%. Non-recurring items adjusted net profit attributable to shareholders was RMB 1.550 billion, with a non-recurring adjusted net margin of about 12.5%. Against the backdrop of a significant revenue increase, the company still chose to substantially increase R&D intensity: R&D investment was RMB 3.744 billion (R&D as a share of revenue: 30.23%); R&D expenses were RMB 2.475 billion (up 74.61% year over year).

This structure implies two points:

• In the short term, profit statements are under pressure from “proactive spending on the expense side,” not from weakness in demand;
• In the medium to long term, whether high R&D investment can be consistently converted into successful client validation, repeat orders, and large-scale tool installation is the key to the valuation anchor and earnings elasticity.

2）Non-recurring gains and losses amplified the net profit attributable to shareholders figure

In 2025, total non-recurring gains and losses were RMB 562 million (RMB 228 million in 2024). Among them, larger items include:

• Gains and losses from disposal of non-current assets: RMB 446 million;
• Fair value changes and disposal gains and losses from financial assets: RMB 177 million;
• Government subsidies: RMB 39 million.

The company also disclosed: for equity investments accounted for at fair value with changes recognized in profit or loss, the fair value change gains and investment income generated in 2025 totaled about RMB 661 million (about RMB 198 million in 2024). This explains why the growth rate of net profit attributable to shareholders was significantly faster than the growth rate of non-recurring adjusted profit—within the profit structure, “investments and disposals” contributed more to current-period earnings, and investors need to distinguish when comparing the quality of annual earnings.

In addition, under the company’s disclosure basis, non-recurring adjusted net profit is also affected by share-based payments: share-based payment expenses in 2025 were RMB 513 million. If the impact of share-based payments is excluded, the non-recurring adjusted net profit attributable to shareholders would be RMB 2.063 billion (RMB 1.846 billion in 2024), which is closer to the profit trend from the operating side.

Product progress and strategic moves: building the “dry + wet” puzzle across advanced process and advanced packaging

Product and customer progress disclosed in the annual report mainly points to “improving advanced process penetration and expanding product categories”:

• Etching equipment (CCP/ICP): The company said its etching equipment has covered numerous applications from 65nm to 3nm and beyond. In 2025, CCP etching equipment shipped more than 1,000 reaction chambers in a single year, with cumulative installed base exceeding 5,000 reaction chambers. For dual-tool ICP systems, the company emphasized achieving etch-rate control precision at the level of 0.2Å per minute between reaction chambers, and it validated across multiple thin-film etching processes.
• Thin-film equipment: tungsten-series CVD/HAR/ALD, and metal gate series ALD TiN/TiAl/TaN, among others, are pushing client validation and securing repeat orders; EPI equipment has entered the client mass-production validation stage.
• MOCVD: The company continues to highlight its leading market share in GaN-based LED MOCVD since 2017, and is advancing validations in directions such as Mini-LED, Micro-LED, GaN power devices, and 8-inch SiC epitaxy.
• Advanced packaging: TSV etching equipment continues to win repeat orders in 2.5D/3D advanced packaging scenarios, and it is advancing more platform-oriented equipment.

A more “strategic signal” is that the company plans to acquire controlling equity interest in Hangzhou Zhongxing Electronics Technology Co., Ltd. by issuing shares and paying cash to purchase assets and raising matching funds. The intention is to make the leap from a “dry process” approach to an end-to-end solution spanning “dry + wet.” If the transaction is completed, Micro-Chem would move beyond competing on single-point equipment and further toward capability competition in “process synergy + turnkey adoption.” In theory, this could improve customer stickiness and production-line penetration speed. However, it would also bring execution challenges in M&A integration and coordination across R&D/product lines.

Dividends and bonus share issuance: cash returns are relatively steady; share capital expansion is substantial

The company plans to pay RMB 3.50 in cash per 10 shares (including tax). Based on the current share capital, this implies total cash dividends of approximately RMB 219 million. Roughly calculated from 2025 net profit attributable to shareholders of RMB 2.111 billion, the cash dividend payout ratio is about a little over 10%, reflecting an approach of “steady returns plus preserving R&D and capacity-expansion ammunition.”

Meanwhile, the company plans to transfer 4.9 shares per 10 shares. After the transfer, total share capital will increase from 626 million shares to 933 million shares. For the secondary market, the bonus share issuance itself does not change the company’s intrinsic value, but it will change how per-share metrics are presented. It also typically reflects management’s expectations for business expansion and capital operation space over the long term.

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