Fudan Microelectronics 2025 Annual Report Analysis: Non-GAAP Net Profit Plummeted by 69.30%, R&D Expenses Increased by 18.64% to 12.23 billion yuan

Core Profitability Indicators—Interpretation

Operating Revenue: Up 10.92% year over year, with a clearly diverging mix

In 2025, the company achieved operating revenue of RMB 3.982 billion, up 10.92% year over year. By product, revenue from FPGA and other products was RMB 1.420 billion, up 25.19%, becoming a key driver of growth; revenue from smart meter chip was RMB 518 million, up 30.69%, with rapidly increasing shipment volumes in the automotive-grade and white goods sectors; revenue from security and identification chips was RMB 855 million, up 8.08%; however, revenue from non-volatile memory was RMB 1.042 billion, down 8.30% year over year, as intensifying industry competition led to revenue decline.

Net Profit: Down 59.42% year over year, with profit pressure

Net profit attributable to shareholders of listed companies was RMB 232 million, down sharply 59.42% year over year. This was mainly affected by a significant increase in asset impairment losses, a decrease in other income, and other factors. During the reporting period, asset impairment losses were RMB 439 million, up RMB 271 million year over year; other income was RMB 143 million, down RMB 91 million year over year.

Non-GAAP Net Profit: Down 69.30% year over year, core profitability weakens

Non-GAAP net profit attributable to shareholders of listed companies was RMB 142 million, down 69.30% year over year—far exceeding the decline in net profit. This indicates that the company’s core business profitability is facing substantial pressure, and support from non-recurring gains and losses for net profit has weakened.

Earnings per Share: Basic EPS of RMB 0.28, down 60.00% year over year

Basic earnings per share was RMB 0.28 per share, down 60.00% year over year; non-GAAP earnings per share was RMB 0.17 per share, down 70.18% year over year. This is consistent with the sharp downward trend in net profit and non-GAAP net profit, with shareholders’ earnings per share shrinking significantly.

Expense Structure Analysis

Total Expenses: Up 14.52% year over year; R&D expenses are the main incremental factor

Total operating expenses for the period were RMB 1.626 billion, up 14.52% year over year. Among them, R&D expenses, administrative expenses, and financial expenses all increased to varying degrees, while selling expenses decreased slightly.

Selling Expenses: Down 1.38% year over year, with a slight contraction in scale

Selling expenses were RMB 239 million, down 1.38% year over year. Employee compensation is the main component of selling expenses. In the current period, employee compensation was RMB 174 million, up 3.45%. However, expenses such as office expenses and business promotion expenses declined, resulting in a slight contraction in the overall scale of selling expenses.

Administrative Expenses: Up 16.21% year over year; personnel-related spending increases

Administrative expenses were RMB 184 million, up 16.21% year over year. This was mainly due to increases in employee compensation, consulting service fees, and others. In the current period, employee compensation was RMB 116 million, up 22.66%; consulting service fees were RMB 109 million, up 42.62%. This shows that the company increased spending on personnel costs and management services.

Financial Expenses: Up 11.20% year over year; FX losses increase

Financial expenses were RMB 32 million, up 11.20% year over year. This was mainly because fluctuations in the U.S. dollar exchange rate led to an increase in FX losses. FX losses in the current period were RMB 97 million, up 291.61% year over year, while interest expense was RMB 38.0766 million, down 10.85% year over year.

R&D Expenses: Up 18.64% to RMB 1.223 billion; sustained high investment

R&D expenses were RMB 1.223 billion, up 18.64%, accounting for 30.70% of operating revenue. This was mainly because certain capitalized R&D projects were unlikely to achieve expected economic benefits in the future; therefore, the company wrote them off and recognized them as R&D expenses. At the same time, the company continued to maintain strong R&D investment, including product iteration and expansion of product lineages. Employee compensation was RMB 725 million, up 25.10%; materials and processing fees were RMB 223 million, up 14.61%, indicating that the company’s investment in R&D personnel and R&D materials has continued to increase.

R&D Personnel Overview

During the reporting period, the company had 993 R&D personnel, down 137 from 1,130 in the prior year. R&D personnel accounted for 50.72% of the company’s total headcount, down from 54.41% in the prior year. Total R&D personnel compensation was RMB 692 million, up 1.80%. Average R&D personnel compensation was RMB 0.6967 million, up 15.85%. This indicates that the company increased per-capita investment in R&D personnel, and the structure of R&D personnel may be optimized and adjusted.

Cash Flow Analysis

Net Cash Flow from Operating Activities: Up 7.06% year over year; cash-generating ability remains stable

Net cash flow from operating activities was RMB 784 million, up 7.06% year over year. Cash received from the sale of goods and the provision of services was RMB 3.671 billion, up 13.71%. Cash paid for the purchase of goods and receipt of services was RMB 1.606 billion, up 4.70%. The increase in net cash flow from operating activities was mainly due to higher collections from sales.

Net Cash Flow from Investing Activities: Net outflow narrows to RMB 279 million

Net cash flow from investing activities was -RMB 279 million, compared with -RMB 754 million in the same period last year; the scale of net outflow narrowed significantly. This was mainly because the company paid RMB 265 million for the purchase and construction of fixed assets, intangible assets, and other long-term assets, down RMB 367 million year over year, and paid RMB 1.533 billion for investments, down RMB 191 million year over year. Meanwhile, cash received from the recovery of investments was RMB 1.513 billion, up 26.08% year over year.

Net Cash Flow from Financing Activities: Turns from positive to negative, to -RMB 268 million

Net cash flow from financing activities was -RMB 268 million, compared with RMB 89 million in the same period last year, shifting from net inflow to net outflow. This was mainly because the company received cash from borrowings of RMB 1.435 billion, down RMB 299 million year over year, and paid RMB 1.626 billion for debt repayment, up RMB 78 million year over year. The scale of corporate debt financing shrank, while repayment-related expenditures increased.

Potential Risks Ahead

2. Risk of Intensifying Industry Competition: Internationally, there is a gap between some of the company’s products and international leading players in terms of technology and scale; domestically, attention to the integrated circuit design industry has increased, more competitors have emerged, and some product prices and gross margin rates face downward pressure.
3. Risk in the Supply Chain: Global semiconductor industry trade controls and technology restrictions continue to be upgraded. The pressure on the company to adjust its overseas supply-chain system is increasing. There is uncertainty regarding overseas supply of core raw materials, design tools, and manufacturing processes, which may affect the company’s production and operations.
4. R&D Risk: High-end chip R&D has a long cycle, requires large investment, and carries high risk. If key technologies cannot be breakthroughs or product performance fails to meet market demand, R&D may fail, affecting the company’s competitiveness.
5. Talent Competition Risk: Talent competition in China’s chip design industry is fierce. If the company is unable to attract and retain excellent talent, it may affect its ability to sustain innovation.
6. Risk of Inventory Price Decline: At the end of the reporting period, the book value of inventories was RMB 2.637 billion, representing 38.44% of total current assets. The allowance for inventory price decline balance was RMB 796 million, with a provision ratio of 23.19%. If the market declines in the future or technology iterations accelerate, the risk of inventory price decline may further increase.

Compensation of Executive Directors and Supervisors

Chairman—Pre-tax Remuneration: No compensation received during the reporting period

The total pre-tax remuneration obtained by Zhang Wei from the company during the reporting period was 0. Due to a management transition, he will receive compensation from the company starting in 2026.

General Manager—Pre-tax Remuneration: RMB 1.6866 million

During the reporting period, Shen Lei’s total pre-tax remuneration received from the company was RMB 1.6866 million, including compensation received at Fudan Microelectronics and its controlling subsidiary Hualing Shares.

Deputy General Manager—Pre-tax Remuneration: Up to RMB 1.7446 million

During the reporting period, Meng Xiangwang’s total pre-tax remuneration was RMB 1.7446 million. Xu Liewei’s was RMB 1.6269 million, Yu Jian’s was RMB 1.5899 million, departing Deputy General Manager Diao Linshan’s was RMB 1.4413 million, Li Qing’s was RMB 1.2498 million, and so on. The compensation level for deputy general managers is related to the company’s operating performance and individual job responsibilities.

Chief Financial Officer—Pre-tax Remuneration: RMB 0.9968 million

During the reporting period, Jin Jianwei’s total pre-tax remuneration received from the company was RMB 0.9968 million.

Appendix: Comparative Table of Core Financial Data

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