Specialty Foundry

To be honest, looking at the past four quarters, our gross margin has been on a roller coaster, bouncing between 17% and 21%. The core issue isn't that orders aren't coming in—it's that utilization on our 8-inch and 12-inch lines hasn't ramped to full. Every additional point of utilization is another point of margin. Let me start with my two key assumptions. First, 2026 Q2 revenue will come in slightly softer than Q1. Due to seasonal adjustment effects, customers take inventory mid-year, so new orders get pushed out and don't ramp until Q3. I've pegged Q2 revenue at around 4.58B. Second, the demand wave for power devices hasn't crested yet. Loading rates on our specialty process nodes—specialty IC, embedded memory, ultra-low power—will visibly rebound in Q3, giving gross margin a shot at climbing back above 20%. I've got Q3 revenue at 4.82B. As for why net profit stays positive while operating profit is frequently negative—that's actually par for the course for an IDM-style foundry like us. Government R&D subsidies, the VAT super-deduction, and minority interest from non-controlling shareholders—these non-operating items and minority interest line items have been quietly propping up the core business. So even if the main business posts a small loss of 45M in Q2, net profit attributable to parent shareholders still comes in at 135M. In Q3, operating profit flips positive at 65M, and net profit attributable to parent looks even better, hitting roughly 190M. I have to lay out the biggest risks clearly. First, if memory and logic foundry capacity spills over, it will pressure pricing on our 8-inch specialty processes, and our blended ASP could reverse at any moment. Second, equipment depreciation is fixed cost—once utilization drops below 90%, every percentage point down eats 0.5 percentage points off gross margin, and that small Q2 loss would get amplified. What I'm watching right now is precisely these two things: the order book and whether the furnaces are full.