Honestly, when I saw the Q1 number, my heart sank a bit. Revenue of RMB 4,799 million isn't actually bad, but gross margin dropping from 15.6% all the way to 11.3%, with net profit getting slashed to roughly RMB 87 million — that one-two punch forces me to take this seriously.
Let me start with my two core assumptions. First, Q1 weakness is mainly seasonality layered on top of a pull-through timing issue in consumer-grade chips. Pre-Spring Festival inventory build pulled forward a chunk of orders, and combined with a high 2025 Q4 base and the still-ongoing destocking at the consumer electronics end, these factors stacked together and compressed gross margin pretty brutally. Second, the SiP, Fan-Out, and Bumping capacity ramp at the Kunshan and Tianshui sites will start showing up in the product mix from Q2 onward. Every percentage point of advanced packaging share moving up delivers real lift to blended gross margin — that's the conviction behind my call for gross margin recovering to 14.5%+ by Q3.
Based on these two points, my Q2 view is revenue ticking up modestly to around RMB 5.1 billion, gross margin recovering to roughly 13%, and net profit climbing back to about RMB 190 million. In Q3, as new capacity continues to come online and the customer mix further optimizes, revenue steps up another level to RMB 5.4 billion, gross margin returns to 14.5%+, and net profit recovers to RMB 255 million.
But the biggest risk isn't on the demand side — it's on the cost side. If you look closely at the past four quarters, operating margin (OpIncome/GrossProfit) slid from 56% all the way down to 21%. If that trend doesn't stop, no amount of gross margin improvement will survive being eaten by Opex. That's why in Q2 and Q3 we'll be watching expense discipline even more closely than revenue growth — and it's also why my net profit recovery is less dramatic than the revenue recovery.
The second risk is geopolitical and equipment-related. Advanced packaging is fairly dependent on overseas equipment, and if Q2's capacity ramp gets bottlenecked by the supply chain, the entire recovery path gets pushed back. This is something I'm monitoring every single day.
Overall, I see 2026 H2 playing out as a "repair first, then ramp" rhythm. But please don't take these numbers as guidance — in the OSAT business, yield is the lifeline, and any on-paper forecast can get blown up overnight by a single yield fluctuation.