Rockchip released its 2024 annual report and Q1 2025 report last night. This article mainly records the observation points.The performance is impressive, no need for further elaboration. The product matrix has taken shape, and the “top-down and bottom-up, yin-yang coordination” strategy is beginning to show its power. This annual report has changed the original eight-character guideline to a new “Banyan Tree” strategy, which is quite interesting. The full text is excerpted as follows:The company develops AIoT across various industries with a “Banyan Tree” strategy. The core technologies of “large audio, large video, large perception, and large software” serve as the “roots” of the tree, adhering to the principle of “IP first” and developing autonomous innovative core technologies for the future, maintaining a leading level of core technology, making it a strong and stable foundation for the “Banyan Tree.” The product lines in automotive electronics, machine vision, and other application fields serve as the “trunk,” continuously expanding and penetrating, making the “Banyan Tree” increasingly robust and solid. The rich AIoT products serve as the “leaves,” strengthening scene and data cooperation with customers and ecological partners, delving into scenarios, refining needs, and ensuring that products are well-made with “chips,” allowing the “Banyan Tree” to branch out and thrive.From the perspective of performance expectations, in the article “How to Estimate the Quarterly Report of Semiconductor Design Companies,” the revenue expectation was set at 830 million. The actual performance this time was 880 million, which indeed exceeded expectations and matched the wording disclosed by the management in the Q1 performance forecast.The only points of concern in the entire financial report are the cash paid for purchased goods and the prepaid accounts, as the current market shortage is already evident. Both the RV1126 and RK3588 are in short supply, with the RK3588 having few competitors, making it relatively irreplaceable, and its unit price is high, with a high value in applicable downstream scenarios. Therefore, the price increase by traders can still be absorbed by the market. However, the RV1126 has many downstream competitors, and its unit value is low. If the trade price remains high, downstream customers will inevitably switch to competitors like Allwinner. Therefore, ensuring supply is the top priority for the company’s current operations.In terms of cash paid for purchased goods, Q4 2024 was 584 million, and Q1 2025 was 474 million. For prepaid accounts, Q4 2024 was 27.73 million, and Q1 2025 was 76.05 million. The total for Q4 2024 was 612 million, and for Q1 2025, it was 550 million. The continuous increase shows that since Q3 2024, the company has been increasing inventory and maintaining this momentum. From the perspective of inventory turnover days, benefiting from the continuous rise in sales revenue, the inventory turnover days have been decreasing, currently reaching 134 days, entering a state of tight balance.The prepaid accounts in Q4 2024 were mainly for wafer fabs to ensure wafer output. Q1 2025 did not clearly state where the new prepaid accounts were allocated, but I expect it might be for packaging and testing factories. The Q1 2025 report clearly states that the company is doing its best to resolve the supply chain packaging obstacles caused by the US-China tensions. From the actual situation in the industry chain, TSMC’s customers’ downstream advanced packaging capacity is constrained by TSMC, leading to continuous tight capacity. The downstream advanced packaging of Samsung and GlobalFoundries’ customers may be affected for specific reasons, and this could be the deeper reason stated in Rockchip’s Q1 report.From the company’s payment situation regarding these two funds, combined with the company’s business progress, although payments have increased and revenue has risen, it may still be difficult to fully meet market demand in Q2. Based on the discounted revenue in Q1, Q2 will continue to be discounted. Of course, even with discounts, the year-on-year growth will still remain impressive.As for the stock price, the valuation is too high, expectations are too strong, and the increase is too large, which is not very meaningful.