In the first half of 2025, Changchuan Technology appeared to be thriving, with revenue soaring to 2.167 billion, a 41.8% increase; net profit grew to 427 million, nearly doubling, with a year-on-year increase of 98.73%.
In the domestic semiconductor equipment sector, this growth rate is indeed impressive. For comparison, the net profit growth rate of Zhongwei Company is only around 30%-40%, which is just half of Changchuan’s; Tuojing Technology is even worse, with profits declining.
However, can these impressive numbers truly reflect the company’s actual operational performance? A closer look at the financial report raises some questions.
Upon examining Changchuan’s non-recurring gains and losses, a particularly striking entry of 64 million stands out, sourced from “disposal gains and losses of non-current assets.” In simple terms, this money was derived from recalculating the previously held equity during the acquisition of Changchuan Semiconductor (Shenzhen).
In other words, this amount has little direct relation to the company’s core business of selling equipment and conducting R&D it is purely an accounting figure with no real cash inflow. Removing this “filter,” Changchuan’s actual net profit after deducting non-recurring items is 357 million, with a growth rate of 71.3%—still impressive, but nearly 30 percentage points lower than the original astonishing increase of 98.73%.
Furthermore, aside from that special gain, Changchuan’s cash flow alarm is ringing louder. In the first half of the year, the company experienced a net cash outflow of 80 million from operating activities, a staggering year-on-year drop of 203%. Cash flow is the lifeblood of a business, the best indicator of whether the company is truly making money.
While the books show a profit of 427 million, over 80 million in cash has flowed out from operations, a discrepancy of 500 million! Where did the money go? The company explains that the main reasons are the soaring costs of materials and salaries.
To put it bluntly, the company is desperately hiring and stockpiling, betting on future growth despite current cash tightness. This aligns with its continuously rising inventory levels. By the end of the first half, inventory reached 3 billion, nearly 800 million more than the end of last year, accounting for over one-third (33.78%) of total assets.
With inventory piling up and not selling, it must recognize impairment losses, which will directly reduce profits. This concern is not unfounded; Changchuan has been burdened by inventory impairment for years. From 2020 to 2024, asset impairment losses rose from 12 million to 171 million; this year, in the first half, it doubled to 70 million, and against this backdrop, increasing inventory seems somewhat like a gamble.
Where does Changchuan get so much money for expansion?
Primarily through borrowing. In the first half of the year, the company’s financing activities brought in 571 million in cash flow, with nearly 1.1 billion coming from bank loans. The model is clear: relying on borrowed money to fuel rapid business expansion and equipment purchases.
The result is a skyrocketing debt ratio, rising from 31.75% in 2020 to 53.11% in the first half of this year, far surpassing peers like Zhongwei Company (25.74%) and Huafeng Measurement and Control (6.14%).
So why does Changchuan dare to take such risks? What gives it confidence?
On one hand, it is betting on the trend of “advanced packaging.” As chip processes approach physical limits, improving performance and reducing costs by shrinking transistors is becoming increasingly difficult. For example, moving from 5nm to 3nm only reduced costs by 4%, far less than before.
As a result, the industry is turning its attention to “advanced packaging,” seen as the “last mile” for enhancing chip performance. Global giants like Samsung, Intel, and SK Hynix are investing heavily in building factories, with the market expected to double in the coming years.
This surge in demand has directly driven a skyrocketing need for packaging and testing equipment, and as a significant player in China, Changchuan’s equipment has already penetrated leading packaging and testing companies like Changdian, Huada, and Tongfu Microelectronics, naturally positioning it to share in the profits.
On the other hand, it is pursuing “domestic substitution,” vigorously investing in R&D and acquisitions. Although Changchuan has broken the foreign monopoly in the domestic testing equipment market and established a foothold, it still has a considerable gap compared to international giants, and the road to substitution is long.
Thus, the company’s strategy is clear: “cultivating internal skills while enhancing external capabilities.”
Internally, it mainly focuses on testing machines and sorting machines. From 2020 to 2024, R&D expenses increased from 187 million to nearly 1 billion (967 million), with the R&D expense ratio consistently above 20%, and it has not slackened in the first half of this year. High investment has yielded results, with core product performance leading domestically and nearing international advanced levels.
Moreover, the pricing is lower than that of similar foreign products, offering high cost-performance. Remarkably, despite the lower prices, the gross margin remains robust, consistently above 50%, even surpassing established brands like Pizaihuang and Tongrentang, and leaving competitors like Beifang Huachuang and Tuojing Technology far behind.
Externally, it focuses on acquisitions and integration. For instance, acquiring Malaysia’s Exis (integrated into Changyi Technology) was primarily due to its turret sorting machine technology, allowing Changchuan to complete its product line with gravity, translation, and turret sorting machines.
Conclusion:
Ultimately, evaluating a company’s performance cannot solely rely on how fast its growth rate is. Changchuan Technology is indeed a leader in the domestic semiconductor equipment field, both in market share and growth momentum, which must be acknowledged.
However, the high debt, tight cash flow, and inventory risks it carries are also glaring realities. Nevertheless, these seemingly risky moves are backed by its business logic—fully betting on the explosive growth of advanced packaging and the acceleration of domestic substitution.
Whether this is a forward-looking strategic layout or a gamble with excessive risk may only be answered by time.
PS: For related reports, please search for “semiconductor” on Knowledge Planet to download!
