The Comeback of a Circuit Board: Net Profit Soars by 452%?
Don’t just drool over AI large models; take a look at the circuit boards they stand on—behind Shengyi Electronics’ net profit surge of 452% in the first half of the year lies a wealth story that is even “harder” than ChatGPT.
“Snap!” A crisp sound echoed in the conference room.
An engineer from Shengyi Electronics slammed a circuit board the size of a fingernail on the table, eyes shining: “This is the ‘heart’ of the next generation AI server, and there are no more than five companies in the world that can produce it.”
Just last week, this company delivered a report that sent the entire PCB (Printed Circuit Board) industry into a frenzy: Net profit of 531 million yuan in the first half of the year, a staggering increase of 452.11% year-on-year! Revenue reached 3.769 billion yuan, a year-on-year increase of 91%.
In the second quarter alone, revenue was 2.19 billion yuan, with a net profit of 330 million yuan, a year-on-year increase of 374.3%.
This is not just a simple performance rebound, but a technological carnival ignited by the AI computing power revolution. While everyone is looking up at NVIDIA’s graphics cards, few are looking down to see— all AI devices stand on high-end circuit boards.
01 The Secret of the Explosion Lies in the “Foundation” of AI
Shengyi Electronics’ performance is not a windfall; it has hit the historic windfall of AI explosion.
Imagine this: building a skyscraper requires more than just a beautiful glass facade; the key is the steel framework buried deep underground. In the world of AI, high-end PCBs are that framework.
With the global demand for AI servers surging, multilayer boards and HDI (High-Density Interconnect) have become hot commodities. The high-end circuit boards produced by Shengyi Electronics are the core carriers of AI servers and high-speed switches.
“It’s not the customers urging us to deliver,” a production line manager joked, “it’s us urging customers to hurry up and take their goods; those waiting behind are anxious!”
Industry data confirms this trend: the global PCB industry is expected to reach a total output value of 73.565 billion USD in 2024, a year-on-year increase of 5.8%. In the next five years, the global PCB output value is expected to maintain a compound annual growth rate of 5.2%, potentially reaching 94.661 billion USD by 2029.
Shengyi Electronics has risen to 35th place in the global PCB company rankings in 2024, quietly forming a wide economic moat in the high-end manufacturing sector, akin to what Buffett describes.
02 Three Swords Targeting a Trillion Market
Shengyi Electronics’ strategic layout is as clear as three key pieces on a chessboard, each step pointing towards the growth poles of the next decade.
The First Sword: Targeting the Heart of AI Computing Power
In the communications field, 800G high-speed switches are replacing 400G as the market’s mainstay, and Shengyi Electronics has already deeply cultivated the 800G market, collaborating with customers to develop the next generation 224G products, some of which have entered the prototyping stage.
“Last year, discussing 224G felt like talking about science fiction,” the technical director pointed at the samples in the R&D center, “this year it’s already breathing in our lab.”
The Second Sword: Inserting into the Smart Car Network
In the automotive electronics field, Shengyi Electronics is deeply bound with international giants, with products like smart driving controllers and millimeter-wave radars fully entering mass production. Imagine, in the future, the “nervous system” of every smart car will flow with their technological blood.
The Third Sword: Pointing to the Sky and the Unknown
Multiple cooperative projects in the low-altitude economy are entering the verification stage. While peers are still fighting for the ground market, Shengyi Electronics has already extended its reach to the sky.
03 Heavy Investment, 1.9 Billion Yuan Bet on the Future
True chess players dare to place heavy bets at critical moments.
On August 15, Shengyi Electronics made a shocking announcement: Investing 1.9 billion yuan to build a smart manufacturing high-multilayer computing power circuit board project.
The project will be implemented in two phases:
- Trial production in 2026
- Completion of the second phase in 2027
Once completed, it will add 700,000 square meters of high-end circuit board production capacity annually, focusing on the mid-to-high-end markets such as servers and AI computing power.
Meanwhile, the Dongcheng Phase IV project has achieved mass production of high-end products like HDI and optical modules. The smart computing center project has also entered the trial production stage.
“It’s not a question of whether to expand production now,” an industry analyst lamented, “but rather whoever runs slow will be eliminated from the high-end market.”
R&D investment has surged by 67.51% year-on-year, reaching 195 million yuan. This money is being transformed into hard-core competitiveness: a total of 282 invention patents have been obtained, accelerating the industrialization of key projects like AI servers and satellite communication PCBs.
04 Concerns and Challenges: A Cool Reflection Amidst the Carnival
Amidst the feast, one must remain three parts sober. Behind Shengyi Electronics’ rapid advance lie three hidden challenges.
Technological Iteration is Like Rowing Upstream
The pace of technological updates in the communications industry is frighteningly fast:
- 800G ports are expected to surpass 400G and become mainstream by 2025
- 1600G ports will explode in 2026
Today’s leading technology may face obsolescence tomorrow. If the throttle on R&D investment is loosened, advantages may evaporate in an instant.
The Risks of a 1.9 Billion Yuan Bet
The new project faces risks such as market demand falling short of expectations and policy changes. Although the post-tax dynamic payback period is estimated at 8.4 years, the market is unpredictable, and heavy asset expansion is like walking a tightrope.
The Uncertainty of the Global Chessboard
As the 35th ranked player globally, Shengyi Electronics faces comprehensive competition with international giants. Every technological breakthrough in the high-end market is a battle of capital and talent consumption.
05 Buffett’s Thoughts: Moat and Wet Snow
Viewing Shengyi Electronics through Buffett’s eyes requires consideration of three key questions:
Is the Moat Deep Enough?
With a total of 282 invention patents, a leading layout in 800G and 224G technologies, and deep binding with top global customers—these constitute Shengyi Electronics’ technological moat.
Is the Snow Path Long Enough?
AI servers, smart cars, low-altitude economy… each track is paved with thick “wet snow.” Prismark predicts a 5.2% compound annual growth rate for the industry over the next five years, providing Shengyi Electronics with a sufficiently long snowball slope.
Is the Price Reasonable?
This requires each investor to do their homework. But it is worth noting that the company announced 3 yuan cash dividend for every 10 shares, totaling 247 million yuan—only truly profitable companies dare to distribute dividends so generously.
In the finance room, the financial director pointed at the dividend plan and smiled: “Every 10 shares pay 3 yuan; this 247 million cash dividend will be distributed, shareholders are happy, and we are also pleased.”
Meanwhile, in the newly built smart factory, machines have already begun to hum. The 1.9 billion investment is transforming into new production lines, and by 2026, this place will produce the core framework supporting the AI world.
The battlefield of the global PCB industry is quiet; only the copper foil on the circuit boards knows— a materials revolution triggered by the computing power revolution has just begun.
(This article contains fictional content for entertainment reference only and does not constitute any investment advice. The market has risks; decisions should be made cautiously.)