Zhaochi Shares Q3: Expansion of production + disruption of business, technological transformation su

Under the multiple pressures of slowing global economic recovery, intensifying geopolitical conflicts, and frequent adjustments in tariff policies, corporate operations generally face the challenges of high costs and narrowed profits. However, the third quarterly report released after hours by Zhaochi Co., Ltd. on October 22, 2025 frequently highlighted that by proactively deploying overseas production capacity and deepening technological transformation, the company not only achieved significant improvement in operating data month-on-month, but also dominated profits and segmented profits with emerging businesses. The trend of high-end breakthroughs in the track shows strong growth resilience and sets a model for the industry to break through adversity.​

Highlight 1: The release of overseas production capacity drives a month-on-month improvement, and the global layout consolidates the revenue foundation

Although Zhaochi Co., Ltd. achieved operating income of 13.896 billion yuan and net profit attributable to the parent company of 1.000 billion yuan in the first three quarters of 2025, a certain decline compared with the same period last year, the significant improvement in the month-on-month data has become an important highlight in the performance report: In the third quarter, revenue increased by 13.72% month-on-month in the second quarter and 45.38% month-on-month in the first quarter. The net profit attributable to the parent company also maintained month-on-month growth, and operating vitality continued to be released. The core driving force for this positive change stems from the company's precise control of global operating layout and rapid implementation of production capacity.​

As a core contributor to revenue and profits, Zhaochi's smart terminal business decisively accelerated the expansion of production bases in Vietnam in the first half of 2025, jumping the annual production capacity from 2 million units to 11 million units. This advanced layout accurately caught the delivery demand in the peak season of consumer electronics in the third quarter, effectively alleviating the pressure of tariffs and logistics costs faced by domestic production. At the same time, the company has simultaneously built a more stable global supply chain system and further enhanced its ability to respond to fluctuations in the international market by establishing long-term cooperation with overseas core component suppliers and optimizing logistics and distribution routes.​

Looking forward to the fourth quarter, Zhaochi will also accelerate the pace of intelligent transformation of overseas production bases by introducing technologies such as automated production lines and digital twin management systems to further improve capacity utilization and production efficiency and reduce manufacturing costs per unit product. With the implementation of intelligent transformation, combined with tariff optimization and logistics efficiency improvement brought about by global layout, the gross profit margin of the company's intelligent terminal business is expected to gradually recover, accumulating momentum for long-term profit growth.​

Highlight 2: Emerging business profits account for more than 60%, and the transformation strategy has achieved outstanding results

On the basis of the stable cash flow provided by the traditional smart terminal business, Zhaochi's industrial upgrading and transformation strategy has ushered in key breakthroughs in the first three quarters of 2025: emerging businesses such as LED, optical communications, and Internet video platforms have jointly contributed more than 60% of profits, successfully hedging the short-term pressure of traditional businesses and becoming the core engine of the company's growth. This data not only verifies the forward-looking nature of the transformation strategy, but also marks that Zhaochi has accelerated its progress from a traditional manufacturing enterprise to a technology-driven enterprise.​

From the perspective of business logic, the high profit contribution of emerging businesses is no accident. The LED business focuses on high-end display and lighting tracks, and the added value of products is significantly higher than that of traditional consumer electronics; the optical communications business targets the demand for 5G and AI computing power, and deploys high-bandwidth optical modules and core chips, with high technical barriers and profit margins; Internet video The platform achieves business model upgrades through AI empowerment, and the gross profit margin far exceeds that of the hardware manufacturing business. The three form a pattern of complementary technologies and market synergy, building a diversified profit growth pole for the company.​

Highlight 3: High-end breakthroughs in subdivided tracks and building competitive barriers in multiple dimensions

Zhaochi's emerging business growth does not rely on a single field, but achieves high-end breakthroughs in multiple sub-tracks, forming multi-dimensional competitiveness and further strengthening transformation momentum:

1. LED business: entire industry chain layout + high-end product breakthrough

Zhaochi Co., Ltd. has built a full industrial chain layout of chip-light board-complete machine in the LED field. In 2025, it will further focus on the high-end market, and the market share of Mini/Micro LED new displays, automotive LEDs, high-end lighting, home theater all-in-one machines and other products continues to increase. At the technical level, the company maintains its industry leading position in fields such as chip miniaturization and vehicle-mounted vertical structure chips, providing core support for high-end products.​

It is worth noting that in the third quarter of 2025, relying on the synergy advantages of the entire chain of R & D and production capabilities and the industrial chain, Zhaochi Co., Ltd. successfully launched the RGB Mini LED backlight solution. This solution not only fills the company's technical gap in the high-end display field, but also forms synergy with the existing LED complete business. For example, applying RGB Mini LED backlight technology to home theater all-in-one machines can significantly improve product contrast and color performance, and promote The price and gross profit margin of terminal products have both increased, becoming an important starting point for the continued improvement of the profitability of the LED business.​

2. Optical communications business: Aiming at next-generation technology and seizing the commanding heights of the industry

In the field of optical communications, Zhaochi's high-end breakthrough is reflected in the two-line advancement of current mass production + future layout: on the one hand, the 400G/800G optical module has completed customer sample delivery and entered the verification stage. Commercialization is imminent and will directly benefit from the demand for data center and AI computing power construction;2.5G optical chips have been successfully rolled out, which can realize independent control of core raw materials in the future, reduce external dependence and improve profit margins; At the same time, the company has launched intelligent transformation of optical module production lines, laying the foundation for large-scale delivery.​

On the other hand, Zhaochi Co., Ltd. is forward-looking to plan a broad and slow next-generation optical communication technology path, focusing on increasing investment in research and development of Micro LED optical interconnection technology. Due to its low latency, high bandwidth, and low power consumption characteristics, this technology has become a key support for large-scale deployment of AI. It has now attracted large domestic and overseas manufacturers such as TSMC, Microsoft, and Credo to increase their layout. Relying on its accumulation of key technologies such as Micro LED epitaxial growth, chip etching, and massive transfer, as well as its unique advantages in Micro LED technology + optical communication vertical industrial chain, Zhaochi is expected to reduce the R &D and mass production of optical interconnection core devices. Threshold, seize the lead in the competition for the next generation of optical communications.​

3. Popular in Beijing: AI empowers transformation and creates a comprehensive content platform

As the core carrier of the Internet video platform business, Beijing Fengxing will complete an important strategic upgrade in 2025: transforming from a traditional content distribution platform to an integrated AI content production + distribution platform, serving hundreds of content partners and more than 400,000 content creators. Its independently developed Orange Star DreamWorks AIGC Innovation and Development Integrated Platform integrates the full link capabilities of creative generation, intelligent production and global distribution. It has technical advantages such as cross-modal generation, role consistency guarantee, and minimalist interaction, which can greatly reduce the production cost and cycle of comics, Short Video and other content.​

This transformation not only improves the content production efficiency and market competitiveness that is popular in Beijing, but also opens up a diversified profit model of technical services + advertising sharing + content payment, promoting the transformation of Internet video platform business from traffic-driven to value-driven, becoming an emerging business. An important supplement to profit growth.​

Highlight 4: Implementation of PCB independent supply chain, upgrading of industrial chain synergy advantages

In order to support the large-scale and high-end development of the two major technology tracks of LED and optical communications, Zhaochi Co., Ltd. has further laid out the core supply chain of PCB(printed circuit board) and established a subsidiary company Jiangxi Zhaochi Intelligent Display Circuit Co., Ltd. focuses on the production of Mini/Micro LED circuit boards and optical module circuit boards.​

The strategic value of this layout is significant: on the one hand, PCB is the core component of Mini/Micro LED displays and high-end optical modules. Independent production can achieve accurate matching of technical parameters and avoid technical limitations and delivery delays from external suppliers. For example, for RGB Mini LED backlight modules customize high-density circuit boards to improve product performance stability; on the other hand, vertical integration of the PCB supply chain can reduce procurement costs. At the same time, through the full chain collaboration of chip-PCB-module-complete machine, R &D and production cycles can be shortened and improved. Rapid response to market demand.​

As the PCB production line is gradually put into production, Zhaochi's independent controllability capabilities in the Mini/Micro LED and optical communications industry chain will be further enhanced, and technological innovation and industrial synergy will continue to be released, providing a key supply chain for the long-term growth of the two core businesses. support.