Listed for less than five months, Sj Semiconductor Corporation (688820), a scarce leader in domestic advanced packaging, has delivered its first "report card" to the market. In the first half of the year, the company achieved revenue of 3.407 billion yuan, a year-on-year increase of 7.2%, and net profit attributable to shareholders of 449 million yuan, up 3.33% from a year earlier. Both revenue and profit growth have slowed to single digits.
Although the company's revenue and profit maintained growth in the first half, the capital market seems unimpressed. On the day after the interim report was disclosed (August 20), Sj Semiconductor Corporation's share price fell 9.23%, at one point plunging 13% intraday. Why did the market vote with its feet? Observation suggests that the company's second-quarter performance was relatively weak, with revenue growth but profit decline, and net profit falling 16.40%.
After listing, the company's share price rallied sharply. At the end of May, Sj Semiconductor Corporation's total market value exceeded 360 billion yuan, making it the second most valuable company in Jiangsu by market cap. Although the value later retreated, as of the August 28 close, the company's market value stood at 237.6 billion yuan. Compared with A-share peers, Changjiang Electronics Technology Co Ltd reported net profit growth of 79.41% in the first half, Tianjin Teling Electronic Technology Co Ltd saw a 259.15% increase, and Tongfu Microelectronics Co Ltd projected a first-half net profit growth of 288.26% to 336.80%. Sj Semiconductor Corporation's single-digit first-half net profit growth, coupled with a second-quarter profit decline, contrasts sharply with its market value exceeding 200 billion yuan, leaving many investors openly saying the report was mediocre.
Where to begin
The reasons behind Sj Semiconductor Corporation's profit growth lagging behind some peers are twofold. First, its largest business segment has the lowest revenue growth while cost growth outpaces revenue growth; second, asset impairment losses have expanded. Looking ahead, the company's growth momentum depends on its layout in the advanced packaging field, and it is intensifying efforts in 2.5D/3DIC chiplet multi-chip integration. At the same time, Sj Semiconductor Corporation has expanded production capacity, but it faces risks in absorbing new capacity and a high customer concentration issue.
Top business growth drops to single digits, Q2 net profit falls 16%
Sj Semiconductor Corporation started with 12-inch wafer processing and further provides full-process advanced packaging and testing services, including wafer-level packaging and chiplet multi-chip integrated packaging. On the evening of August 19, the company released its 2026 interim report, recording first-half revenue of 3.407 billion yuan, up 7.20% year-on-year, and attributable net profit of 449.4 million yuan, up 3.33%. During the first half, government subsidies recognized in current-period profit totaled about 109.3 million yuan, an increase of roughly 52.3 million yuan year-on-year, while share-based payment expenses were about 101 million yuan, approximately 20 million yuan lower year-on-year.
Though overall first-half performance grew, the interim report offered no "surprises." By quarter, Sj Semiconductor Corporation posted first-quarter revenue and profit growth rates of 13.13% and 51.55%, respectively; in the second quarter, those figures were 1.89% and -16.40%. Clearly, the first quarter still had double-digit growth, but the second quarter shifted to rising revenue with falling profit.
From a main-business perspective, in the first half of 2026, chiplet multi-chip integrated packaging, mid-segment wafer processing, and wafer-level packaging ranked as the top three businesses, with current-period revenue growth rates of 2.61%, 13.55%, and 10.60%, respectively. Notably, chiplet multi-chip integrated packaging serves as the core carrier of Sj Semiconductor Corporation's "AI computing advanced packaging" narrative. According to the prospectus, from 2022 to 2024, that business grew at a compound rate of roughly 70% before listing, driven mainly by rapid 2.5D business expansion. In the first half of 2026, however, its revenue growth fell to 2.61%, the lowest among all business lines, dragging down the company's overall growth. Additionally, while mid-segment wafer processing maintained double-digit growth, its gross margin fell 8.34 percentage points year-on-year.
On the cost side, Sj Semiconductor Corporation's operating cost growth reached 9.80% in the first half of 2026, faster than revenue growth, pushing its gross margin down to 30.14%, a 1.65 percentage point year-on-year decline. Meanwhile, asset impairment losses widened to 165.3 million yuan, up 13.86% year-on-year, mainly from inventory write-downs and contract cost impairment losses. Against the backdrop of accelerating AI chip iteration, inventory write-down risk is a common concern for advanced packaging manufacturers. Overall, increased government subsidies and reduced share-based payments somewhat supported the company's reported profit, but declining top-business revenue growth, cost growth outpacing revenue, and larger asset impairment losses were key factors dragging second-quarter performance.
Behind the advanced packaging push: new capacity absorption and major customer reliance
In the post-Moore's-law era, advanced packaging has become a necessary technology for high-computing-power chips and a key link in building the complete supply chain for high-computing-power chips that support computing infrastructure. Broker research shows that mid- to low-end advanced packaging technologies are provided by OSAT players, while high-end 2.5D/3D packaging technologies (such as SoIC, CoWoS, and EMIB) are mainly led in innovation by TSMC, Intel, and Samsung Electronics—meaning front-end manufacturing players hold the high-end market. As one of the few mainland Chinese companies with comprehensive coverage of various mid-segment wafer processing processes and back-end advanced packaging technologies, Sj Semiconductor Corporation's development moves draw outside attention.
Currently, Sj Semiconductor Corporation is refining its layout for 2.5D/3DIC chiplet multi-chip integrated packaging technology platforms. Specifically, in the 2.5D chiplet multi-chip integration segment, the company has leveraged its comprehensive capability base in 2.5D technology to successfully achieve process development for a leading 6x reticle ultra-large-size silicon bridge chiplet multi-chip integration solution. Notably, Sj Semiconductor Corporation is a major force in mainland China's 2.5D packaging field. In the 3DIC segment, the company has achieved mass production through its micro-bump-based 3DIC technology platform, SmartPoser®-3DIC-BP; for its hybrid bonding-based 3DIC platform, SmartPoser®-3DIC-HB, the company is deepening R&D focused on hybrid bonding and continuously honing C2W and W2W process capabilities.
Beyond technological innovation, Sj Semiconductor Corporation is also expanding production capacity. On one front, it continues to expand capacity at its Jiangyin production base, with a total investment of 9.8 billion yuan in a multi-layer, fine-line-width system integration packaging and testing project (Phase I) that broke ground in May this year, aimed at maintaining its leading position in mid-segment wafer processing, wafer-level packaging, and chiplet multi-chip integrated packaging technologies. On the other front, the company has forward-looking plans with a 10-billion-yuan investment in the Dongsheng Hexin three-dimensional integrated chip manufacturing (Phase I) project, which started construction in June this year to further improve its advanced packaging technology platform layout.
While pursuing strategic initiatives, Sj Semiconductor Corporation faces two major operating risks. First is the risk of absorbing new capacity. The company notes that the industry faces intensifying market competition, and if future market development and marketing efforts fall short of expectations, or if it ends up in a disadvantageous position amid fierce competition, new capacity may go unabsorbed. Some analysts suggest that capacity ramp-up and utilization-rate improvements will be key metrics to watch, as these affect profit release and gross margin trends. Notably, the 19.8-billion-yuan expansion may bring depreciation pressure in the future, and before capacity utilization reaches a critical threshold, gross margins will be tested.
Second is the risk of high customer concentration, as the company relies heavily on major clients. The prospectus shows that from 2022 to the first half of 2025, revenue from the top five customers rose from 72.83% to 90.87% of total revenue. Among them, Sj Semiconductor Corporation's largest customer, Customer A, accounted for 74.40% of revenue, meaning the company is significantly dependent on this major client. During the IPO process, the CSRC's inquiry letters highlighted the customer concentration and single-customer dependence issue, with both the first and second rounds of inquiries addressing it, underscoring how much impact the major customer has on performance. In its responses, the company stated that its cooperation with Customer A has strong stickiness and mutual reliance, with revenue from Customer A expected to reach approximately 4.613 billion yuan in 2025 and continue growing year-on-year in the first half of 2026. It also flagged the risk: if Customer A experiences operational changes, order reductions, or external factors, it could have a significant adverse effect on the company's earnings stability, potentially even leading to losses.
Although the 2026 interim report did not disclose major customer data, the company's disclosures show that receivables from the top five customers by outstanding amount account for over 89% of total accounts receivable, indirectly indicating that high customer concentration persists. Overall, against the backdrop of domestic substitution, Sj Semiconductor Corporation has benefited from its advanced packaging technology, with the market assigning a high valuation and pushing its market value above 200 billion yuan. However, the second-quarter profit decline and the first-half drop in top-business growth have poured cold water on an overheated market. Whether Sj Semiconductor Corporation can deliver better results in the future remains to be seen, and we will keep tracking its progress.