Goertek Microelectronics Inc. recently had its Hong Kong Stock Exchange listing application accepted, with China International Capital Corporation, CITIC Securities International, China Merchants International, and UBS serving as joint sponsors. The parent company of Goertek Microelectronics is Goertek Inc. (002241.SZ), which owns 83.40% of the subsidiary, controlled by the couple Jiang Bin and Hu Shuangmei. Before seeking a Hong Kong listing, Goertek Microelectronics attempted to list on the Shenzhen Stock Exchange. This is not the company's first application for listing in Hong Kong; it previously submitted a prospectus in January 2025 but it lapsed.
Despite a slight improvement, the gross margin remains below that of past periods. According to Tianyancha, Goertek Microelectronics was established in October 2017 and focuses on the research, production, and sales of sensors, sensor interaction modules, and System in Package (SiP) technologies, with applications across consumer electronics, automotive electronics, smart homes, industrial applications, and healthcare. Goertek has developed UniSense, a platform that integrates the company’s full-stack technical capabilities in material research, chip design, packaging testing, algorithm software development, and system design.
Through this platform, Goertek can quickly replicate and expand its capabilities across various application areas, enabling the company to provide a diverse range of high-performance intelligent sensing interaction solutions at optimal costs to meet customer needs. As per Frost & Sullivan data, Goertek was the fifth-largest intelligent sensing interaction solution provider globally and the largest in China based on 2024 sales revenue. It ranked as the fourth-largest sensor provider and the largest acoustic sensor provider globally.
During the reporting period, Goertek served 126 direct-selling clients globally, including the top nine mobile phone manufacturers (by 2024 shipment volume) as well as leading vendors in automotive electronics, smart home technologies, industrial applications, and healthcare sectors. From 2022 to 2024, and in the first three months of 2025, Goertek maintained relationships lasting over three years with 63, 66, 70, and 70 direct clients, respectively.
Goertek's smart sensing solutions include sensors, SiP, and sensor interaction modules. Revenue from sensors during the reporting period was recorded as CNY 2.541 billion, CNY 2.092 billion, CNY 3.558 billion, and CNY 905 million, accounting for 81.4%, 69.7%, 78.5%, and 80.8% of total revenue during each respective period. The majority of Goertek's total income comes from its sensor revenue. The types of sensors offered by Goertek include acoustic sensors, pressure sensors, and inertial sensors widely used in smartphones, smart headphones, VR/AR devices, smart cars, and smart homes.
Due to the slow iteration of products, the sensors sold in 2023 primarily consisted of older models facing more competitive conditions, resulting in an average selling price decline from CNY 1.6 to CNY 1.3 per unit, leading to a 17.7% year-on-year decrease in sensor revenues for that year. In 2024, an expected rebound in demand from the consumer electronics industry, along with an increase in the average selling price of sensors from CNY 1.3 to CNY 1.8, contributed to a 70.1% growth in sensor revenue. For the first quarter of 2025, sensor revenue reached CNY 905 million, a 67.3% year-on-year increase.
Goertek also offers comprehensive SiP services and sensor interaction modules. Revenue from SiP during the reporting period was CNY 480 million, CNY 753 million, CNY 732 million, and CNY 145 million, constituting 15.4%, 25.1%, 16.1%, and 12.9% of total revenue in each respective period. Revenue from sensor interaction modules was recorded as CNY 87.588 million, CNY 143 million, CNY 234 million, and CNY 67.495 million, accounting for 2.8%, 4.8%, 5.2%, and 6.0% of total revenue.
Due to the decline in sensor sales in 2023, Goertek experienced an overall revenue decrease that year, reporting total revenues of CNY 3.121 billion, CNY 3.001 billion, CNY 4.536 billion, and CNY 1.12 billion in the respective periods. Revenue in 2023 fell by 3.9% year-on-year. In terms of profits, net profit during the reporting period was CNY 326 million, CNY 289 million, CNY 309 million, and CNY 116 million, with adjusted net profits of CNY 379 million, CNY 254 million, CNY 365 million, and CNY 133 million, resulting in net profit margins of 10.4%, 9.6%, 6.8%, and 10.4%, and adjusted margins of 12.1%, 8.5%, 8.0%, and 11.9% respectively. Net profit margins fell for two consecutive years in 2023 and 2024 before rebounding slightly in March 2025.
The company's gross margins were recorded at 18.5%, 17.2%, 19%, and 20.6%, with a first-quarter 2024 gross margin of 22.1%. Regarding the year-on-year decline in gross margin in the first quarter, Goertek attributed this primarily to a decrease in the gross margin of sensors, caused by a shift in product mix with an increased proportion of lower-margin acoustic sensors. Although Goertek’s gross margin improved in 2024, it remained lower than the 22.85%, 22.37%, and 22.87% observed from 2019 to 2021.
As per its listing application documents, Goertek’s gross margin is substantially lower than that of comparable companies in the industry, which average around 37%-40%. A ranking of gross margins among MEMS sensor listed companies for the first quarter of 2025 shows Kongsberg at the top with a gross margin of 64.32%, followed by GDH at 52.16%, Ruichuang Micro-Nano at 45.95%, and Minxin with a gross margin of 25.98%.
It’s also noteworthy that Goertek receives various government grants and enjoys certain tax benefits. During the reporting period, the company reported government grants of CNY 1.78 billion, CNY 115 million, CNY 44.756 million, and CNY 18.752 million.
Goertek’s revenue from its top five clients during the reporting period was CNY 2.356 billion, CNY 2.23 billion, CNY 3.615 billion, and CNY 902 million, representing 75.5%, 74.3%, 79.7%, and 80.5% of total revenue during those periods. Goertek identified Client A as its largest client, with revenues of CNY 1.752 billion, CNY 1.484 billion, CNY 2.825 billion, and CNY 695 million from this client, accounting for 56.1%, 49.4%, 62.3%, and 62.0% of the respective periods, significantly exceeding those from other clients, widely believed to be Apple.
The high concentration of revenue from the top five clients poses significant risks. Senior industry economist Liang Zhipeng commented on the high risks associated with long-term reliance on major clients. If a company’s revenue heavily depends on a few major clients, the loss of any one client can greatly impact its revenue. To enhance risk resistance, diversifying into a broader client base is recommended.
Additionally, sourcing essential raw materials and components from key suppliers is crucial for Goertek’s operations. During the reporting period, the company’s purchases from the top five suppliers totaled CNY 1.635 billion, CNY 1.336 billion, CNY 2.539 billion, and CNY 686 million, representing 71.1%, 69.2%, 70.9%, and 76.1% of total purchases each period. The amount spent on the largest supplier was CNY 1.212 billion, CNY 911 million, CNY 1.908 billion, and CNY 533 million, which corresponded to 52.7%, 47.2%, 53.3%, and 59.1% of total purchases.
Moreover, Goertek has been experiencing an upward trend in its inventory and accounts receivable year on year. At the end of each reporting period, inventories were recorded at CNY 812 million, CNY 517 million, CNY 794 million, and CNY 893 million, with inventory turnover days of 116.1, 97.7, 65.1, and 85.3 days, respectively. At the same time, trade receivables and bills receivable were recorded at CNY 386 million, CNY 565 million, CNY 844 million, and CNY 681 million; provisions for impairment losses on trade and other receivables were CNY 2.35 million, -CNY 2.311 million, -CNY 2.186 million, and CNY 1.743 million; turnover days for trade receivables and bills were 66.8, 58.4, 56.9, and 61.3 days, respectively.
Other financial data indicated that at the end of the reporting period, trade payables and bills payable amounted to CNY 517 million, CNY 721 million, CNY 1.397 billion, and CNY 1.211 billion, with accounts payable turnover days of 97.3, 90.9, 105.2, and 131.9 days. The persistent growth in inventories, receivables, and payables has contributed to declining cash flow for Goertek. The net cash flow from operating activities was CNY 693 million, CNY 601 million, CNY 435 million, and CNY 224 million at the end of each reporting period.
On a more positive note, the company maintains a relatively high level of cash, with cash and cash equivalents recorded at CNY 1.862 billion, CNY 2.263 billion, CNY 2.402 billion, and CNY 2.302 billion at the end of each period. Regarding debt repayment ability, the company’s current ratios were 4.6, 4.1, 2.6, and 3.1, while quick ratios were 3.4, 3.5, 2.2, and 2.4 during the same periods. As of the end of each reporting period, Goertek's total liabilities were CNY 1.009 billion, CNY 1.196 billion, CNY 1.981 billion, and CNY 1.653 billion, with total assets of CNY 5.179 billion, CNY 5.639 billion, CNY 6.739 billion, and CNY 6.534 billion. The calculated debt-to-asset ratios were 19.48%, 21.21%, 29.4%, and 25.3%.
As a consumer electronics enterprise, R&D expenditures are crucial. During the reporting period, Goertek’s R&D expenses were CNY 258 million, CNY 264 million, CNY 326 million, and CNY 67.431 million, with R&D expense ratios of 8.27%, 8.80%, 7.19%, and 5.98%. In fact, according to the previously submitted A-share prospectus, Goertek's R&D expenditure ratio is significantly lower than the average of its industry peers. Liang Zhipeng pointed out that as a manufacturing enterprise, Goertek’s inherent technical content tends to be relatively low. Although manufacturing companies require some R&D investment, the primary focus is on production quality, processes, and precision, resulting in a lower level of independent R&D.
In December 2021, Goertek applied to list its shares on the Growth Enterprise Market of the Shenzhen Stock Exchange (prior application for GEM listing) and was recognized by the GEM Listing Committee in October 2022 as meeting the issuing, listing, and disclosure requirements. However, due to the earlier GEM application that had not yet received formal approval since Goertek determined in October 2022 that it met the requirements, there remained uncertainty regarding the A-share listing timetable. Considering business prospects and market conditions at the time, Goertek decided to voluntarily withdraw its previous GEM application in May 2024.