ZTE Corporation released its half-year report today. The report shows that the company achieved revenue of 71.55 billion yuan in the first half of the year, representing a year-over-year increase of 14.5%. Net profit attributable to shareholders reached 5.06 billion yuan, with adjusted net profit attributable to shareholders at 4.10 billion yuan. Both second-quarter revenue and net profit attributable to shareholders achieved sequential growth.
Notably, the "second curve" businesses represented by computing power and terminals achieved nearly 100% year-over-year revenue growth, accounting for over 35% of total revenue. Government & enterprise and consumer businesses combined exceeded 50% of total revenue, marking that ZTE's transformation from a traditional telecom equipment vendor to a comprehensive "network connectivity + intelligent computing power" service provider has entered the realization phase. The revenue scale approaches Nokia's 75.08 billion yuan for the same period, narrowing the gap to 5%, enhancing the company's ability to withstand industry cyclical fluctuations.
**Government & Enterprise Business Becomes Core Engine with 109.9% Growth**
From the perspective of specific business segment performance, the government & enterprise business became ZTE's "core engine" for revenue growth in the first half, achieving revenue of 19.25 billion yuan, surging 109.9% year-over-year.
Consumer business revenue reached 17.24 billion yuan in the first half, growing 7.6% year-over-year. Although the growth rate was lower than the government & enterprise segment, it achieved significant results in terminal ecosystem development and overseas market expansion. In the personal terminal field, the company globally launched multiple AI terminal formats including the Nubia Z70S Ultra photographer edition, Flip2 small foldable screen, and the first consumer-grade tablet Pro. The gaming brand "Red Magic" continues to deepen its domestic presence while expanding overseas online channels. In home scenarios, the focus is on the "four key components" of AI home networks, computing power, smart screens, and robots. Additionally, the two-in-one cloud PAD sales exceeded one million units, becoming a new growth point.
Carrier network business revenue reached 35.06 billion yuan in the first half. Although still declining, the decline margin has significantly narrowed.
Worth mentioning is ZTE's intensive overseas market layout in the first half: the company closely follows the wave of data center and computing infrastructure construction in major overseas countries, deepening cooperation with Chinese enterprises going abroad and local customers. Through self-developed chips, intelligent computing servers, ultra-large-scale clusters, and other full-stack domestically-produced intelligent computing products, as well as software solutions including resource management platforms and training-inference platforms, the company provides end-to-end solutions.
**R&D Expenses 12.66 Billion Yuan, Patent Applications Approximately 94,000**
However, ZTE's overall gross margin faced periodic pressure during the reporting period, primarily due to changes in revenue structure. Computing power products (such as servers) face intense market competition with normal gross margins lower than traditional telecom network products. Revenue from such products grew over 200% in the first half, dragging down overall profitability levels.
In response, ZTE has outlined three key improvement measures: first, achieving economies of scale by increasing computing power product revenue to dilute R&D expenses and procurement costs; second, increasing investment in self-developed chips and software algorithms while reducing overall production costs through architectural and engineering optimization; third, upgrading from "single product sales" to "solutions + application services," promoting high value-added products like training-inference integrated machines to enhance profit margins, establishing a foundation for long-term profitability recovery.
From a financial perspective, besides revenue scale growth and revenue structure optimization, stable R&D investment provides solid support for ZTE's development. First-half R&D expenses reached 12.66 billion yuan, accounting for approximately 18% of revenue, providing sufficient funding for AI technology development and product innovation.
According to statistics, as of June 2025, ZTE has accumulated approximately 94,000 patent applications with over 50,000 authorizations. Among these, AI patent applications approach 5,500 (nearly 50% authorized), and chip patent applications total about 5,700 (over 3,700 authorized), forming technological barriers in key areas such as intelligent computing chips, AI algorithms, and network architecture.
Industry insiders believe ZTE's quarterly financial report reveals substantial transformation results: revenue structure has shifted from single telecom equipment to diversified computing power and terminals, significantly enhancing anti-cyclical capabilities. High R&D investment ratio and positive cash flow provide sustainable ammunition for technological iteration. However, gross margin remains dragged by computing power product scale expansion, requiring simultaneous improvement in profitability quality and global compliance systems. This also means ZTE has obtained a ticket to the AI computing power era, and next needs to "hold onto" and "sit firmly" in the market.
**Full-Category AI Terminal Layout, International Mobile Market Revenue Increases Over 30%**
Looking at ZTE Corporation's strategic layout, the company currently executes a "connectivity + computing power" strategy centered on "consolidating fundamentals + expanding new growth poles." Regarding the carrier fundamentals, facing challenges from declining domestic 5G investment, ZTE has narrowed carrier network revenue decline through core product market share improvement, intelligent computing project expansion, and future technology deployment in 5G-A and 10-gigabit access, while releasing the AIR RAN+AIR Core converged network architecture.
In computing business, this core growth area, ZTE achieved over 200% year-over-year growth in server and storage revenue, with AI servers accounting for 55%. The launched 800GE high-density switch received a "Very Strong" rating from GlobalData, and the intelligent computing super-node system won the "Annual Major Breakthrough Achievement Award" at the 2025 China Computing Power Conference.
In end-side product upgrades, through full-category AI terminal layout and "ZTE + Nubia" dual-brand strategy, the company expands overseas open channels. The gaming terminal brand Red Magic deepens domestic market presence while developing overseas online e-commerce. International mobile market revenue grew over 30%, two-in-one cloud PAD sales exceeded 1 million units with a 70% carrier market share, continuously strengthening terminal ecosystem competitiveness.
Industry insiders believe that from an industry dividend perspective, global AI infrastructure investment is expected to reach $780-990 billion by 2027, with domestic intelligent computing demand continuing high-speed growth. ZTE's "connectivity + computing power" strategy highly aligns with industry trends. As computing power product scale expands, self-developed proportion increases, and business structure upgrades, gross margin is expected to gradually recover, returning profitability to normal trajectory.