China’s largest analog circuit semiconductor company, Wen Tai Technology, has recently released a profit warning, marking its first loss since going public. Following the announcement of a profit shortfall by Hanwuji, known as China’s “No. 1 AI Chip Stock,” Wen Tai Technology has forecasted a loss for the 2024 fiscal year.
Wen Tai Technology issued a profit warning for the fiscal year 2024, expecting a net profit attributable to the owner of the parent company to be between -3 billion yuan and -4 billion yuan.
As the first mobile ODM company in China, Wen Tai Technology experienced its first loss since its listing on the Shanghai Stock Exchange through a reverse merger with Zhongyin Shares in 2017.
The announcement cited reasons for the loss including uncertainties in future project acquisitions in the product integration business due to changes in customer risk preferences. This has led to the impairment of intangible assets, fixed assets, and goodwill, resulting in a significant loss for the year 2024.
According to public information, Wen Tai Technology Co., Ltd., headquartered in Jiaxing City, Zhejiang Province and belongs to the State-owned Assets Supervision and Administration Commission of Yunnan Province. In 2019, Wen Tai Technology acquired the global semiconductor giant AMS Group based in the Netherlands. This acquisition positioned Wen Tai Technology as the only automotive-grade semiconductor company in China and the largest analog circuit semiconductor company in the country.
In December 2024, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) revised the Export Administration Regulations (EAR), adding 136 Chinese entities to the Entity List, including Wen Tai Technology and SMIC.
Wen Tai Technology became the second Apple supplier in China to be blacklisted by the United States, following the OFilm Group. Following its inclusion on the U.S. trade blacklist, Wen Tai Technology sought to sell business related to Apple and Samsung.
Moreover, the international business of AMS Group acquired by Wen Tai Technology may face indirect impacts, particularly in cooperation with the U.S. and its allies. Concerns over sanctions may lead to reduced or terminated partnerships. Any decline in the performance of AMS Group would result in significant impairment of goodwill, symbolized as the “Sword of Damocles” hanging over Wen Tai Technology.
Just before Wen Tai Technology announced its profit warning for 2024, Hanwuji, China’s “No. 1 AI Chip Stock,” revealed a projected loss in the range of 396 million yuan to 484 million yuan for 2024.
On January 15, the BIS revised the EAR, listing 25 Chinese companies under export control, including those in the fields of artificial intelligence and semiconductors. This move led to a shift in the A-share market’s AI index from a rally to a downturn, with sectors such as humanoid robots, semiconductors, and military industry leading the losses. By the end of that trading day, Hanwuji’s stock price had fallen by 14.65%, resulting in a market value loss exceeding 40 billion yuan compared to the previous trading day.