Nexchip Q3 Report: Revenue of 3.354 Billion Yuan, Non-Recurring Net Profit Up 697.53% Year-on-Year

On the evening of October 26, Nexchip (688249.SH, 2249.HK) disclosed its 2026 third-quarter report. In the third quarter, the company achieved operating revenue of 3.354 billion yuan, up 14.42% year on year; net profit attributable to shareholders of the parent company was 229 million yuan, up 5.23% year on year; and net profit after deducting non-recurring gains and losses was 191 million yuan, surging 697.53% year on year. In the first three quarters, the company's operating revenue climbed to 9.310 billion yuan, up 14.52% year on year.

Behind the numbers, the quality of main-business profitability at this global leader in display driver chip foundry is recovering rapidly: after excluding two non-operating factors—fair value change losses and exchange losses—the company's total profit in the third quarter rose 135.58% year on year; in the first three quarters, net cash flow from operating activities was 4.721 billion yuan, up 76.53% year on year, a growth rate far outpacing revenue. Combined with its July listing on the Hong Kong Stock Exchange and downstream device leader Huaqin Technology's announcement of an increase in its H-share holdings, Nexchip's growth story is shifting from "cyclical recovery" to a new stage of "dual expansion of capacity and technology."

Image/Nexchip 2026 Third-Quarter Report

Cash flow growth outpaces revenue, enhancing the "quality" of profit

Looking through Nexchip's third-quarter report, the most intuitive highlights are steady revenue and an explosive surge in cash flow. In the first three quarters, the company achieved operating revenue of 9.310 billion yuan, up 14.52% year on year, of which third-quarter revenue was 3.354 billion yuan, up 14.42% year on year. The company attributed this to increased product sales and continued expansion of revenue scale.

Profitability showed more layers. In the third quarter, the company's total profit was 210 million yuan, up 28.33% year on year; net profit after deducting non-recurring gains and losses was 191 million yuan, surging 697.53% year on year (the figure was less than 25 million yuan in the same period last year), with the high growth rate created jointly by the low base and improvement in the main business. In the first three quarters, the company's net profit after deducting non-recurring gains and losses was 322 million yuan, up 41.32% year on year.

The "one down, one up" between net profit attributable to shareholders of the parent company and net profit after deducting non-recurring gains and losses is worth noting: in the first three quarters, net profit attributable to shareholders of the parent company was 475 million yuan, down 13.70% year on year, but the deducted basis grew by more than 40%. The difference mainly stems from the change in the base of non-recurring gains and losses; in the same period last year, the company recognized relatively large non-recurring gains, while this figure was 153 million yuan in the first three quarters of this year. After excluding "one-off" factors, main-business profit actually grew significantly.

There are also two "visible losses" on the third-quarter income statement: trading financial assets generated a fair value change loss of 64.2724 million yuan due to short-term fluctuations in the stock prices of investee companies, and exchange rate market fluctuations brought exchange losses of 78.7831 million yuan, totaling about 143 million yuan. The company explicitly stated in the report that, excluding the impact of the above factors, total profit in this reporting period increased 135.58% from the same period last year.

Cash flow is the touchstone for testing profit quality. In the first three quarters, net cash flow from Nexchip's operating activities reached 4.721 billion yuan, up 76.53% year on year, far exceeding revenue growth, indicating healthy collections and ample operating cash generation capacity.

Catching the price increase cycle, the logic of rising volume and price is being realized

Nexchip's current round of performance recovery resonates with the systematic rebound in industry prosperity.

In mid-March this year, Nexchip issued a price adjustment notice to customers, announcing a uniform 10% price increase for newly produced wafer foundry products starting June 1, becoming a landmark event in this round of domestic wafer foundry price increases.

The confidence behind the price increase comes from both supply and demand. On the demand side, AI computing demand continues to heat up and spill over to terminals; new scenarios such as AI phones, AI computers, and smart cars are continuously raising chip usage. Panel maker HKC said bluntly in a September investor survey that growth in AI demand has pushed up prices of components such as driver chips significantly. On the supply side, major manufacturers such as TSMC and Samsung continue to reduce or transfer 8-inch capacity, and supply of mature-process categories such as PMIC and power devices is tightening. Sigmaintell expects that in the fourth quarter of 2026, the average capacity utilization rate of major global wafer fabs will be about 91%, and the overall upward trend in wafer foundry prices is certain; UMC has already signaled a price increase. Some institutions estimate that the price increase effect for mature processes will extend to 2027, with related foundry prices rising by an average of 5% to 15%.

As a global leader in display driver chip (DDIC) foundry, Nexchip is one of the core beneficiaries of this round of the prosperity cycle. Industry forecasts show that the domestic DDIC market will reach US$4.541 billion this year, of which OLED driver chips will account for more than 27%; Huatai Securities estimates that the global OLED driver chip market will reach US$5.643 billion in 2026. Rising OLED penetration not only brings market expansion but also means higher value per chip and higher process thresholds.

At present, Nexchip's 40nm high-voltage OLED display driver chips and 110nm Micro OLED chips have achieved mass production, the 28nm OLED driver chip process continues to advance verification, and the 28nm logic process platform has completed development and is advancing customer tape-out verification.

A+H dual platform finalized, expansion and R&D both accelerate

A breakthrough at the capital level is Nexchip's most important change this year. On July 10, the company's H shares were listed on the Main Board of the Hong Kong Stock Exchange at an issue price of HK$32.30 per share, making it another "A+H" enterprise in the wafer foundry sector.

The cash flow statement shows that in the first three quarters, Nexchip received 7.966 billion yuan in cash from absorbing investments. The leap in capital strength is directly reflected in the balance sheet: as of the end of September, the company's total assets were 65.707 billion yuan, up 23.28% from the end of the previous year; net assets attributable to shareholders of the parent company were 28.878 billion yuan, up 32.66% from the end of the previous year; and book monetary funds were 12.150 billion yuan, about 5.3 times the beginning of the year.

The use of proceeds is clear: about 53.6% for R&D and optimization of the new-generation 22nm technology platform, about 23.1% for upgrading the AI-based intelligent R&D and production planning system, and about 13.3% for establishing an R&D and sales center in Hong Kong to expand international markets. From 40nm to 28nm and then to 22nm, Nexchip's technology roadmap is climbing step by step.

Capacity expansion is advancing in parallel. Nexchip's Phase IV project plans to build a 12-inch wafer foundry production line with a monthly capacity of 55,000 wafers, covering 40nm and 28nm CIS, OLED, logic and other processes, with products targeting fields such as OLED display panels, AI phones, AI computers, smart cars, artificial intelligence and storage.

The third-quarter report shows that Nexchip's construction in progress at the end of the period reached 13.899 billion yuan, up about 18.6% from 11.720 billion yuan at the beginning of the year, and expansion is at a construction peak. In R&D, the company invested 1.178 billion yuan in the first three quarters, up 9.19% year on year, accounting for 12.65% of operating revenue. In addition, the company recently established a wholly owned subsidiary with 918 million yuan to extend into design services and electronic specialty materials, further improving its industrial ecosystem.

Final thoughts

The moves of industrial capital often send signals earlier than financial data. Disclosed alongside the third-quarter report on October 26 was also an increase-holdings announcement: Huaqin Communication Hong Kong, a wholly owned subsidiary of Huaqin Technology, a shareholder holding more than 5% of the company, plans to increase its holdings of the company's H shares by 15 million to 25 million shares through centralized bidding within three months starting October 27, with no price cap. So far, Huaqin Technology and its concert parties together hold 10.97% of Nexchip's shares. As a globally leading smart hardware ODM manufacturer, Huaqin Technology is both a shareholder and an important customer of Nexchip; its real-money increase in holdings represents recognition by a downstream device leader of upstream foundry capabilities.

From the secondary market perspective, Nexchip's A shares closed at 26.74 yuan on October 26, with a total market value of 59.8 billion yuan. In the short term, exchange rates and fluctuations in the stock prices of investee companies may still disturb the income statement, and depreciation pressure under the asset-heavy model cannot be ignored; but from a longer perspective, the industry prosperity of rising volume and price, progressively advancing process technology, and continuously implemented capacity expansion are building the confidence of this wafer foundry, established only more than a decade ago, to ride through cycles.