Desay SV's Growing Pains: Autonomous Driving Leader Faces "Sandwich" Dilemma, Automakers' Defection Forces R&D Breakthrough

Source | Times Business Research Institute

Author | Hao Wenran

Editor | Han Xun

In 2025, amidst the turbulent waters of the smart vehicle industry, Desay SV (002920.SZ) achieved a new level of operational performance.

According to the annual report, Desay SV achieved revenue of 32.557 billion yuan, a year-on-year increase of 17.88%, and net profit of 2.454 billion yuan, up 22.38% year-on-year. Despite the intense price wars in vehicle sales and the extreme squeezing of industry chain profits, the company still maintained double-digit growth, solidifying its position as a leading domestic Tier 1 supplier for intelligent driving.

However, behind the performance growth, Desay SV’s gross profit margin declined from 24.60% in 2021 to 19.07% in 2025. At the same time, pressures from chip giants and threats from downstream automakers’ in-house R&D began to emerge. As the industry transitions from “high-level intelligent driving popularization” to the “cockpit-integration” deep-water zone, Desay SV is attempting to shift from a pure hardware integrator to a technology-driven intelligent driving solution provider.

The “Sandwich” Dilemma of Hardware Integration

As a leading enterprise in China’s intelligent driving field, Desay SV has formed a coordinated development pattern of three major segments: “Smart Cockpit, Intelligent Driving, and Connected Services.”

In 2025, revenue from the smart cockpit business reached 20.585 billion yuan, accounting for 63.23% of total revenue, serving as the main pillar of performance; intelligent driving revenue was 9.7 billion yuan, a 32.63% increase, accounting for 29.79%, becoming the core growth engine; connected services and other businesses generated 2.272 billion yuan, accounting for 6.98%, continuously exploring new fields.

However, behind these impressive results, a 300 million yuan inventory write-down revealed its passive position as a hardware integrator.

For a long time, Desay SV has been regarded as Nvidia and Qualcomm’s core “spokesperson” in China. Its business essence is converting top-tier chips into mass-produced intelligent domain controllers. Yet, this niche revealed significant “sandwich” pressure during rapid technological iteration: upstream are chip giants with absolute bargaining power, downstream are automakers embroiled in price wars eager to pass on costs. This directly led to an asset impairment of 431 million yuan in 2025, with 300 million yuan from inventory write-downs.

Behind this 300 million yuan loss is the “cost of being caught in the middle.” In a strong seller’s market, Tier 1 suppliers often need to lock in capacity 6 to 9 months in advance and stockpile high-priced chips, while downstream orders are highly uncertain—2025 was a transition period from Orin to the Thor platform, with automakers adjusting product lines due to technological updates or canceling orders due to lower-than-expected sales, causing the value of old chips to plummet.

This contradiction between “rigid upstream procurement” and “flexible downstream orders” forms Desay SV’s “sandwich dilemma.”

A Strategic Choice to Trade Profit Margin for Scale

Replacing profit margin with market share is a pragmatic choice for Desay SV to stabilize its ecosystem under this dilemma. This is especially evident in the intelligent driving business: in 2025, this segment’s revenue surged 32.63% to 9.7 billion yuan, securing new project orders with an annualized sales exceeding 13 billion yuan, but gross profit margin fell by 3.55 percentage points to 16.36%.

The decline in gross margin actually reflects two proactive strategies.

First, to deepen strategic cooperation with mainstream automakers like GAC Toyota and Chery, Desay SV actively increased supply of standardized sensors such as millimeter-wave radars. In 2025, its sensor products successfully secured new project orders from these two clients. GAC Toyota also designated Desay SV as a digitalization benchmark partner, while cooperation with Chery expanded from domain controllers to joint development of cockpit-integration platforms. Although these sensors have transparent profit margins and lower gross profit, they serve as strategic entry points to expand cooperation and bind customers.

Second, in 2025, new intelligent driving project orders generated an annualized sales of over 13 billion yuan, not only ensuring short-term revenue but also indicating that the company’s intelligent driving solutions have gained scaled market recognition. As future new domain controllers based on Thor chips are gradually mass-produced and high-value-added products increase their share, product structure optimization and profit recovery are expected.

Multiple financial indicators support this proactive approach. By the end of 2025, the company’s cash and cash equivalents and trading financial assets reached 1.448 billion yuan and 3.911 billion yuan, respectively, with year-on-year increases of 86.77% and 3988.91%, mainly due to a 4.399 billion yuan private placement, providing ammunition for expansion; construction-in-progress increased to 894 million yuan, a 100.79% rise, indicating that capacity building at factories in Huizhou, Chengdu, and Spain is accelerating.

From “financing accumulation” to “investment acceleration,” Desay SV has entered a peak period of strategic investment, paving the way for global expansion and new business deployment.

From this perspective, the “sandwich” dilemma is an unavoidable “external wound,” while the decline in gross profit margin of the intelligent driving business may be an “internal repair” actively chosen under “external wounds”—trading short-term profit space for long-term ecosystem security. This is both a necessary adjustment under passive pressure and a ticket paid for transitioning from a domestic hardware integrator to a soft-hardware integrated tech company.

Automakers’ In-House R&D Threatening Tier 1s: How to Break Through?

Another major threat Desay SV faces is the trend of downstream automakers “self-developing chips.”

As intelligent driving becomes the core of vehicles, leading automakers (OEMs) are experiencing a strong sense of insecurity. From Tesla’s FSD to domestic NIO, Xpeng, and Li Auto investing in in-house chips, automakers aim to achieve vertical integration to control pricing and technological iteration.

The logic is that if intelligent driving systems rely entirely on Tier 1 suppliers, automakers not only pay high integration costs but also cannot achieve deep software-hardware synergy. By self-developing chips, automakers can customize algorithms for higher efficiency and lower power consumption under the same computing power. More importantly, this significantly reduces the “integration markup” earned by Tier 1 suppliers, freeing up profits in price wars.

This trend poses a real “decoupling” risk for Desay SV: if automakers complete full-stack R&D from algorithms to chips, Tier 1s like Desay SV will become pure “OEMs,” losing their core value-added voice.

In response, Desay SV has launched a costly “R&D race.” Over the past three years, R&D expenses have continued to rise: 2.029 billion yuan in 2023, 2.192 billion yuan in 2024, and 2.637 billion yuan in 2025, maintaining an R&D expense ratio of around 8%.

This strategy is twofold: on one hand, deepening its moat in traditional tracks by shifting from hardware adaptation to comprehensive services including BSP (board support package) and system engineering integration, demonstrating its indispensable vehicle-grade engineering capabilities; on the other hand, shifting from “defense” to “expansion,” opening new tracks to prove the universal value of its full-stack capabilities.

The most strategic move is transferring L4 autonomous driving technology to low-speed autonomous vehicles. The “Chuanxing Zhiyuan” S6 series autonomous vehicles tested in Chengdu Economic Development Zone are equipped with Desay SV’s self-developed L4 system, already adapted for logistics in industrial parks and other closed scenarios.

This cross-border extension of “vehicle-grade software and hardware full-stack capabilities” not only finds new commercial outlets for high R&D investment but also pre-positions in emerging fields like robotics and autonomous delivery, laying the groundwork for mass production of new products such as robot domain controllers in 2026.

Going Global as a Key Solution

As domestic market gross margins are under continuous pressure from vehicle price wars, Desay SV places hope on overseas markets.

The extreme cost transfer by domestic new energy automakers has squeezed Tier 1 profit margins to the limit; in contrast, overseas, especially European OEMs, have higher tolerance for supply chain stability and technological accumulation, which means better gross margins.

Data clearly illustrates Desay SV’s global ambitions. From 2023 to 2025, overseas revenue was 1.644 billion yuan, 1.708 billion yuan, and 2.41 billion yuan, with a CAGR of 21%, showing accelerated growth.

Currently, the company has established 16 overseas branches in key markets such as Germany, France, Spain, Japan, and Singapore, and has secured new project orders from well-known global automakers including Volkswagen, Mazda, Skoda, Lexus, Renault, Suzuki, Proton, BMW, and Mercedes-Benz.

Meanwhile, the long-standing “big customer dependence” issue is expected to be alleviated through globalization. From 2023 to 2025, the top five customers accounted for 55.9%, 59.27%, and 55.53% of revenue, respectively, maintaining over 50% for the long term. While this high concentration can generate scale effects during growth, it also poses critical vulnerabilities during downturns or when major clients develop in-house R&D.

The upcoming production of the Spain factory in 2026 is a targeted move to address this weakness. It aims not only to meet localization needs for clients like Volkswagen and Volvo in Europe but also to integrate into the global supply chain, diluting the top five customer dependency to healthier levels.

Additionally, the recent disclosure of a Hong Kong stock listing plan also supports the internationalization strategy—its core purpose is to establish a global capital window, leveraging international financing platforms to hedge against cash flow pressures caused by surging domestic receivables.

Key Point: Technological Depth and Global Deployment Determine Success

Desay SV’s 2025 financial report reveals new trends in the hardware integration field of intelligent driving: even as an industry leader, it still faces the pain of “scaling up, gross margin shrinking” amid chip giants and automakers’ pressures.

However, through “profit-for-scale” strategies, Desay SV has secured market share and order reserves; by expanding into new tracks like low-speed autonomous vehicles, it aims to carve out a high-margin “second battlefield”; and through global deployment, it seeks better profit structures and customer diversification. The impairment warnings from inventory write-downs and the surge in receivables reflect its ecosystem vulnerabilities, while over 13 billion yuan in intelligent driving orders and cross-border L4 applications highlight its ambitions to break through. Compared to current performance, the company’s technological depth and soft power in intelligent driving are more critical indicators of its long-term value.

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