Dinglong Co., Ltd. expects a 38.32% year-over-year increase in net profit by 2025. Semiconductor business accounts for 57% of revenue. The company faces multi-dimensional challenges during the transition period of new and old growth drivers.

Can AI sustain profit growth with high R&D investment?

By Caiding, Daily Economic News Editor: Yang Jun

On the evening of March 26, Dinglong Co., Ltd. (SZ300054, stock price 45.23 RMB, market value 42.881 billion RMB) disclosed its 2025 annual report. The report shows that Dinglong achieved total revenue of 3.66 billion RMB in 2025, a year-on-year increase of 9.66%; net profit attributable to shareholders of the parent company was 720 million RMB, up 38.32%, but below the consensus forecast of approximately 728 million RMB; net profit after deducting non-recurring gains and losses was 678 million RMB, up 44.53%. Basic earnings per share were 0.77 RMB. The company also expects that in the first quarter of 2026, net profit attributable to shareholders will be between 240 million RMB and 260 million RMB, a year-on-year increase of 70.22% to 84.41%, and a quarter-on-quarter growth of 19.53% to 29.49%.

(Source: Dinglong Annual Report)

The Daily Economic News reporter notes that behind this seemingly impressive “double growth” performance, Dinglong is undergoing a deep internal restructuring. For example, the semiconductor segment now accounts for 57% of total revenue—its first time surpassing half of the company’s revenue—becoming the main driver of performance. Meanwhile, sales of general printing and copying consumables have declined by nearly 13% year-on-year.

Semiconductors Take the Lead, Traditional Consumables Enter Deep Integration Phase

In 2025, Dinglong’s most significant change was a historic reversal in its underlying revenue structure.

The annual report shows that the company’s semiconductor segment (including semiconductor materials and integrated circuit design and application services) achieved main business revenue of 2.086 billion RMB, a 37.27% increase. This segment now accounts for 57% of total revenue, overtaking traditional consumables and becoming the core engine driving the company’s performance. Notably, in 2025, Dinglong set a new monthly sales record of over 40,000 polishing pads for the first time, and semiconductor display materials (such as yellow polyimide slurry YPI and photosensitive polyimide slurry PSPI) grew steadily by 35.47%.

However, while new growth drivers are emerging strongly, the pressure on Dinglong’s traditional business is also a reality.

In 2025, sales revenue from the company’s general printing and copying consumables (excluding printing consumables chips) was 1.559 billion RMB, down 12.97% year-on-year. This reflects that the traditional consumables industry has entered a highly mature stage, with market share concentrated among leading players and competition normalized. It also results from the company’s profit-driven adjustments, actively reducing low-margin products and customer segments.

Meanwhile, as an intermediary between consumables and semiconductor technology, the company’s integrated circuit chip design and application business faced phased challenges during the reporting period. Due to intensified market competition, the unit price of printing consumables chips declined, directly impacting sales revenue and net profit attributable to shareholders in this segment.

Thus, Dinglong’s current performance growth is not uniform across all areas but is a typical “structural growth.” The capital market is reassessing the valuation of its semiconductor platform and also needs to rationally view the integration pains and profit recovery cycle of its traditional consumables business under stock competition.

Accelerating Commercialization, Capacity Release, and Balancing High R&D Investment

Investors’ high attention to Dinglong largely focuses on its breakthroughs in high-barrier fields such as high-end wafer photoresists and advanced semiconductor packaging materials. In 2025, these “seed businesses,” which have been in laboratory and testing phases for a long time, began to move toward commercialization.

The annual report discloses that Dinglong has built China’s first full-process mass production line for high-end wafer photoresists, from organic synthesis to polymer synthesis, purification, and photoresist blending. Currently, three types of ArF and KrF photoresists have entered stable mass supply. Additionally, advanced packaging materials such as semiconductor packaging PI and temporary bonding adhesives have secured orders from multiple clients, with sales exceeding 10 million RMB. Furthermore, in the first quarter of 2026, the company plans to acquire a 70% stake in Shenzhen Haofei New Materials Co., Ltd. to enter the lithium battery auxiliary materials sector, continuously expanding its “innovative materials platform.”

However, on the other side of the coin, moving from R&D breakthroughs to true “self-sustaining profitability” remains a challenging process for Dinglong.

First, there is ongoing high-intensity R&D investment. As a platform materials company, Dinglong must maintain technological breakthroughs across multiple frontier fields simultaneously. In 2025, R&D expenditure reached 519 million RMB, accounting for 14.19% of revenue. This high level of investment is necessary to sustain core competitiveness but will undoubtedly squeeze overall profit margins in the short term. The company also admits in its annual report that high-end wafer photoresists and advanced semiconductor packaging materials are still in early market development and volume expansion stages, with no profit yet, requiring continuous investment, which somewhat affects net profit attributable to shareholders.

(Source: Dinglong Annual Report)

Secondly, capacity expansion brings depreciation and utilization rate challenges. In recent years, the company has successively completed projects such as the Quanjiao CMP soft pad line, Xiantao CMP polishing liquid and YPI/PSPI expansion projects, and Quanjiao high-end wafer photoresist line. As these new production lines are gradually commissioned, fixed asset depreciation will increase accordingly, raising short-term operating costs. In the context of macroeconomic fluctuations and evolving international geopolitical situations, if downstream semiconductor wafer or panel manufacturers’ demand experiences phased adjustments, the ramp-up of new lines may face risks of lower-than-expected growth.

Daily Economic News