In-Depth Analysis of Wingtech Technology's ODM Business Divestment: Semiconductor Business Outlook Assessment

Wingtech Technology’s ODM business was once the core pillar of the company’s growth for more than a decade. In 2023, this business achieved revenue of RMB 44.315 billion, and further increased to RMB 58.431 billion in 2024, accounting for 72.39% and 79.39% of the company’s total revenue respectively [1]. However, since 2022, this business has entered a state of continuous loss: net loss of RMB 447 million in 2022, expanding to RMB 1.569 billion in 2023; in H1 2024, although revenue increased by 26.68% YoY to RMB 26.12 billion, net profit still suffered a huge loss of RMB 850 million [1].

The main factors leading to the continuous loss of the ODM business include:

• Geopolitical impact
  : The company was added to the U.S. Department of Commerce’s Entity List, leading to significant uncertainty in obtaining future new projects and a significant decline in downstream customers’ willingness to cooperate [1]
• Structural shrinkage of market demand
  : Slowdown in 5G base station construction, peak growth of the smartphone market, and overall pressure on consumer electronics OEM demand
• Deteriorating competitive landscape
  : Leading manufacturers in the consumer OEM sector continue to squeeze profit margins of small and medium-sized players with cost and supply chain advantages
• Asset impairment pressure
  : Due to uncertain business prospects, the company has made large-scale impairment provisions for related assets

In 2025, Wingtech Technology released a major asset sale plan, intending to transfer 100% equity of Kunming Wenxun, Huangshi Zhitong, Kunming Zhitong, Shenzhen Wingtech, Hong Kong Wingtech (including Indonesia Wingtech), and the business asset packages of Wuxi Wingtech, Wuxi Wenxun, and India Wingtech to Luxshare Precision and its subsidiaries in cash [1]. After the transaction is completed, Wingtech will completely bid farewell to the ODM business that supported its growth for more than a decade and focus on the semiconductor track.

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After divesting the ODM business, the core value of Wingtech Technology’s semiconductor business has been fully released. The Q3 2025 performance shows [1]:

Indicator	Value	YoY Change
Semiconductor business revenue	RMB 4.3 billion	+12.20%
Business gross margin	34.56%	Remains at a high level
Net profit	RMB 724 million	Stable profitability
Revenue share from China market	49.29%	YoY +14%

The semiconductor business shows differentiated growth trends in different application fields:

• Automotive business
  : YoY growth of over 26%, becoming the strongest growth engine, benefiting from the increase in new energy vehicle penetration and accelerated electrification transformation
• AI server and AI PC business
  : Significant growth in computing device-related businesses, aligning with the global AI computing power demand explosion trend
• Industrial-related business
  : Maintains steady growth, with relatively stable demand for industrial semiconductors

From the perspective of revenue structure, the revenue share from the Chinese market accounts for 49.29% of global total revenue, indicating that the company’s influence in the Chinese semiconductor market continues to increase. With the divestment of the ODM business, the company’s revenue scale will decline, but profitability and asset quality will improve significantly.

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The global semiconductor industry in 2025 shows obvious characteristics of coexistence of “exit wave” and “focus wave”. Industry events such as SK Hynix exiting the mobile CIS business and Wingtech Technology divesting the ODM business reflect four structural driving factors for strategic adjustments of semiconductor giants [1]:

1. Technology route differentiation
   : Among wide-bandgap semiconductors, GaN is suitable for high-frequency fast charging, while SiC is more suitable for high-voltage electric drives; in the storage field, HBM and CXL have become AI刚需 (must-haves), and enterprises must “bet” rather than “cast a wide net”
2. Capital efficiency pressure
   : Cutting-edge technologies such as 2nm process and HBM4 require huge investments, so divesting low-return businesses has become a necessary means to release cash flow and support core R&D
3. Strengthening of competitive barriers
   : Leading manufacturers continue to expand their advantages in technical patents and supply chain integration; latecomers will face the risk of marginalization without sustainable technical or ecological barriers
4. Application demand restructuring
   : Emerging fields such as new energy vehicles, AI computing, and intelligent manufacturing have strong demand, while traditional consumer electronics growth slows down

• Leading layout in automotive semiconductors
  : Automotive business revenue grew by over 26% YoY, benefiting from the rapid development of the new energy vehicle industry
• Positioning in AI computing power track
  : Significant growth in AI server and AI PC computing device businesses, aligning with the global digital transformation and intelligent upgrade trends
• Deep binding with the Chinese market
  : Nearly half of the revenue comes from the Chinese market, benefiting from the domestic substitution strategy and independent controllability demand

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From the latest financial data [0]:

• Profitability
  : Current P/E is -26.71x (due to overall net loss caused by ODM business loss), and it is expected to turn profitable after the divestment is completed
• Cash flow improvement
  : The latest annual free cash flow is RMB 1.44 billion, and divesting the ODM business will significantly improve the company’s cash flow situation
• Debt risk
  : Debt risk rating is “medium risk”, with current ratio 2.52 and quick ratio 1.81, showing good liquidity
• Shareholder return
  : ROE is -4.99%, which is expected to reverse as the profitability of the semiconductor business is released

2025 stock price performance [0]:

Period	Change
1 month	-7.40%
3 months	-21.39%
6 months	+13.99%
YTD	+1.99%
1 year	+7.49%

The recent stock price correction mainly reflects the market’s concerns about the transition period of ODM business divestment, but in the medium and long term, strategic focus on semiconductors will significantly enhance the company’s valuation.

:<br>

• Divestment of the ODM business eliminates the continuous loss source and releases the real profitability of the semiconductor business<br>
• Automotive semiconductors and AI computing power tracks are in an upward cycle of prosperity<br>
• Broad space for semiconductor domestic substitution in the Chinese market

:<br>

• The impact of the Entity List may affect the overseas expansion of the semiconductor business<br>
• Cyclical fluctuations in the global semiconductor industry<br>
• The process of automotive intelligence may fall short of expectations

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Wingtech Technology’s divestment of the ODM business is a key step in the company’s strategic transformation, reflecting the management’s clear understanding of industry development trends and emphasis on resource allocation efficiency. From “doing everything” to “focusing on depth”, this transformation aligns with the overall trend of the global semiconductor industry of “focusing on core and exiting edge”.

, the divestment of the ODM business will bring one-time asset disposal gains and losses and uncertainties during the business transition period; but , the company is expected to become a professional manufacturer focusing on automotive semiconductors and AI computing power, occupying a favorable position in the new energy vehicle and intelligent wave.

For investors focusing on the main line of semiconductor domestic substitution, Wingtech Technology’s strategic adjustment is worth attention. After the divestment is completed, the company’s fundamentals will undergo fundamental improvement, and the valuation system is expected to be reshaped. It is recommended to continue tracking the 2025 annual report performance forecast and the performance of the semiconductor business segment to verify the actual effect of the strategic transformation.

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[1] Tencent News - “These Tracks, Chip Giants Are Quitting” (https://news.qq.com/rain/a/20251228A02BQD00)

[2] Wenxue City - “These Tracks, Chip Giants Are Quitting” (https://www.wenxuecity.com/news/2025/12/27/126464869.html)

[0] Jinling API Data - Wingtech Technology (600745.SS) stock price and company financial data