Financial Services Association, March 28 (Reporter Lu Tingting) Hongxin Electronics (300657.SZ), which lays out AI computing power and has entered the Huawei supplier, has received a lot of attention in the capital market, but its performance is in trouble. A Financial Services Association reporter noticed that the company's performance had been losing for three years, with a net loss of more than 400 million dollars for the full year of 2023. When asked about the reason for the huge loss, the relevant person in charge of the company said “there is not enough demand.”

According to the 2023 annual report disclosed tonight, the company's revenue last year increased 24.56% year on year to 3.478 billion yuan; net profit fell 41.56% year on year to -436 million yuan. Net profit for the same period in 2022 was -268 million yuan and -308 million yuan respectively, and net profit losses further increased.

In response to changes in performance, Hongxin Electronics mentioned that the domestic mobile phone industry experienced a sharp decline in shipments from Q3 2022 to 2023. The FPC industry, which is the main supporting supply chain for domestic mobile phones, also plummeted in volume and price, and the price reduction for some products and customers was more than 50%. Although the company launched a new flagship model last year and began to sell high-end phones such as folding machines, the results are showing that it is already a process. Most of the company's actual production last year was the delivery of low price orders in the early stages, which led to large losses. The company anticipates that the impact of new relatively high value orders on operating results will begin to be felt in 2024.

It is worth noting that the folding screen phone market is booming. Vivo's xFold3 series folding screen phones were released a few days ago, and the new generation of Huawei and Xiaomi folding screen phones are also “on the way.” Counterpoint Research predicts that foldable smartphones will become more popular starting in 2024, and shipments are expected to exceed 100 million units by 2027.

The head of the company mentioned above said that the more demand for folding screens (mobile phones), the better for us, because there are more requirements for soft boards for folding screens.

For the AI computing power business, the company has built a factory and put into operation, delivered a computing power server with an output value of nearly 1 billion yuan, and lit up a large computing power base of nearly 3000P in Qingyang. According to the annual report, up to now, in terms of AI computing power leasing, the company has obtained a 3-year “Computing Power Service Agreement” of 300 million yuan from Capital Cloud and has entered the commercial negotiation stage of the computing power rental implementation plan with several large model potential customers; in terms of AI computing power server production and sales, AI server sales orders were delivered in large numbers last year, and new orders continued to be placed in the first quarter of 2024.