As a pioneer in China's visual IC industry, Shanghai FHM Microelectronics (300613.SZ) is about to complete its dual listing layout of &#34;A+H&#34; shares on the main board of the Hong Kong Stock Exchange.
According to a report by Frost &amp; Sullivan, in 2024, it will rank first in global revenue in the smart visual processing chip market and will also lead in shipment volume in two key markets: edge smart visual processing chips and automotive-grade ISP chips. However, in stark contrast to its leading position, the financial data revealed in the prospectus has raised alarms. The company's revenue has continued to decline in recent years, and net profit has sharply shrunk, especially in the first half of 2025, where net profit fell to 1.8 million yuan, a nearly 98% drop year-on-year.
The huge contrast between the halo of a market leader and the reality of collapsing profitability raises the question: does FHM Microelectronics hold a trump card and is temporarily under pressure, or is its business model facing deep structural challenges?
<h2>Leading Position Solidified, AI Empowerment Builds Core Moat</h2>
As an extraordinary chip design company, the technological barriers and market position accumulated by FHM Microelectronics over more than twenty years in the industry are the cornerstone of understanding its value.
According to Zhitong Finance APP, FHM Microelectronics adopts the mainstream &#34;fabless&#34; business model in the industry, focusing on the design and sales of integrated circuits while outsourcing capital-intensive processes such as wafer manufacturing, packaging, and testing. This model allows it to concentrate resources heavily on technological innovation.
The company's product architecture comprehensively covers the complete visual processing chain, from image signal acquisition and preliminary processing at the edge (such as security cameras and automotive-grade cameras) to video storage, decoding, and management at the side (such as network video recorders NVR), forming a strong full-stack solution capability.
Currently, the company's business mainly consists of three core product lines: among them, smart video is FHM Microelectronics' traditional advantage and main source of revenue, contributing 67.3% of total revenue in 2024. Its product matrix includes system-on-chip (SoC) for network camera systems, image signal processing chips, and hybrid video recorder SoCs, widely used in professional scenarios such as network security cameras and digital/network video recorders (DVR/NVR).
The smart IoT business line aims to promote the popularization of AI chips in everyday consumer scenarios, with products including low-power IPC SoCs and smart display SoCs, primarily applied in rapidly growing consumer electronics fields such as home cameras, video doorbells, AI glasses, and smart home appliances.
In the smart mobility sector, FHM Microelectronics is simultaneously laying out both the aftermarket and the more technically demanding first-tier market, which must comply with standards such as AEC-Q100 and ISO 26262. Its automotive-grade products, such as automotive-grade ISP chips, are used in key in-vehicle visual systems like driver monitoring systems, panoramic monitoring image systems, and camera monitoring systems.
Today, the wave of artificial intelligence is bringing historic transformation opportunities to the visual chip industry. According to Frost &amp; Sullivan's forecast, the global smart device AI SoC market size is expected to grow from USD 43.8 billion in 2025 to USD 109 billion in 2029, with a compound annual growth rate of 25.6%
In response to this opportunity, FHM has clearly proposed the core strategy of &#34;AI for All.&#34; This strategy aims to provide the market with high-performance, energy-efficient, and cost-effective AI vision ICs through technological innovation, thereby promoting the widespread application of AI in various fields. The company's future plans and the use of funds raised from this listing clearly demonstrate its determination to translate strategy into action. According to the prospectus, the raised funds will focus on expanding the R&amp;D team, broadening the AI product portfolio and application scenarios, as FHM strives to seize the AI-driven industrial upgrade opportunities.
However, despite FHM's solid market position and clear future strategy, the challenges revealed by its recent financial performance and the hidden structural risks are also evident in its financial statements.
<h2>Short-term Performance Under Pressure, Highlighting Customer and Supply Chain Concentration Risks</h2>
Despite its strong technical capabilities, FHM's financial statements reveal a structurally weak business model, highly exposed to the dual risks of customer concentration and compressed profit margins.
In recent years, FHM's financial performance has shown a significant downward trend. According to Zhito Finance APP, from 2022 to 2024, the company's total revenue decreased from RMB 2.11 billion to RMB 1.79 billion, with a further year-on-year decline of 14.1% in the first half of 2025.
The performance on the profit side is even more severe, with net profit dropping from RMB 378 million in 2022 to RMB 232 million in 2024. In the first half of 2025, this decline further intensified, with net profit plummeting from RMB 83 million to RMB 1.8 million, a drop of over 97%.
The prospectus attributes this to a reduction in procurement volume from the largest customer and intense price competition. Notably, the impact of this price war is not mere talk but is clearly reflected in the average selling price (ASP) of products:
In the company's core smart video segment, the ASP has fallen from RMB 15.4 in 2022 to RMB 11.1 in the first half of 2025; in the smart IoT segment, the decline is even more severe, plummeting from RMB 15.5 to RMB 8.6, directly explaining the collapse of profitability.
Rising R&amp;D expenditures combined with shrinking revenue further squeeze profit margins. Data shows that in the first half of 2025, while revenue declined, the proportion of R&amp;D expenses to revenue rose from 20.7% in the same period last year to 24.8%. Under the negative operating leverage effect, the decline in revenue is rapidly magnified, leading to a sharp drop in profits.
At the same time, the high dependence on a single customer constitutes the company's main operational risk. According to the prospectus, in 2024, the top five customers contributed a total of 88.4% of the company's revenue. Notably, the dependence on the largest customer is particularly pronounced, accounting for 66.7% of revenue.
In the first half of 2025, it was precisely due to the excessive reliance on Customer A that the reduction in procurement volume from this largest customer led to a decline in the company's revenue and a sharp drop in profits, directly realizing the structural risk. According to Zhito Finance APP, from 2022 to 2024 and for the six months ending June 30, 2025, the sales from the largest customer accounted for 75.3%, 71.4%, 66.7%, and 55.0% of total sales, respectively
Similar to the customer structure, the company's supply chain also exhibits a highly concentrated characteristic. In 2024, the procurement amount from the top five suppliers accounted for 80.6% of the total procurement amount. Due to the company's adoption of a fabless model, it is highly dependent on upstream foundries and testing service providers. Any production interruption, capacity constraints, or supply restrictions caused by geopolitical factors from key suppliers could significantly impact FHM's production and delivery capabilities.
<h2>Summary</h2>
Overall, FHM's industry position and technological strength as a global leader in intelligent visual chips are its core values. However, the company is currently facing multiple challenges, including a sharp decline in profitability, high customer concentration, and an escalating market price war. At this critical juncture of going public in Hong Kong, FHM intends to leverage the power of the capital market to provide ample &#34;ammunition&#34; for its next phase of strategic transformation.
Today, FHM stands at a crossroads that will determine its future direction. On one hand, the wave of artificial intelligence and the Internet of Things provides unprecedented market opportunities for its core business; on the other hand, its own profitability bottlenecks and high dependence on a single customer pose severe internal challenges.
To assess FHM's long-term value, the key lies in evaluating whether its management can successfully seize the opportunity of this IPO, efficiently execute the established strategy, and truly transform its leading technological advantages into sustainable and diversified profit growth capabilities. On this path to breaking through, challenges and opportunities coexist

300613

FHM is about to complete its "A+H" dual listing on the Hong Kong Stock Exchange. As a pioneer in China's visual IC industry, it ranks first in global revenue in the smart visual processing chip market. However, the prospectus shows that the company's revenue has declined in recent years, with net profit in the first half of 2025 dropping nearly 98% year-on-year. FHM adopts a "fabless" model, focusing on integrated circuit design and sales, forming a strong full-stack solution capability

New Stock Outlook | Can FHM, the leader in intelligent vision chips, break the "profit barrier" upon its Hong Kong stock listing?