In the first half of 2026, Omnivision Integrated Circuits Group, Inc. (SSE: 603501) saw its semiconductor design sales revenue decrease by approximately 901 million yuan year-on-year, while its semiconductor agency sales revenue increased by approximately 949 million yuan. The increment from the latter largely offset the decline in the former, but the profitability of the two businesses is not equivalent.

During the same period, the company reported operating revenue of 14.025 billion yuan, up 0.49% year-on-year, while net profit attributable to shareholders was 1.220 billion yuan, down 39.85% year-on-year. The contrast between essentially flat total revenue and a significant decline in net profit stems partly from pressure on the proprietary chip design business's revenue and gross profit, with agency sales expansion insufficient to compensate for the decline in its profit contribution.

The two revenue categories appear to cover each other, but gross profit contributions differ markedly

According to the 2026 semi-annual report, Omnivision Integrated Circuits Group, Inc. (SSE: 603501) recorded semiconductor design sales revenue of 10.671 billion yuan in the first half, down 7.79% year-on-year, while semiconductor agency sales revenue reached 3.263 billion yuan, up 41.01% year-on-year. Agency sales as a proportion of main business revenue rose from 16.60% in the same period last year to 23.29%, an increase of 6.69 percentage points.

The two businesses create value in different ways. The chip design business relies on research and development, product performance, and customer certification to build competitive advantages, while the agency sales business primarily generates returns through product channels, customer service, and supply chain management. Changes in revenue scale therefore cannot be directly translated into equivalent gross profit changes.

Segment financial information disclosed in the company's 2026 semi-annual report shows that, calculated on segment revenue and cost, the semiconductor design segment's gross margin was approximately 34.43%, while the agency segment's was approximately 6.04%, a gap of 28.39 percentage points. The design segment's gross profit was approximately 3.776 billion yuan, down approximately 392 million yuan year-on-year; the agency segment's gross profit was approximately 287 million yuan, up approximately 117 million yuan year-on-year. The above segment data includes internal transactions and is not entirely consistent with the classification of external sales revenue.

On a consolidated basis, Omnivision Integrated Circuits Group, Inc. (SSE: 603501) reported a comprehensive gross margin of 28.78% in the first half, down 1.70 percentage points year-on-year, with total gross profit decreasing by approximately 218 million yuan year-on-year. The revenue growth of the agency business provided support for overall revenue, but its limited gross profit increment was insufficient to offset the gross profit decline in the core business.

The profit decline was also affected by expenses, tax burdens, and changes in financial asset valuations. The company's R&D expenses increased by approximately 108 million yuan year-on-year, financial expenses increased by approximately 64 million yuan due to exchange rate fluctuations and other factors, and income tax expenses increased by approximately 144 million yuan; gains from changes in fair value shifted from a gain of 49 million yuan in the same period last year to a loss of 78 million yuan. Therefore, the decline in net profit cannot be entirely attributed to changes in business structure, but the profitability of the proprietary chip design business remains an important basis for assessing operational quality.

Rising storage prices and weak terminal demand: image sensor operations diverge

Omnivision Integrated Circuits Group, Inc. (SSE: 603501) recorded image sensor solution revenue of 9.254 billion yuan in the first half, down 10.55% year-on-year. Of this, consumer electronics market revenue was 2.836 billion yuan, down 30.98% year-on-year; automotive market revenue was 3.159 billion yuan, down 16.64% year-on-year. Based on the company's disclosed year-on-year growth rates, combined revenue from the two major markets decreased by approximately 1.9 billion yuan.

Regarding the consumer electronics business, the company noted in its semi-annual report that tightening supply and rising prices of DRAM, NAND, and other memory devices, combined with weak terminal demand, increased the overall cost pressure on smartphone manufacturers. Some customers adjusted their model structures, production schedules, and procurement pace accordingly, affecting sales of image sensor products. Rising storage prices thus became a cost transmission factor for some downstream chip segments, but this alone cannot fully explain the entire decline in Omnivision Integrated Circuits Group, Inc.'s consumer electronics revenue.

Peer data further reveals operational differences. Relevant data shows that in the first half of 2026, SmartSens Technology chip sales revenue grew 20.90% year-on-year, and GalaxyCore Inc. CMOS image sensor revenue grew 15.33% year-on-year, while Omnivision Integrated Circuits Group, Inc. (SSE: 603501) image sensor solution revenue declined 10.55% during the same period. As the three companies disclose different business scopes and revenue compositions, the above growth rates cannot be directly used to infer market share changes, but they still indicate that terminal demand pressure manifests inconsistently across different enterprises.

Beyond industry demand, major customers' product cycles, vehicle and model structures, product pricing, and project mass production progress can all affect supplier revenue performance. For Omnivision Integrated Circuits Group, Inc., it is necessary to continuously monitor order recovery in traditional advantageous markets and whether high-end image sensor products can drive revenue and gross margin improvement.

Emerging businesses grow rapidly, but traditional market decline still dominates

While traditional market revenue declined, Omnivision Integrated Circuits Group, Inc. (SSE: 603501) achieved growth in emerging application areas. In the first half of 2026, the company's image sensor business generated 1.726 billion yuan in revenue from emerging markets, up 47.12% year-on-year. Of this, professional imaging terminal revenue was 1.287 billion yuan, up 53.36% year-on-year; machine vision and robotics revenue was 210 million yuan, up 71.15% year-on-year; edge AI terminal revenue was 230 million yuan, up 8.46% year-on-year.

Professional imaging terminals contributed nearly three-quarters of emerging market revenue, covering products such as action cameras and panoramic cameras. The machine vision and robotics business grew faster but has a relatively limited revenue scale, and includes applications such as industrial vision and data acquisition, so it cannot be entirely classified as the humanoid robot market. Based on disclosed data estimates, emerging market revenue increased by approximately 553 million yuan year-on-year, lower than the combined revenue decline of approximately 1.9 billion yuan in consumer electronics and automotive markets.

After new products enter application scenarios, they still need to go through customer introduction, large-scale sales, and profit realization. Emerging businesses have growth potential, but at this stage they are not yet sufficient to fully offset the downward pressure from traditional markets.

Procurement spending grows faster than cash collected from sales, inventory turnover slows

Changes in operating cash flow provide another perspective on the above operational divergence. In the first half of 2026, Omnivision Integrated Circuits Group, Inc. (SSE: 603501) received 13.830 billion yuan in cash from sales of goods and provision of services, up 186 million yuan year-on-year; cash paid for goods purchased and services received was 11.207 billion yuan, up 1.049 billion yuan year-on-year. Net cash flow from operating activities during the same period fell from 1.888 billion yuan to 408 million yuan, down 78.40% year-on-year.

The company explained that increased procurement and stockpiling expenditure was one of the main reasons for the decline in operating cash flow. Inventory details show that as of the end of June 2026, the book balance of finished goods inventory was 5.189 billion yuan, an increase of 1.180 billion yuan from 4.009 billion yuan at the end of June 2025; inventory turnover days extended from 138.31 days to 160.26 days. At the end of the reporting period, the company's net inventory was 9.187 billion yuan; the book balance of finished goods inventory and net inventory are different statistical calibers.

The increase in finished goods inventory may be related to procurement stockpiling, product structure, and sales cycles, and cannot be directly deemed as accumulation. However, against the backdrop of pressure on consumer electronics and automotive-related businesses, the efficiency of converting inventory into sales revenue and cash collection is worth tracking. The company's monetary funds at period-end were 14.936 billion yuan, and a single-period decline in operating cash flow does not constitute evidence that a liquidity risk has already occurred.

The changes in Omnivision Integrated Circuits Group, Inc.'s business structure show that agency sales can buffer revenue fluctuations in the proprietary chip design business but cannot provide gross profit support of the same magnitude; emerging businesses continue to grow, but still fall short of replacing the revenue volume of mature markets.