1. Chips&Media Q2 Earnings: What Happened?

Chips&Media reported Q2 2025 revenue of KRW 6.6 billion (up 22% QoQ), operating profit of KRW 1.4 billion (up 500% QoQ), and net profit of KRW 0.8 billion (turning to profit QoQ). However, these figures fell short of market consensus (revenue KRW 6.9 billion, operating profit KRW 1.5 billion, and net profit KRW 1.9 billion), with net profit significantly below expectations.

2. Reasons for Underperformance: Why These Results?

Revenue growth was driven by contributions from the China JV and increased NPU IP license sales. However, delays in chip development by clients limited the revenue growth. The decline in operating and net profit was a result of a combination of factors, including rising costs, increased SG&A expenses, higher financial expenses, and losses from equity method investments. The impact of the economic downturn and client development delays cannot be ignored.

3. Chips&Media’s Future: Opportunities and Threats

  • Positive Factors: Growth potential of NPU IP, growth prospects of China JV, diverse customer acquisition strategy
  • Negative Factors: Concerns over short-term profitability deterioration, gap between market expectations, potential decline in investor confidence, fluctuations in KRW/USD and KRW/EUR exchange rates, intensifying competition, lack of a clear profitability improvement plan

4. Investment Strategy: What Should Investors Do?

Investment decisions in Chips&Media should consider a comprehensive evaluation of factors such as the performance of the China JV, NPU IP license sales, profitability improvement plans, and macroeconomic uncertainties. It is crucial to carefully assess the feasibility of long-term growth strategies and risk factors rather than focusing solely on short-term performance fluctuations. Further information disclosure and management explanations are needed to address uncertainties.