Transsion Holdings' net profit plummets 53% in 2025, with rising storage chip prices becoming the biggest "profit killer" | Financial Report Insights

February 26 — “Africa’s Phone King” Transsion Holdings announced its preliminary financial results for 2025. The report shows that amid a complex global supply chain environment and fierce market competition, Transsion’s profitability is under severe pressure.

From key financial indicators, Transsion’s 2025 profit statement shows a comprehensive contraction. Net profit attributable to the parent company’s owners plummeted 53.43% to 2.584 billion yuan, and net profit after deducting non-recurring gains and losses dropped even more sharply to 1.968 billion yuan, a 56.66% decline year-over-year. Operating profit also fell 51.25% to 3.204 billion yuan.

In terms of revenue, 656.23 billion yuan represents only a slight decrease of 4.50% during the overall downward cycle, indicating that Transsion still maintains some resilience in its core markets in emerging markets globally. However, the slight revenue decline combined with a sharp drop in net profit suggests the company experienced a typical “revenue growth but profit decline” (or slight revenue decrease with significant profit drop) dilemma in 2025, with a clear decline in profit quality and a significant decrease in earnings per share.

From this unaudited preliminary data, it is evident that Transsion is in a painful transformation period. As the benefits of low-cost supply chains fade, the company has to rely on increased R&D and marketing investments to defend its moat and compete for market share in emerging markets.

Supply Chain “Assassin”: Storage Component Price Hikes Eat Into Gross Margin

The primary factor dragging down performance, as highlighted in the financial report, is “due to market competition and supply chain costs, the prices of storage and other components have risen significantly.”

Storage chips (RAM and ROM) are major cost components in smartphones. Between 2024 and 2025, the upstream semiconductor storage cycle reversed, with prices continuing to rise. For Transsion, which mainly targets price-sensitive emerging markets like Africa and South Asia, its product pricing strategy often needs to balance extreme cost performance.

In fierce market competition, Transsion cannot fully pass the soaring component costs onto downstream consumers and can only sacrifice its own gross profit margin to maintain market share. This upstream and downstream squeeze has become the main culprit breaking through its 2025 profit defenses.

The Cost of Breaking Through: R&D and Sales Expenses Both Surge

In the headwinds of hardware cost pressures, Transsion did not choose to shrink its operations but instead increased investments for the future, which directly led to rising period expenses.

On one hand, competition in the smartphone industry has long shifted from pure hardware battles to the contest of software-hardware ecosystems and end-user experience. The financial report states that the company continues to invest heavily in technological innovation and product R&D to enhance user experience and product competitiveness.

On the other hand, to break the growth ceiling in a single region, Transsion is actively expanding globally (such as in Latin America, the Middle East, and Africa), which requires increased market development and brand promotion efforts, causing sales expenses to rise accordingly. The combined push of R&D and marketing, while building long-term strength, has undoubtedly further squeezed operating profit in the short term.

Balance Sheet Remains Steady

Despite the heavy hit to profits, Transsion’s asset base remains relatively stable. As of the end of 2025, the company’s total assets were 44.363 billion yuan, a slight decrease of 1.55% from the beginning of the reporting period; owners’ equity attributable to the parent was 20.449 billion yuan, a countercyclical increase of 1.08%.

The net asset per share attributable to the parent company was 17.76 yuan, a slight increase of 0.11%. This indicates that even in a year of significant profit fluctuations, the company managed to maintain its asset quality fundamentals without major asset impairments or leverage deterioration risks.

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