Huatai Securities: High-End Chip Commercialization Accelerates at Centec Communications
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Abstract
Centec Communications (688702 CH), China's leading domestic Ethernet switching chip designer, reported first-half 2026 revenue of RMB671 million, up 32.0% year on year, while its net loss attributable to shareholders narrowed to RMB18 million. Second-quarter revenue rose 48.2% year on year to RMB422 million, driven by accelerating commercialization of high-end switching chips, including the Arctic series, and new-generation product launches.
Huatai Securities notes the company is cementing its growth base by signing large contracts with related parties and supplying flagship chips to data centers. The Ethernet switching chip business lifted its revenue share with stable gross margin, though overall gross margin slipped on product-mix changes. Booming AI compute demand is raising switching-chip value per GPU and speeding domestic substitution; the related-party transaction quota was raised on strong order demand.
Huatai maintains an Overweight rating with a target price of RMB447.06, citing long-term potential from AI computing-network construction and chip localization. It forecasts 2026-2028 revenue of RMB2.008 billion, RMB4.386 billion and RMB6.897 billion, with the next-generation high-end switching chip slated for release within 2026.
Key exhibits
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Exhibit 2
