Liwei Technology’s Gross Margin Rebounds, but Operating Losses Persist

Highlights

Liwei Technology (立衛科技, 5344-TW) reported a gross margin of 13.13% in 2026 Q3, up 11.8 percentage points from 1.33% in the same period of 2025. For the first three quarters, gross margin rose from 4% a year earlier to nearly 13%. However, the improvement has not yet restored operating profitability: the company recorded an operating loss of NT$7.64 million over the first three quarters. CIS testing accounted for 40% of revenue, while MCU and power-management IC testing were identified as areas of growing volume. Operating expenses remained above gross profit, leaving the core business short of break-even.

Sentiment Analysis

• The article presents a mixed financial picture. The sharp recovery in gross margin is a positive development, rising from 1.33% in 2025 Q3 to 13.13% in 2026 Q3, while the first-three-quarter margin climbed from 4% to nearly 13%.
• Business composition offers a cautiously constructive signal: CIS testing represented 40% of revenue, and the company reported increasing test volumes for MCU and power-management ICs. Its stated focus on higher-priced, higher-margin work could support further improvement, although the article provides no forecasted financial outcome.
• Profitability remains the principal concern. First-three-quarter operating profit was negative NT$7.64 million, and Q3 operating expenses exceeded gross profit by NT$2.38 million. Non-operating income helped produce positive pretax and after-tax results, but did not resolve the operating shortfall.
• Overall sentiment is mixed, with clear evidence of margin recovery counterbalanced by ongoing operating losses and a gap between gross margin and the expense ratio.

Article Text

Liwei Technology (立衛科技, 5344-TW) reported a gross margin of 13.13% in 2026 Q3, compared with 1.33% in the corresponding period of 2025. The difference was an increase of 11.8 percentage points. Across the first three quarters, gross margin rose from 4% in the same period a year earlier to nearly 13%. Despite this recovery, the company’s core operations remained loss-making.

Historical figures cited in the report show the scale of the change. Gross margin was still around 30% at the end of 2023, then fell to near zero in 2025 Q1. During the three quarters of 2026, it recovered to a range between 12.5% and 13.3%. The rebound came after a weak period: gross margins were close to zero in two quarters of 2025, and operating results were generally negative after expenses were taken into account. The figures are attributed to the UAnalyze industry database.

For the first three quarters of 2026, Liwei recorded NT$36.61 million in gross profit and an operating loss of NT$7.64 million. Non-operating income of NT$10.77 million offset the operating loss and contributed to pretax net income of NT$3.13 million. After-tax net income was NT$3.475 million, higher than pretax income because of an income-tax benefit. These results distinguish the company’s positive reported net income from the continuing weakness in its main operations.

CIS image-sensor testing was the largest application category in the first three quarters, making up 40% of revenue. CIS devices are light-sensitive chips used in camera lenses and surveillance equipment. Liwei provides wafer testing and final testing for these chips. USB accounted for 14% of revenue, while microcontroller (MCU) testing represented 11%; the remaining applications were grouped as other.

The company said test volumes for MCU and power-management ICs had increased compared with two years earlier, while CPU testing had declined. It described MCU and power-related work as the areas with more substantial increases. MCU customers serve a broad range of applications, and demand for power-management IC testing has also been rising. Liwei attributed the improvement in gross margin to its product mix and said it would continue seeking projects with higher prices and margins. Its planning for 2027 follows the same direction, although the report does not provide a numerical target.

CIS testing is a relatively recent addition to Liwei’s services. Customers send packaged sensors to the company for final testing, and the company can also test CIS devices using wafer-level chip-scale packaging (WLCSP). Testing can be conducted at temperatures as low as -40 degrees. Liwei also holds IATF 16949 certification for automotive quality systems, a qualification relevant to its automotive-related work.

Expenses continued to constrain operating performance in Q3. Operating expenses totaled NT$15.09 million, including NT$12.92 million in administrative expenses, the largest expense category. Administrative expenses alone exceeded 10% of revenue and were slightly higher than gross profit for the quarter. The operating expense ratio was 15.59%, 2.46 percentage points above the gross margin. In monetary terms, Q3 gross profit was NT$12.71 million, NT$2.38 million less than operating expenses.

Revenue increased quarter by quarter, and Q3 was the highest-revenue quarter of the first three quarters. The operating expense ratio, however, remained between 15% and 16%. Because the expense ratio remained more than two percentage points above gross margin, the core business had not yet returned to break-even. The reported improvement in margins and changing test mix therefore coexist with continued pressure from operating costs.

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