"Horizon, the first listed company in 'Smart Driving Chips,' has gone from a profit of 2.3 billion to a loss of 10 billion: high R&D investment with low returns, cash flow pressure is intensifying."

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Source: International Finance News

In the smart driving chip sector, Horizon has always been a prominent “star player.” However, this “first stock of smart driving chips” that just landed on the Hong Kong Stock Exchange for over a year has encountered a performance reversal.

Recently, Horizon released its annual performance announcement for the year ending December 31, 2025. The annual report shows that the company achieved revenue of 3.758 billion RMB in 2025, although it grew by 57.7% year-on-year, it suffered a massive loss of 10.469 billion RMB, turning from a profit of 2.347 billion RMB in 2024 to a significant loss.

High R&D, Low Return

Why did Horizon, with rising revenue, experience huge losses? According to the financial report, one reason is the dramatic increase in R&D spending. In 2025, Horizon’s R&D expenditure reached 5.154 billion RMB, a year-on-year increase of 63.3%, accounting for a staggering 137.1% of the current revenue. This means the company needs to invest 1.37 RMB in R&D for every 1 RMB earned in revenue.

In addition to R&D investment, changes in the fair value of preferred shares and other financial liabilities have become another important factor dragging down Horizon’s net profit in 2025.

The financial report shows that Horizon recorded a loss of 6.664 billion RMB in fair value changes of preferred shares and other financial liabilities in 2025, compared to a gain of 4.677 billion RMB in 2024. The company explained in the report that the loss in fair value changes for 2025 mainly includes the incremental fair value of convertible loans, in line with the company’s continuously growing market value, as well as the increase in the fair value of preferred shares issued by D-Robotics. The fair value gain in 2024 was attributed to the actual conversion price during the IPO being lower than the previously measured value of the preferred shares.

High investment and low returns have amplified Horizon’s cash flow pressure.

In 2025, the company recorded an adjusted operating loss of 2.372 billion RMB, a year-on-year increase of 58.7%. As of the end of 2025, the company had cash and cash equivalents of 20.188 billion RMB, an increase from 15.371 billion RMB at the end of 2024, mainly due to two financing placements in 2025 exceeding 10 billion HKD. In other words, the company currently still relies on external funding to maintain R&D expansion, and its own ability to generate cash has yet to be established.

Single Business Structure

From a business structure perspective, Horizon’s revenue is almost entirely driven by automotive solutions. In 2025, revenue from automotive solutions was 3.557 billion RMB, accounting for 94.6% of total revenue. Among them, product solutions revenue was 1.622 billion RMB, a year-on-year increase of 144.2%; revenue from licensing and services was 1.935 billion RMB, a year-on-year increase of 17.4%. Revenue from non-automotive solutions was only 201 million RMB, accounting for 5.4%.

This highly concentrated business structure ties the company’s performance closely to the smartization process of downstream automotive enterprises. The risks associated with high customer concentration are also evident in the annual report.

Although the 2025 annual report did not disclose the specific revenue share of the top five customers, in 2024 and the first half of 2025, revenue from the company’s top two customers accounted for 31.50% and 17.40%, respectively, totaling nearly 50%. Looking back at earlier prospectus data, from 2021 to the first half of 2024, the revenue share of the top five customers hovered between 53.2% and 77.9%, with the largest customer share climbing from 24.7% to 37.6%.

After going public, this situation has not fundamentally improved.

According to the company’s 2025 mid-term report, in the first half of the year, the revenue share of its top five customers was still as high as 52.48%, with the largest customer accounting for 19.7%.

Even more alarming is that the stability of the large customer business has begun to fluctuate. Comparing the 2025 mid-term report with the same period in 2024, the first largest customer, which contributed 37.62% of revenue in the first half of 2024, saw its share plummet to 11.16% in the same period of 2025; while the second largest customer, which accounted for 22.85% in the first half of 2024, dropped to 1.03% in the same period of 2025.

Intensifying Market Competition

Facing reliance and risks, Horizon hopes to break through with high-value advanced driving solutions. In November 2025, the company officially began mass production of its all-scenario urban auxiliary driving solution Horizon SuperDrive (HSD).

From the data, HSD’s initial performance is acceptable. By the end of 2025, HSD delivered over 22,000 sets within just over a month of mass production and has secured over 20 models from 10 automotive brands. However, from securing contracts to large-scale delivery and forming substantial revenue, there is still a long way to go.

The bigger challenge comes from external sources.

In the high-end driving market, Horizon is facing dual pressure from international giants and local strong competitors.

NVIDIA remains the top choice for most high-end models, with its Orin chip dominating the market. In March 2026, NVIDIA further announced the expansion of its autonomous driving collaborations to Chinese automakers such as BYD and Geely, developing L4-level full-scenario driving functions around the DRIVE Hyperion platform. This deep integration from chip to system poses immense pressure on Horizon. At the same time, Huawei’s ADS solution, leveraging its “chip + algorithm + cloud” full-stack capabilities, has formed a strong closed-loop ecosystem.

Moreover, former core partners are accelerating their own paths: BYD is adopting a hybrid model of “Horizon chip + self-developed algorithm” to reduce dependence on external suppliers; Li Auto’s self-developed driving chip “M100” has entered the road testing stage.

Core Talent Changes

Against the backdrop of increasingly fierce domestic market competition, going overseas has become an important direction for Horizon to seek new growth. However, from the financial report data, the progress of internationalization still seems slow.

In September 2025, Horizon established its European headquarters in Munich, Germany. Additionally, the announcement shows that as of 2025, the company has accumulated contracts for over 40 export models from 11 automotive manufacturers; at the same time, through two international tier-one suppliers, it has secured contracts for models from three international automakers aimed at overseas markets, with a lifecycle shipment volume of 10 million sets.

However, in terms of revenue contribution, the overseas business has not yet formed a scale.

The 2025 annual report did not list “going overseas” revenue as a separate disclosure item, still included in the overall revenue, suggesting that its proportion has not reached the standard for separate disclosure. Currently, the company’s overseas contracts mainly come from export models of Chinese self-owned brands, rather than core models of international mainstream automakers. Traditional European giants like Volkswagen, BMW, and Mercedes-Benz still prioritize NVIDIA or self-developed solutions in the high-end driving sector.

In addition to external market competition, Horizon also faces internal challenges from changes in core technical talent.

Recent market news suggests that the company’s chip R&D head, Chen Peng, is about to leave. Chen has 19 years of deep experience in the ICT chip industry, having managed a chip team of over a thousand people, and led the entire process of the Journey 6 series chip from design to mass production and delivery after joining Horizon. The departure of the core chip head during the iteration of the new generation of products has been interpreted by the market as a potential break in the technical path, exacerbating the uncertainty of its long-cycle automotive-grade chip R&D pace. Coupled with the former president Chen Liming’s transition to vice chairman, and the appointment of Zhu Wei from CATL as the new president, with changes in the management team and technical leadership, Horizon is currently undergoing a dual restructuring phase.

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