Summary of Key Points
A traditional cement company, "Shangfeng Materials," which was struggling heavily in the cement industry (with 60% of the sector reporting losses), turned things around by investing in semiconductors. Its investments in Changxin Technology and Shenghe Jingwei resulted in profits of over 5 billion yuan and over 2 billion yuan respectively, respectively. These investments single-handedly boosted its net profit for the first half of the year to 1.36 billion yuan—four times the amount from the same period last year, with 89% of this profit coming from investment returns. The company began its semiconductors strategy 9 years ago and has since established a complete supply chain, partnering with professional investment firms, setting an example for traditional enterprises transitioning to new industries.
1. Losing Money in the Main Business, but Saving the Day with Investment Returns: While 60% of Chinese cement companies were in the red in the first half of 2026, Shangfeng Materials delivered its best-ever half-year report. Although revenue decreased by 19% due to poor cement sales, net profit soared to 1.364 billion yuan, a four-fold increase from the previous year. The secret to this success lies in its investments in semiconductors, which accounted for 88.93% of the net profit (1.213 billion yuan from non-recurring gains). In other words, the cement business generated very little profit, but the semiconductors investments made up for the losses and even resulted in a substantial surplus.
2. The Two Most Profitable Investments:
- Changxin Technology: In around 2021, Shangfeng Materials invested 203 million yuan through two subsidiaries to acquire nearly 100 million shares of Changxin Technology. Since Changxin went public, its stock price has risen significantly, resulting in a profit of over 500 million yuan—more than the company's total net profit for the past five years.
- Shenghe Jingwei: An investment of 200 million yuan in 2023 led to a 20-fold return in just three years, as Shenghe Jingwei went public on the STAR Market, with a market value exceeding 43 billion yuan. Shangfeng Materials' shares peaked at over 2 billion yuan, representing a 20-fold increase in value.
3. Preparing for the Future 9 Years Ago:
Shangfeng Materials didn't make these investments by luck. It started early:
- Pilot Projects in 2017: Even when the cement industry was doing well, Chairman Yu Feng foresaw a downturn and began investing in semiconductor companies (Zhengfan Technology and Hui Cheng Shares), both of which later went public on the STAR Market, a successful venture.
- Formal Strategy in 2020: The company adopted a "one main business, two wings" strategy, focusing on cement while investing in semiconductors and new materials. It systematically expanded across the entire semiconductor supply chain, covering upstream silicon materials (Xinhua Semiconductor), silicon wafer manufacturing (Shanghai Chaosi), chip design (Angrui Micro), and wafer fabrication (Yue Xin Semiconductor), as well as downstream packaging and testing (Shenghe Jingwei).
4. How They Made the Right Investments:
Shangfeng Materials worked closely with a professional investment firm, Lanpu Venture Capital, to make informed decisions:
- It was the largest investor in several funds managed by Lanpu, such as Shanghai Junzhipu Fund (which invested in Changxin) and Suzhou Puyun Fund (which invested in Shenghe Jingwei).
- Since 2020, the two companies have jointly established specialized funds (e.g., Hefei Cunxin) to focus on semiconductor projects, entrusting professionals with the investment decisions.
5. The Trend of Traditional Enterprises Transforming:
Shangfeng Materials is not the only example. Many traditional companies are investing in emerging sectors like semiconductors and AI:
- Jiuan Medical: Profitable from COVID-19 test kits, it transformed into a venture capital firm, using 14 billion yuan to invest in large-scale AI models and robotics.
- Jing Tou Development (real estate), Jin Zi Huo Ham (food), and You Ma Shares (retail): All have invested in semiconductors to seek new growth opportunities. The reason? AI and semiconductors represent current industry trends, and traditional industries are vulnerable to economic cycles. Investing in these sectors allows companies to diversify their revenue sources and survive economic downturns.
In essence, this news story highlights a simple truth: Traditional companies can reap significant benefits in new industries by being prepared and adopting the right strategies. Shangfeng Materials' success is a prime example of a successful transformation.