name before asking questions. We also provide a simultaneous interpreting, and you can click on the interpreting button. Next, let's take a look at the results in the first half of this year. In the first half of the year, the group's revenue was CNY 9.22 billion, down 2% year-on-year. Against the background of uncertainties in the global microeconomy, the group made a steady progress, continuously improved operational efficiency and cash flow, and its business diversification strategy achieved initial results.
The GP margin was 14.1%, down 4.8 percentage points year-on-year, mainly due to the weak demand in the global smart market in the first quarter. But the Q-on-Q GP margin improved significantly in the second quarter. The net profit was CNY 150 million, a year-on-year decrease of 57.1%.
In the first half, the group's operating cash flow was CNY 2.05 billion, year-on-year increase of 443.1%. The book cash was CNY 7.13 billion, which was the same as that of last year, and the net gearing ratio was 4.9%, which was 1.3 percentage points lower than 2022. The CapEx was CNY 616 million, which was 42% lower than 2022, and inventory days decreased to 90 days, compared with 109 days at the end of 2022. The company will continue to allocate CapEx and control expenses based on the long-term growth targets, to ensure there's sufficient cash to support the long-term development of the group's business. Next, we'd like to share with you the performance of different business segments. Acoustics.
In the first half, the revenue of the acoustics business was CNY 3.32 billion, a year-on-year decrease of 19.9%, mainly due to the global smartphone market demand recovered less than expected in the first half, resulting in a year-on-year decline in shipment volume.
The gross margin was 25.5%, down 1.7 percentage points year-on-year, mainly due to the decline in shipment volume caused by weak demand in the Android market in the first quarter, and increase in unit costs caused by the drop in the shipments. In the first half of the year, the demand recovery of the Android market still faced some pressure, which had a certain negative impact on the group's Android-related business.
Thanks to years of close cooperation with overseas customers, the group has maintained relatively stable market share and continued to support customers' expansion in the technological innovation. In the first half of the year, acoustics solution, integrating a full set of audio system design services, was launched to create an immersive sound experience for users. In the first half, the group's optics business achieved a revenue of CNY 1.77 billion, year-on-year decrease of 4.4%, mainly due to weak market demand and the pressure on unit prices in the first quarter.
Revenue on the GP margin improved significantly in the second quarter, mainly due to the increase in market demand shipments and the slowdown in unit price competition. It will continue to implement the high-end strategy, optimize the product structure, and gain the market share through technology upgrading.
The plastic lens, the proportion of the 6P products shipments, has increased to more than 10% of the total plastic lens, improving the ASP. We also have the OIS modules. W LG hybrid lens is progressing smoothly, and the related array lenses, cylindricals and prisms made their debut at the 2023 Shanghai Mobile World Congress. In terms of VR, the group's three-piece pancake optomechanical module successfully achieved mass production during the period.
The group has also achieved deployed distribution of industrial lenses and achieved a sales breakthroughs from zero to one in industrial inspection. Now we will pay attention to the emerging division of electromagnetic drive, EMD, and the precision mechanics segments. In the first half, the revenue was CNY 6.362 billion, up 23.4% year-on-year.
The EMD business increased steadily. The metal casing business increased significantly, and the market share of the laptops business increased. The GP margin of the combined segment was 19.3%, down by 1.2 percentage points. In the first half of 2023, group's market share among overseas market remained stable, and the market share further increased.
The shipment volume of Android motor products increased by 63.2% year-over-year, with higher performance in start-stop speed. The group's motor products also continued to extend to the non-mobile phone fields. In the first half, the group's metal casing business continued to expand and maintain a leading market share. Toyo Precision still achieved a good performance on the laptop side.
The Yangzhou Phase Two factory started smoothly, and the group will further enhance the contribution of laptop revenue. Finally, let's pay attention to the sensor and the semiconductor business together. The revenue of sensor and the semiconductor business was CNY 494 million, up 3.2% year-on-year, mainly due to the increase in shipments.
The GP margin was 11.3%, down 2.4 percentage points year-on-year, mainly due to the decline of ASP brought about by intensified competition. In the first half, the production capacity of the Malaysian factory gradually ramped up, and in terms of the automotive fields, the group has successfully developed a complete set of new auto lens microphone modules. After sharing the financial performance of each business segment, let's take a look at the strategic development of the group.
The group continues to lead the smartphone market experience upgrade. Its products include the high-performance x-axis haptics linear motor, which has been used by Samsung Galaxy A23, OPPO Reno 10, Vivo X90, and SLS super linear speaker has been used by Xiaomi 13 Ultra and other model. OnePlus 11 adopted dual speaker box with a proprietary NLC low-frequency algorithm.
Xiaomi Civi 3 and the Mix Fold 3 are equipped with WLG 6P ultra transparent lenses. And also the flagship and the high-end models of some major customers, the business of the metal casing market share is increasing. And the group will adhere to the high-end metal casing. And the group also made the customized hinge and realized this extremely thin, sturdy, and reliable folding experience.
Group also provides customers with ultra-thin and super large vapor chambers , and participants in the research and the development of the new cooling pump heat dissipation technologies, which greatly improves the heat dissipation capacity of the smartphones. In the fields of automotive acoustics, and the President will make the introduction.
Thank you, Joyce. I'd like to talk about the automotive acoustics. Our targets of the automotive customers is to provide the haptic experience to our end users and the customers. Based on this concept, AAC, we pay attention to the amplifier and algorithm, as well as the system matching development. We continuously accumulate the experience and make innovation of technology progress. Under this background, we think AAC has achieved the leading position at the integrated solution of the automotive acoustics. Apart from Harman, only few companies have been equipped with such capability. We also propose the acquisition of PSS. I would like to introduce the PSS.
So PSS has over 15 years of solution technology leadership, and it has its headquarters in Belgium, and there are over 300 engineers globally. Their focus is on the automotive acoustics, and there are four highlights. First of all, is the leadership in the technology in the automotive acoustic systems, and the market they are the market leader in EV and the PHEV, as well as the traditional vehicles.
They also provide the advanced products in the market. In addition, apart from the traditional vehicles and auto companies, the OEMs, as well as the new and NEVs and the new EVs, and they are also their customers. Certainly, we think it's also very important because they serve the automotive companies globally, and they have a very good layout and distribution in the world.
Last but not least, its financial performance and the PSS revenue is about EUR 450 million. We think the revenue will grow in the future. In terms of the revenue, the orders will continue by 3-5 years. So in the next 3-5 years, the growing momentum will be maintained, and it will also be triggered by this new autos, automakers. In addition, they have great momentum in the innovation with their proprietary technologies.
And those technologies and innovation will boost the profits. So we think PSS has a great potential in the future growth. And the strategic rationale for the acquisition of a PSS. PSS is a sizable and a leading white label automotive speaker manufacturer, and this will make a supplement to AAC.
As they supply directly to global OEMs, and it is also a leading supplier to global audio brands. Secondly, they have a strategic diversification. By acquiring a business with existing scale and operation, AAC achieves meaningful strategic diversification through one transaction. Thirdly, vertical integration. The collaboration with PSS, and we can make a breakthroughs in the speakers and amplifiers, as well as some products in optics to grab additional value share.
Fourthly, is the synergistic opportunities. Moreover, the transaction enables AAC to leverage its operational expertise in supply chain and the China market to tap the growth of the global automotive acoustics and EV markets. The reasonable transaction structure. The proposed deal structure enable AAC to retain and effectively motivate the existing management team.
A small part retained in the part of the management, and this will become the incentives for the management and to lead a leapfrog of AAC. And last but not least, risk mitigation. The retention of existing management mitigates significant due diligence risk and boosts confidence in the execution of future business plans. So the six highlights—the six rationales are the main considerations for us to acquire PSS. PSS product portfolio.
The main product is speaker, and it includes full range, mid-range speakers and woofers, etc., and tweeters, etcetera. And they will also provide these speakers to the consumer customers. They also have other three segments. The first one is related acoustic system. The first one is about the speaker systems in a box. It's a subwoofer. And also, the dual boxes.
Headrest solutions, 3D solutions, and they can put this speaker in a small size, and so it's more compatible in the automotive. Thirdly, it's about the safety speakers and systems. With the EVs' growth, it's very important, for example, the AVAS, the Acoustic Vehicle Alert System. This is the requirement for installation in the EVs by law.
After the acquisition, we can also innovation products. Fourthly, it's the transducer-based haptic systems. Many people are talking about the 3D and 4D, and also, for example, more on haptics and experience to our customers. The PSS has achieved a mass production on this regard, in the entertainment and the infotainment. This is a perfect combination of acoustics and optics. Those are the four core business parts or segments of PSS.
The PSS global operational footprint. As I mentioned before, its headquarters is in Belgium. It was founded in Belgium. Those are the main factories. The Mexico factory is mainly serving the U.S. market. We also have factories in Germany and Hong Kong, and those are serving the European automotive market. In Dongguan, and Penang in Malaysia for the Chinese market and Asian global customers. The R&D center is in Belgium and Shenzhen.
Those are the R&D centers. You can see from this map, PSS has a complete global operational footprint, and they have already established industrial supply chain to serve all the automakers… worldwide. This is the brief introduction of PSS. We can come to Q&A session. Thank you. Thank you, Mr. Liu's introduction.
If you need to ask a question, please click the raise button, raise hand button. Let's welcome. The first question is from CICC.
[Foreign language]
Thank you, thank you all the management for your time. I have two questions.
[Foreign language]
The first question is related to the mobile phone. «speaking Mandarin» You can see the pressure or the price pressure of the mobile phone in the first half of the year. So I'm curious about the long-term strategy of the or your view on the long-term demand of the mobile phone. And we also see the recovery or the coming back of a Shenzhen customer. So whether this will boost any demand, and also what's the price strategy? My second question is about the optimistic is about the optics and inventory.
What's your outlook on the inventory on optics business? So I have these two questions. Okay. Regarding the mobile phone market, yes. In the first half of the year, the shipments of volumes, and this decline compared with the first half of last year. The whole year, we think the 1.2 billion shipment volumes of last year will decrease to 1.1 billion volume this year. In terms of the supply chain, based on our understanding of our customers, the inventories levels are low, as far as we know. So the forecast for the second half of the year will be accurate, will be more accurate, and the volatilities will not be as big as that of last year. So this is about the shipments volume of this year.
Most customers are targeting the high value products. The models below 1,000 or 2,000 are decreased, and many users are focused on the models above 2,000 or even higher. We also see the new launch of the mobile phone models, and the new models will trigger the upgrade of their system and their models. So in the first quarter and the second quarter, our shipments will be at a low level. But in the second half of the year, the shipments volume will be ramped up compared with the first half. «speaking Mandarin» And this market will be more stable and value-oriented.
Acoustics, the ASP will be lower in the first half, but the second half, the ASP will increase from 4.5 to about 5. It's related to the new models and the new components upgrade. And from the perspective of shipments volume, the first half is about 40%-45% of the total year's shipments volume. So the second half, the volume will be about 50%-55%, 10%-15% increase compared with the first half. So this profitability in the second half will be increased, especially for the Android system.
[Foreign language]
Also, the production capacity and utilization is increasing, and as well as the precision mechanics and the metal casing.
Of course, this kind of growth was triggered by the Shenzhen customer, and we are developing the collaboration with this customer. We also have the promotion on the high-end models, and for the precision mechanics, we have very positive feedback. Compared with the first half of the year, we believe the top line and the revenue will be increased by 10%-15% in the second half.
And the production capacity and utilization as well as this capacity will be increased. So overall, the mobile market will develop according to this value placed. Right. Okay. And we will be benefited from this development. In terms of optics, and Jack will answer your question. So your question in two parts. The first one is about the inventory.
So, as of the thirtieth of June, our inventory level is about three months. The newly operational parts are split up; it's about two weeks to three weeks. For our historical inventory, we are destocking. Therefore, the inventory level will be maintained at a very sound level. Compared with last year, the completed products inventory declined by 15%, and MPM is also declined.
Your second question is about the future outlook in the second half. Our company is more focused on the high-end lens. In the first half, for example, the 6P shipments volume accounted for 15% of our total shipments volume. In the second half, this number will increase. It is in line with our high-end products strategy.
As mentioned by Kevin, many of our customers are returning to the high-end and the better experience products. Our GP margin is increasing, the ASP is declined. This kind of decline will be paused, will be stopped, and this is also beneficial to our second half. In terms of the inventory, we don't have any inventory modules, and the modules production is based on the orders, and we adjust the inventory and the production according to the production.
We will increase the turnover days, and we will also achieve the cash and inflow positive. So, this will help us to maintain a strong cash position. In a nutshell, we will destock our inventory based on the market demand and to achieve a self-position and a cash inflow. Thank you.
Thank you, Ting Ting, question, and thank you management answer. Next question is from Citi, Tan Jialin.
[Foreign language]
Hi, good afternoon. Good afternoon. In the first half, the optics is better than acoustics. What's the difference? What's the reason? It is the year-on-year. The growth is different. So this is the first question. And the second question is about the folded smartphone. And we also see a lot of mass production. So what's our value chain on this folded smartphone? And apart from the Beijing customers, do you have any potential expansion markets?
From this acoustics perspective. And you can see is a large decline in the inventory. So in the first half, the shipments of the acoustics and the ASP, and this unit price, the unit price declines by 10%-15%. And I would think in the second half, this unit price will recover to that of last year or above that.
So that's, that's why we can see this pressure of the acoustics in the first half, and in some production utilization is not to reach 100%. We have reduced it 390 million products, and our target is 800 million. And the unit price will be increased by 20%. So you can see in the second half of the year, and this will be boosted.
And according to the shipments of these two months, and we think this shipments in the second half of the year can reach 450,000, and ASP can reach CNY 5. So this will help us return the acoustic to sound development. That's also the reason of why you see the optics performance is better than acoustics in the first half.
And second question is the folded smartphone. Indeed, we have reached this mass production and the delivery on the products from Huawei. I think this potential is great. From high-end smartphones, price is about CNY 10,000, and the smaller folded smartphone is about CNY 7,000. It's about CNY 7,000. And for this high-end products, high-end product, for this turning axis, this price is about CNY 500. And yeah, we think this year we can produce 300,000-500,000. So it's also a... It's also based on the customers' demands, and we think this kind of development is promising. And we are developing the market with more customers. If we have further information, we will disclose this to all the investors.
We can also see there's greater potential in this turning axis products. We see this the attitudes, this very good attitudes toward those high products. Thank you. Thank you, Kevin. I learned a lot from you. Thank you, management. So this is about this hinge. Next question is about... Alex . Thank you, management. I have two questions. The first question is about the next three to five years strategy. So it's the mobile phone and non-mobile phone. Second question is about the automotive acoustics. You are planning to acquire PSS. I want to know the timeline, specific timeline. In the future, do you have any guidelines for the revenue of- for the revenue of acquired PSS?
What kind of potential it will bring about to AAC in the automotive market? Certainly, the PSS has collaboration with the biggest client, Tesla client. So after the acquisition, in terms of the optics motor, does the company have more potential in their global customer base? So my question is about the overall company strategy. Okay, thank you.
[Foreign language]
I think in terms of the size of the mobile phone and this will be slowed down. But the value, for example, the high value of products, high-end products with rich functions and experience will be further developed. And therefore, AAC, we need to catch this opportunity to cover all of our business, including with the motors and optics and acoustics. And then we can provide the higher-end products to our customers and receive this upgrading opportunity.
And to increase our revenue and the profits. So this is about the smartphone area. And in terms of the automotive, many people are curious about the development of acoustics in AAC. And the PSS, the revenue in 2022, and it's about EUR 450 million-EUR 500 million, and this will be in our consolidated balance sheets. So in the automotive, the revenue is equivalent scale of our electronic acoustics. So apart from the acoustics, we can also develop our other business. For example, the optics, as well as lens, microphone, and automotive motor. And we can make breakthroughs on this regard. On the this cons...
On this, acoustics, automotive acoustics side, we want to reach the target of the same scale in the consumer electronics. PSS has a lot of our customers in the U.S. Apart from the U.S., the traditional auto makers, as well as the big ICT clients, are their long-term customers. And this good relation, personal relation, are very helpful to AAC. Amplifier, and the speakers, and the other components, and AAC can leverage the PSS and to expand the market. So those are the strategic value of the PSS. Thank you. Thank you, management answer. Thank you, Alex, question. Next question is from Yu Zhou from Huatai.
[Foreign language]
Thank you. My first question is about the SP of the optic lens in the Q2. So, what's the structural optimization?
In the future, the GP margin of the optics will become positive. When does it happen? The lens restructuring started from last year, and this was triggered by the customers' demand in the five P and six P. This kind of verification need in the time. So after verification, the high-end products started mass production and ramped up its production.
This volume is increased by over ten percent. In the second half of the year, we will continue to optimize this structure, and more six P products will enter the market. Sorry, I forgot your second question. My second question is about the processing lens processing. And also the margin profit, and it's about 15%-60%.
The processing ratio is 15%-60%. The GP margin includes two parts, and the first is about lens. The GP margin of lens is -10%. We think this will turn a positive in the second half and with our deployment in the high-end products, as well as the cost reduction and actions within the company, and the technology upgrades, we estimate in Q4, the opt lens business will gain positive profit. In terms of the module, this is the second part.
The second half, the competition, the competition in the second half will become mild. So we think the module GP margin will also turn positive in the second half. Okay, thank you. My second part is about the total precision and what's the production capacity.
After the acquisition of the Toyo, the Yangzhou factory, and this year starts its mass production, and the first products will be delivered in Q3 and Q4. And the total production capacity of the factory is estimated of 100,000-150,000 pieces. And in Q3, this capacity can reach 15%, because we have one product running on it, and there will be more projects onward.
And in the second half, the Yangzhou factory will make some contributions, but it depends on the market demand, because the laptop demand is declining this year. So we have to make adjustments on the production according to the customer demand. And for the first products has already reached its mass production and the deliveries.
So after the acquisition of the Toyo, it's benefited to the group. After the first project, the future projects will be ramped up. And for a single slice, what unit price? The single slice for Toyo is CNY 100-CNY 120. And Yangzhou factory is about CNY 300, because it's a precise processing and not a stamping product. Okay, thank you. Thank you question. And the next question is from Charles.
The question is about the market share of PSS and the book cash. And the revenue of PSS as well, and then the market share of PSS. It's about 15%-25%, and in high-end speakers, its market share will become larger, higher.
In the total speakers, its market share is about 15%-20%. In terms of financial, to invite CFO, Ms. G uo to answer.
[Foreign language]
Okay, I will answer all the questions on the chat box. As mentioned by the management, the top line is about CNY 450 million-CNY 500 million annually, and it will grow on annually. The growth is stable, and the GP margin is at 20%, and the net profit margin is up to 8%. In the future, as you mentioned before, and the some synergies will come from the cross-selling of the products and the whole supply chain, including the overall production line and operational efficiency. So we think there are still potentials in the future growth.
In terms of the book cash, and the, it's the net cash is about EUR 10 million-EUR 15 million. And its debts are the operating debts. Shorter, it's about EUR 50 million-EUR 60 million. Thank you. Thank you, Miss Guo Dan. Next question is from Essence Securities Shen Chengy u. Please go ahead. Thank you. I have two questions. The first question is about our biggest customers in Shenzhen, and in Q3, they will launch new models. So I'd like to know more about the preparation on the ASP and the market share. And the second question is about A big client. Do you have any upgrade on motors?
In terms of the big clients in Shenzhen, their products focus on the high end, and we have close collaboration with them, and we will be in line with their market development. So the ASP is the metal case, as well as the acoustics and the motors. They have higher margins. Their requirements on the ASP, as well as the requirements are higher. Because their requirement is higher, so the ASP is at 20%-13% higher than the market price, because it's more customized.
[Foreign language]
And apart from this year's demand, the customers' future demand is also huge. Therefore, we'll forge our collaboration with customer and to help them to upgrade the immersive experience. The specific figures depends on the market situation.
In terms of the US customer, in the first half, there are some voices in the market that the company will cancel the motor function. But we think there are still opportunities, but this will be delayed. And the function will be promoted in the future and then maybe paused this year, but... Or delayed this year, but it will be promoted in the future. And we are paying close attention to their investment, and we can continue to support its R&D and the development on this function. Okay, thank you, Chen, this question, thank you for answer. The next question is from chat box . The question is about CapEx and the guidance in the second half of this year and in the next year.
The CapEx of this year is in line with CapEx, which is close to before. And before is about CNY 1.85 billion, and the CapEx will reduce by 50%. So this CapEx this year is about CNY 1.5 billion. Of course, it depends on our OpEx and market plan and strategies. We'll add some information here. And for our traditional and old products, the cost is more optimized, so there won't be any capacity expansion on the traditional products.
For our investment, for example, there are small functions upgrade on the smartphones. For example, the hinge. For the new x-axis motor and upgrade the high value or value added components will be the investing areas. But for the old and the traditional mass producing parts, the investment will not be increased.
In addition, we also see the supply, the separation or this fragmented supply chain of our customers, and we can support all of these customers from our overseas factories, and it will help our customers to, you know, mitigate the tax risks.
Thirdly, the CapEx will be on the strategic development, for example, the acquisition of the PSS. In the automotive, we will continue our investments, for example, the innovative and automatic automotive speakers, and the amplifiers and microphones, as well as the automotive optic lens. So apart from PSS acquisition, AAC will make continuous CapEx in their own automotive business. So the CapEx target this year has already covered for this development.
In the future, we will continue to optimize our cash flow in the mobile phone production line and to achieve a stable business development, and we will efficiently control our CapEx, but retain our investment in innovation. Thank you. Our time is constrained, and this will be the last question, and the last question is from Liu Ling.
[Foreign language]
I thank you, management, for this opportunity. I have two questions. The first question is about the precision mechanics, that we see the 40% of increase in the laptops and et cetera. You know, with the return of the Shenzhen customer, the precision mechanics will become better. And the acoustics and the motor and other business segments, do you have any revenue targets?
My second question is, how do you see the recovery of the Android markets and any upgrade potential in the second half of the year? Thank you, management. The precision mechanics is very good. This is related to the Shenzhen customers' operation. We also see is on high-end models development. Even there's some middle-end products will introduce the metal casing, and this will become the industrial trend.
The overall industry are developing into the mid and high-end performance and products. Also the holding and haptics experience is very important. Therefore, I think the metal casing will be promoted. For the first half of the year, the production capacity, for example, the CNC, and have reached its full capacity.
We even need to find the third-party partner and to expand our capacity. This is a good news. Next year, this kind of momentum will be maintained, I believe. The metal casing next year is another increasing point, which is hinge. In Q2 and Q3, we will have our first mass production. The second half and the next year, there will be more products.
The Android market will use the hinge products as the edge or the starting point for the new market. So with the launch of the new hinge smartphones, you can see this shipment volumes is with a lot, for example, the Shenzhen big clients and the other clients. So that hinge as its market, and it's a high price, high unit price.
It's a very pivotal structural support. And this will increase the performance of the smartphones and also reduces weight. And certainly, it's about the projects in Yangzhou. After the M&A of Toyo and the metal casing for laptops are the focus of the Yangzhou factory. And, yeah, we think in the next year and the year after next year, there will be more projects into the mass production. And the precision mechanics profitability and revenue will increase significantly.
It's very clear in the precision mechanics segment. So what's your second part of your question? My second question is about the revenue guidance. For any upgrade potential in the Android market. Acoustics, motor, and the precision mechanics will keep the high-end momentum and their products will be optimized in accordance with this high-end momentum.
So we think motor can maintain 20%-30% in the growth. The mobile phone has the demand, the haptics demand, has haptics requirement. And this, our new motors showed the better performance, and this is also price, a high price to performance ratio choice to our customer. And the customer will have a very immediate experience upgrade.
For example, SLS and the big acoustics volume products will help the mid and high-end customers to upgrade. And we will increase the quality of sound as well as the volume. In the metal casing, as I mentioned before, this middle-end mobile phone will use more metal casing and as well as the folded mobile phone, and they will help us to increase our top line and the bottom line.
With the stable production utilization and the stable market, and all the production line will return and recover to sound level. Thank you. Due to the constrained time, this is the end of the 2023 interim results, and our materials has already been uploaded to the official website. If you have further questions, please feel free to contact IR team. Thank you.