Good morning. Welcome to the 2023 interest results announcement, a press conference by Sunny Optical Technology. On behalf of Sunny Optical Technology, thank you for your long-term support. First of all, let me introduce the management present here today. Executive Director and Chairman of the Board, Mr. Ye Liaoning. Executive Director and President, Mr. Sun Yang. Vice President and Corporate Secretary, Mr. Ma Jianfeng. Senior IR Manager and Corporate Secretary, Ms. Huang Peilin. Investor Relations Director, Ms. Liu Yanfeng. Now we will start the slides presentation. The presentation is also uploaded to the official website. You can scan the QR code to gain access now. VP and the president, Mr. Sun Yang, will start his presentation. Investors, good morning. Now we have less investors attending our press conference. We hope that we can improve our performance, so we will gain new market opportunities.
I'm sure in short time, we will taking a full turnout sometime soon. Your presence here today, represents your support, so thank you very much. Going forward, I'm going to report on the business performance of the first half. Frankly speaking, in the first half, in vehicle lens sets business, the management believes we still have done a very good job. In vehicle lens sets, camera module, LiDAR, HUD, headlamps, we have achieved very good progress. We will share the details in the slides. The biggest revenue source remains the smartphone. As you know, in the first half, the smartphone market is still bottoming out. At the same time, camera, lens, and other stuff are going through the de-spec trend, and we will represent it with some numbers.
What I mean is that our vehicle business is doing well, but smartphone is still bottoming out. That's why our gross profit margin, revenue, and net profit have come down. Our revenue coming as $14.2 billion, down by 15.9%. Gross profit, $2.1 billion, down by 59.5%. Shareholder equity, $1.9 billion, and earnings per share is down by 67.8%. I would just go through the numbers very quickly. We have disclosed these numbers in our corporate disclosure documents. In this page, you have the revenue numbers. In the first half, the percentage of total operating expenses is 13.3%. It's 1 percentage point up from 12.3%. Selling and distribution expenses are up 1.7%.
The reason is that after we have gone out of the pandemic, we had lots of visits, physical visits to customers. This was beneficial because we had to maintain this exchange with our customers. R&D expenditure dropped. That doesn't mean that we have reduced our R&D projects. It's down because we have controlled the efficiency at a reasonable level. Admin expenses are up. In the second half, we will update our budget, and hopefully, in the second half, the admin expenses will be controlled under 12%. Let me quickly go through our financial ratios. In the first half, operating cash inflow came in as RMB 1 billion, still positive. Cash and cash equivalents, RMB 20 billion. Gearing ratio, 12.2%. ROE, which is coming down significantly and now standing at 2.1%. Capital expenditure, RMB 1 billion.
In the second half, we will update the annual capital expenditure in the hope of controlling our CapEx and optimizing the number. In the beginning of the year, we shared that the CapEx this year would be RMB 2.5 billion. As for. The breakdown, RMB 800 million will be spent on XR business. RMB 800 million. RMB 600 million will go to our new factories in Vietnam and other, we need to expand our bases. RMB 500 million will be invested in handsets, lens sets. This is mainly in response to our major customer in the US. RMB 400 million will be spent on vehicle-related products, RMB 400 million. RMB 300 million will be invested in technical upgrade and mobile actuator integration for smartphone lens sets, so RMB 2.5 billion in total.
We hope through these measures, we can smoothly go through this very difficult period. The next page shows the breakdowns of our major product mixes. As you can see, smartphone-related business has come down, now standing at 67.9%, down by 7.3%. Vehicle is rising very sharply, from 10.2% to 17.3%. You are also interested in XR, VR business. It's down from 3.9% to 3.3%. There were some seasonality reasons, because our main customer remains Meta. In the second half, Oculus 3, including cameras and Pancake modules, will see higher numbers of shipment, so we believe the percentage will continue to rise. This page shows gross profit margin.
In the first half, gross profit stood at 14.9%, optical components 26%. Optical electrics 6.9%, optical instruments 42.7%. You may want to ask the guidance for our GP margin in the second half. We believe there are three aspects. First of all, we predict that smartphone will continue to build a bottom. In the beginning of this year, we predicted that the number will bottom out in the first quarter, and it will rise again in the second quarter. Instead, the number still drops in Q2. We maintain exchanges with our customers and industrial peers. We believe that for the end of the year, it will bottom out.
With the coming back of orders from some major customers, our ASP and production efficiency utilization will benefit. Thirdly, we will continue to cut cost and improve efficiency with the reasons above, which that the GP margin in the second half will improve and become much better than the first half. This is the prospect for GP margin in the second half. Three things: smartphones numbers will bottom out, shipment numbers will rise again from major customers, and thirdly, we will cut costs and improve efficiency. These three reasons are behind the good specs for the second half this year. Let us then look at some achievements in R&D. First of all, vehicle business.
In R&D, the very first successful project is that we provided to an autonomous driving company, a full set of 17 million pixels front view and Surround View vehicle lens sets. That was the first project that served Level 4 autonomous driving, and the most famous autonomous driving company in the world. Secondly, we offered 3 MP and 8 MP ultra miniaturized side view vehicle lens sets. We believe miniaturization will be a major trend. Thirdly, we offered a 5-megapixel, ultra miniaturized OMS vehicle lens sets to a major autonomous driving company. As for LiDAR, we have two major projects. First, we did a scanning module combined with polygons and electrical motors. Secondly, 3D flash transceiver modules have been completed. Fourthly, in HUD, you know, we have built the LCOS. This year, we completed the LBS solution as part of HUD.
Fourthly, we produced some smart lamps, headlamps. These headlamps can be used inside-... to express people's feelings and emotions with different colors of lights. This represents the future trend, and we have some R&D projects in it. As you can see, in mass production, we have various 8, 3, and 1.7 MP sensing vehicle modules. It's worth mentioning that we have the very first COB project in 8 MP. BGA was often used before, but now we went for COB for miniaturization, and a good heat dissipation. There are great challenges in safety, and we did a project on 3 MP e-mirror sensing. It's a sensing plus viewing vehicle module. In the third project, we had 8, 5, and 2 MP in-cabin monitoring vehicle modules.
These are our R&D projects and mass production projects in vehicle business. In XR and robotic vision-related business, first, we successfully developed a new generation of see-through. As you know, see-through became more important in VR business. Quest Pro, Quest 3, and Vision Pro all used see-through technology, combining the real and virtual worlds. We shipped the new generation of modules, and we are working on the next generation. We did RGBD robotic vision modules. The algorithm behind was self-developed. In mass production, Quest 3 started to use VR Pancake display modules, and we are the major supplier. With regards to robotic vision, we developed an intelligent door lock recognition module, which is useful to the elderly. We developed this recognition module, and the core remains our self-developed algorithm. These are for XR and robotic vision.
Thirdly, let me talk about smartphone-related business, both R&D and mass production. Number 1, we developed a new long-focus handsets lens sets with folded light route. New long-focus handset lens sets with folded light route. Means our product will be comparable to the long-focus product by the U.S. company. Through innovation, we will serve our customer better. It's a new technology with folded light route. Secondly, we have a various hybrid handset lens sets with large image size and variable apertures. Third, we developed variable aperture handset camera modules with large image size and OIS. Besides that, we have a 200 MP handset camera module. Related to our R&D in smartphones. As for mass production, first of all, our ultra-low reflective used for 1 or 2 pieces, but now it's used for each lens. This is the first point I need to emphasize on.
Secondly, in the future, we will have more foldable handsets, both vertical and horizontal foldable handsets, and they have higher demand for miniaturization and ultra-thin lens. Thirdly, we developed a 1-inch handset lens set, which is hybrid. In the end, we have our own OIS handset camera module with our self-developed actuator. It's for the first time that we achieved the design of module actuator saturation, which was a major breakthrough. Those are the projects we had achieved in. In the last part, I'm going to talk about optical instruments. We had two R&D projects, the first one being VR optical component inspection equipment, and the second being vehicle lens sets, dust detection equipment. These two equipment sets are primarily used for our own business units, which will improve our inspection efficiency in VR modules and vehicle inspections.
In mass production, projects, we developed a prototype of a circulating tumor cell analysis system. Going forward, let me share with you our latest progress in patent applications. In the first half, we had 473 new patents being authorized. These were very important patents, including 278 invention patents. As of the end of June this year, 4,048 patents were still pending for approval. These are for our patents applications, more and more our patents have inclined to vehicle and XR, preparing us for future competition. Going forward, let me also talk about our three major production lines and their progress. First of all, vehicle, lens sets. In the first half, the shipment volume rose by 25.2%. This was much higher than industry average, now it stood at 47 pieces.
In the whole year, we believe the target for the whole year will rise by 15%+. That's for vehicle lens sets.
That's about handset lens set. You can see that the decline is quite big. We're down 21.3%. In the first half, shipment was 512,000 units. On the right-hand side, I think you are familiar with this chart. When the industrial cycle was better, actually, our growth is much higher than in the left. Here, you can see here, 6 P and above, handset lens sets is down 32.9%. As I said earlier, in the first half, well, the decline was still happening, so you can see that from these data. That's about our handset lens set, down 11.8%. In the first half of the year, 254,000 odd units were shipped.
On the right-hand side here, you can see periscope modules and large image size modules. The decline is even bigger, down 51.7%. In the first half this year, for lens set, the situation is very tough. Then, in the second half, we believe that the situation will improve, without camera. I think you are familiar with our global layout in Vietnam, India. We have been gradually developing some production bases. In the third part, let me share with you our future outlook. For the first chart, here you can see this vehicle. Vehicle is the second-tier growth curve for our company. This is already quite apparent. Let's take a look at the vehicles. Basically, in the vehicles, all optical-related sensors and display devices, we are producing them, we are making them.
Here you can see ADAS, which you are very familiar with, and then CMS, also for in-car monitoring, and OMS, and then Surround View. Surround View. Surround View will turn into sensing, so from display into perception and sensing, and then rear view, LiDAR, HUD. Then there are many pixel headlamps, different types of near-field projection lamps. There are a lot of things that we can do in a vehicle. However, the value that we can derive from that will far exceed handset, lens set, or smartphones. Okay. Let me now share with you... obstacle sensors for vehicles and our views about the future. There are three parts. You are familiar with vehicle camera-related products, and then LiDAR-related products, and then HUD and headlamps. Okay, let me talk about vehicle lens sets and cameras. Right, let me conclude.
In the future, for vehicle cameras and lens sets, there will be three development trends. First trend is, we are talking about intelligent driving, intelligent cabin. They are not only about external, they are also about internal. I'm talking about lens sets and camera re-requirements. They will be enhanced, and this will last for a long time. I think the running time will be longer. That's the first judgment. Secondly, for these lens sets and cameras, the resolution will continue to rise because people want clearer vision. They want to be able to see farther away. The third trend is for cameras and lens sets, hybrid, hybrid lens sets, like those ALD coating technology, ultra-low reflective ones. The distortion will be removed. The application of such technology will become more and more widespread.
For cameras and lens sets, there are three powers that are driving the development. Resolution will be higher, image size higher, and then, for different scenarios, there will be the need for new technologies. In order to better satisfy all these scenarios, these are the three driving forces. At present, our positioning is this: for vehicle lens sets, we are still leading the market, 30 odd % market share. Now, with ODM and OEM vendors, and with other brands, Qualcomm, Mobileye, Horizon, and so on, we maintain very good working relationship. That's about vehicle cameras and lens sets. The second thing is LiDAR. Now, you may have different views concerning LiDAR, but we believe that high-level autonomous driving, at present, still needs LiDAR for assistance. FSD, people may be thinking of whether FSD will be widespread all over the world.
As in the case of Tesla, the algorithm, the operating system, there are very few companies that can integrate all these. Most companies need to do some sort of integration work, and for a longer period of time, LiDAR, as a very safe sensor, will be essential and indispensable. We think that in the future, LiDAR will see very good development. Within the LiDAR scope, we have said many times that we work on optical components, parts, assemblies, modules, and also OEM for LiDAR. We are the working partners of... Also empowerment for the LiDAR suppliers. For display, there are a few insights here. First of all, we think that in the future, AR HUD has already become a highlight for differentiated mobile vehicles. It is not good to have.
It is a highlight for differentiated competition and competitiveness. This is for sure. For headlamp, well, it is to lighten up the environment, but then it will move towards pixels, intelligent development, and also interaction. Now we also have smart projection lamps, as I said just now. For these projection lamps, they will display the driver's mood during driving. They will display a certain vibe. In China and in the Asian market, this develops fast. There is one more category here, and that is smart projection lamps. All these are about display. You are aware that within HUD, well, we have DLP and LCOS,L BS as well. In other words, we are able to offer optical engines to different types of HUD for development. For smart headlamps and projection lamps, the same strategy.
For headlamps and projection lamps, manufacturers, we will offer core optical components and parts. For vehicles, these are the three major categories, with three very clear development directions, and we see a lot of opportunities here. This slide shows our plan about XR. For VR display, we have done two things. First, Fresnel, a lower-cost option, and then Pancake. Of course, there is constant iteration for Pancake, from flat surface to curved surface, and there is a lot of challenge here. We give full play to our strengths. Apart from Meta, we also supply to other companies all over the world. For positioning and interaction cameras, very broad, there is yes, six degree tracking, video see-through, RGB, head localization, face and eye tracking, depth, and so on. All these are our strengths.
I think we need to do a better job in this area. For AR perception, I think at least four cameras will be used, so the number will far exceed that in smartphone. For AR display, we are doing two things. First, display or imaging. So optical waveguide. In mainland China, we are the one invested the most, and we are the leading one, apart from the nano printed waveguide technology. So in other words, we have made a lot of investment in this area. Then for projection, we offer optical machine, or actually, optical engine. So this term is not very accurate here in the English version. Optical engine, for a term. So there is the projection, which is shown on AR glass, which is a big module.
For optical engine, we are very strong in our product portfolio. There is DOP, which is a bit more costly, but high performance. There is, there's also micro DOE option. We also have that. Now, we work on these two separately, but we are of the view that if these two are assembled, then they will become a very big module, and FATP will be very smart in the future. That is our views about AR. On this page, you can see IoT area or territory. We have done quite a lot in this area. For hardware, algorithm, system, drive, total solution, we have made our layout. Chips, algorithm, vision, modules, and so on. These will form the major assembly work of robotic modules.
ChatGPT and also, human-like machines, all these, we are doing a lot of deployment to achieve a better position. Finally, handsets, smartphones. Here on the PPT, you can see four directions: front camera, main camera, ultra wide angle, and telephoto. In the future, for competition and differentiation about handsets, two main areas, main camera and long focus. I think these are the two most important directions. Innovation will be in these two areas, main camera and telephoto. For main camera, the direction is very clear. First, large image size. After that, the aperture should be large, and after that, there is the need for combinable or ultra-thin aperture. Okay, we have to reduce the weight and height for that large aperture.
For main camera, the photography effect must be good, there must be OIS and sensor shift stabilization. When the lens set is getting heavier and heavier, so we need this sensor shift stabilization. Okay, regarding main camera, things will shift towards large image size, large aperture, ultra-thin, OIS, and sensor shift stabilization. These are work that we need to do. Telephoto. Next year, it may be a very big year for telephoto. We are number one globally in this area because we have already launched a few generations of Samsung S-series products. We are the main supplier. For Huawei long-focus products, we're the supplier as well. Next year, if it is a big year for telephoto, there is a lot that we can do. First, prism-centered and prism-post options.
It is related to the folded light path that I mentioned just now. We have to lower the height telephoto, so it should be thinner. The third thing is. Within a lens set, between different pieces of lens, we need to achieve auto focus internally between groups. These are the three things that we are doing. Okay, finally, let me talk about our ESG work. For our group, ESG is not for the sake of showing to investors or the regulators or customers. We know that ESG is important and we can build the company's core competitiveness. It will help our operation and marketing as well. It is not because this is a requirement of the regulator, it is that it will help us a lot. That's why we have done a lot of ESG work this year.
Our MSCI rating has been improving. Besides, we are included in a number of ESG-selected indices. I won't read out the names, and we have won some government awards. Zhejiang Province Carbon Factory, Provincial Green Factory in Henan, and so on. We have also won other ESG awards, many of them. I, I think you are familiar with them. The second area is greenhouse gas emission. We have made an undertaking. For Scope 1 and Scope 2 GHG emissions, we hope that by 2025, GHG emissions, comparing with 2021, can be down 20%. That's our undertaking. Besides, our bond sponsors told us that among Asian technology companies, we have issued the first sustainability-linked bond or green bond in the amount of $400 million. We are very proud of that, and our customers like this as well.
Now, I won't read out all these details. For example, we have increased energy efficiency, resource use efficiency also improved. We did a lot in energy transformation. Anyway, ESG and green sustainable development will be regarded as our core competencies. We will seriously improve the work in these areas. That's all in my presentation. Thank you, everyone.
Thank you, management, for the presentation. Now we will start taking questions. If you have a question, please raise your hand and identify yourself before taking the floor. Thank you for the presentation. From CLSA. Two questions: Your new base in Vietnam involves RMB 600 million CapEx. Can you please talk about capacity and numbers at this base? In the first half, vehicle had a 25% increase. It's higher than industry average. What are the main growth drivers behind that? We have seen more fierce comp in vehicle lens sets in China. Can you please talk about your observation? Let me respond to your first question first. Our new production base, we started in 2022 as the first company, working on vehicle lens sets, due to the tariff problems from the U.S.
Well, due to the global geopolitical situation, when we set up overseas institutions, we are faced with greater challenges. Vietnam will be one of the major markets in our future development plans. The new base is still in preparation. We believe that we will wait until the 2nd half next year to see its production. This base will be in a bigger size, and it will take a longer time. It's not about migrating our current production capacity. This new production base will mostly take up the new business from, from our business plan. That's my response. Do you have any further questions? Can you please talk about the prospects for vehicle lens sets and shipment numbers? I should say, vehicle, is the 2nd-largest business segments to our company, only after a smartphone.
We were one of the early companies tapping to this market. Now, with higher demands for vehicle lens sets, our optical electrical products see more applications and better prospects. Vehicles are different from smartphones. Smartphones will see very high increase. Vehicle lenses, due to stringent standards, will be only able to increase gradually, but continue for a very long time. If autonomous driving has become prevalent, it will take a few more years. We believe our company can offer products continuously, so our vehicle customers can make better use of our products. Next question, please.
Good morning.
Morning, I am from Huatai Securities. I have two questions. First question is related, related to handsets. For the high end, the share is coming down, GP margin is coming down, unit price is coming down. I guess the market is not really good, and in the past, Huawei did a good job with premium phones. Now their share has come down. The market is looking forward to Q3, Q4 this year, and they hope that Huawei will come back up. What do you think? If Huawei returns to the handset market, then will there be a one-off impact on your modules, or will it change the overall competitive landscape? What will be the impact on you, and what will be the impact on GP margin? Your guidance, please. Thank you.
For the Huawei company, well, according to the publicity and promotion, they will be coming back or returning to the market, where we will be doing preparation work, disclose some information. In the handset, lens set, we work a lot with the Huawei company. A lot of new generation cases are with us. If next year, as they said, they can reach sales of almost 100 million units, then for optical product, GP margin boost, there would be a lot of hope. Of course, we hope that Huawei company can lead a virtuous technology upgrade, and then we think that the industrial chain will be healthy. When they're still in the market, there was constant technology, breakthrough, and iteration. They are a good leader.
We do look forward to their success, and we are the most, or the main, working partner, and we can benefit from their growth. When they come back.
Well, the market will not is no longer as big as in the past few years. There was negative growth or zero growth, and there would be some offsetting in terms of growth. This is quite natural. If they put in efforts towards the higher end of the market, I think that will be a very good information and news for the market. My next question is about vehicles. I think we come across a valuation relationship. You make disclosure based on products, so modules, lens set, and instruments. For the revenue, they are disclosed based on customers for vehicles. Vehicles, RMB 1.7 billion revenue, and we don't know what the what the structure or breakdown is. I want to know the profit contribution of vehicles. How big a share of your company?
1.7 billion-$1.8 billion revenue, 14% GP margin, gross profit is $2 billion now. Is it true that GP margin for vehicles already reached 40%? How should I do the calculation? Can you offer us some ideas and logics? Lens sets, 40% GP margin, vehicles should account for 40% of your total gross profit. How should I do the calculation? This is a very good question. I think we should offer some time for Mr. Ma to do some calculation. Sometimes there may be some disclosure issues. I think your idea is correct. How can we or express our BEUs more clearly, which category makes how much profit and so on? Yesterday, we had a board meeting, and a director also made the same point.
Handset is the biggest segment, and we are used to that, and I think Mr. Ma will have to, do some work in terms of the, dimensions applied and, adjustment.
Next question, please. Xie xie. Thank you.
Thank you, management, from Citibank. It's nice to be back here in person. I have two questions, the first one being vehicle-related. In the first half, ASP was stable on vehicle lens side. I wanted to confirm that if it is true, and GP margin is quite stable, expected. Vehicle contributed 17%. How do you look at the contribution from vehicle camera modules? Because at the beginning of the year, you said the number would double. Is the number really double what you expected? Well, I like to ask a question for investors. For the whole year, any guidance, any expectation for shipments of mobile smartphone lenses? We heard that some of your peers said there would be a market recovery, and there will be structural changes of product mixes.
What about your view?
With regard to vehicle lens, yes, you are right. In the first half, the ASP was quite stable, and GP margin, around 40%, was stable as well. We expect the same in the second half, ASP, GP margin continuing being stable. As for market structure, product structure, V was up 17%. ASP is stable. The absolute number increased by 25%, so was revenue. The problem is with the camera modules. There was a 100% growth compared with last year. In the first half, there will be high-speed growth in vehicle module. In March, we said the target would be RMB 2 billion, but in the first half, there were some disturbance to the performance of domestic car makers. There was problem.
It's still difficult to reach $2 billion in the end. We'll try to reach $1.6 billion instead. Compared with the same period of last year, % growth or higher. Your second question has to do with shipment or the general case of the whole industry. Everyone knows smartphones are not doing well this year. In the second half, the numbers will probably not stabilize. We expect to 7% decline in smartphone shipment numbers. Lens market has already saturated, will probably increase higher than smartphones in general. We will adjust our guidance. It will be -10% the year, roughly the same as industrial average. Modules have stabilized, our target will remain the same, at least as last year. No decline. Very slight. The remained the same as last year.
We hope that we can seize some opportunities in the second half with the coming back of major customers and with a better product. Our two product lines have improved on the basis of last year's performance.
Thank you. Next question, please.
Thank you, management. I'm Andy from Morgan Stanley. I have one question. In the first half of this year, in the whole industry, the situation is the terminal manufacturers of handsets, their growth, their profit margin has improved, but then other companies are under pressure. Business results have declined a lot. At the beginning of the year, you talked about inventory clearance, so there is this diverse development. In the long run, downstream customers, that should not be the issue, that downstream customers are making a lot of money, but then for components manufacturers, their profit declines. For the industry's trend change, do you think will that be the situation where when downstream companies recover their profit margin, then there will also be an upward trend for your profit margin?
When manufacturers' profit margin rises, they will have stronger momentum to go for upgrades of their land sets as well. Is this the right logic? Which point should we pay attention to? New case planning and discussion, or should we look at the real orders placed, and then whether or not unit price is going up or not? Are we or have we seen this kind of phenomenon?
OEM manufacturers did quite well in the first half. Let's not think about the US company. Beijing Nanchang has publicized their financial statements. I met with their CEO, Mr. Liu, last week, and their profit was quite good. He had to with me about some issues. I think the situation is quite reasonable.
Their first point is that, unit price is going up, income per user is going up, IoT is profitable, and they confirm that in this round, there's a lot of harvest in their supply chain, so to speak. Their supply chain is doing well. Overall speaking, profit level is quite good in their financial statements. To me, well, we are also operating this kind of company, so we've had that discussion. In the long run, I think in the ecosystem, there should be coexistence. There should not be a certain part which is highly profitable and another part is not profitable. That won't be sustainable. In the whole industrial chain, I think, we are trying to rediscover the price. Not only our company, for the whole industrial.
People are trying to rediscover the price so that there will be better and sustainable developments. In the first half this year, as you said, OEM and supply chain have a lot of differences between them or variance between them. There are many factors. For the earlier period, low to medium, and capacity expansion was big, and there is a lot of demand for the medium to low end. Suppliers' demand is excess, so OEM has the chance to implement their supply strategies. There had been some adjustments already, and this year, there is another trend. High-end sells well, the volume is not big, demand is good, but then the volume growth is not big. Not one company can sell more than 10 million, only a few 100,000 units. People are still working towards this direction.
As I said at the beginning, for smartphone, long focus, I think that is the, the main direction. We have talked about many of such innovations. We cannot come up with innovation from nowhere. When we talk about innovation, definitely it must be aligned with customers' needs. At the same time, only satisfy the common needs among key customers. For Apple and Huawei, only they can do some customized and personalized work, perhaps. Towards the high end, there will be more new cases coming out. The high end will be... If the high end is profitable, then everybody can get some share of it. Right now, the situation is as I described just now.
Next question, please.
Good morning. I have a quick question on foreign exchange. In the first half, there were turbulences in foreign currency exchange, but you did a good job in smoothing out the turbulence. Going forward, if RMB will continue to depreciate, or if the trend turns around, what impacts do you foresee on your company financially?
This moment, if RMB continues to drop, it will pose some on our company. There are two reasons. First of all, we issued a $400 million in bond insurance. We used this to replace part of the bond insurance we did before, and we borrowed a loan of $200 million to local bank. That's to replace old debts with new debts. As this is liability, RMB depreciation will lead to unrealized loss. When we procure core components like CMOS, a lot of them will come from overseas markets. It will pose some challenge on foreign currency exchange loss.
With the business development in vehicle and XR, and also in smartphones, because we are taking more market share from foreign peers going forward, that's why a US dollar would take a much bigger share in our revenue. The RMB depreciation will see a dwindling effect. Internally, we would say that our job in Forex control wasn't very good, and in the second half, we could improve on that.
Because of time, we will now take the last question.
Good morning. I am Sheng Dai. I have two questions. First question is about GP margin. In the second half, for handsets, there may be improvements, but can you share with us the extent of improvement, including modules, lens sets, and then for vehicles, lens sets? Just now, you said GP margin is stable.
For vehicle modules, GP margin and trend, can you share more details? My second question is about your overall business segment. Handsets right now is a bit soft and weak. Vehicles growth is better. For non-handsets, apart from vehicles-related business, can you give us some details of its current situation? Bottom line question, can you let us know? Thank you. First, GP margin. For lens sets and camera modules, the direction won't be a problem. Definitely, in the second half, there will be an improvement from the first half, and it is difficult to work out the actual extent of improvement. There are three major reasons already presented. I won't repeat the points, but we will try our best to cut costs and expand revenue. That is something we can put in effort.
We will focus on that. We hope to achieve a good answer. For vehicles, lens set, it is stable for GP margin. For modules, it is much better than handset modules. We think that vehicle module product line, well, we achieved RMB 1 odd billion, up a lot year-on-year. Unit value is high. For product structure, it is richer. For 8-megapixel, the share is quite big, 50% already. Changes in product structure will change ASP and GP margin. There are two points that are certain. First, GP margin, comparing with handset module, will be much better. In the future, the same trend. GP margin fluctuation will not be like handset, because competition is intense and so on, where volatility is bigger.
For vehicles, volatility will be smaller because it involves vehicle safety and regulation and compliance. Apart from vehicles and handsets, you want a breakdown of our sales revenue, that is quite clear already. We have to look at XR, VR, and AR. This year, first half is only 3.3% in share, but in the second half, when our major overseas customers start to increase volume, then the volume growth in the second half will be bigger. No matter whether you talk about the mainland sets and modules, overall GP margin will be quite good. It won't be worse than handsets. It will only be better. This year, the VR industry is not good, but then we believe that for the whole year, VR-related revenue growth will exceed 20% year-over-year.
That is about VR. Then, robotic vision. There are a lot of industries involved, and I think our DU needs to work hard, and we need to grab more orders from different industries. Profit, share of profit right now is not very big, but then this industry sees a lot of upside. When, apart from vehicles and VR, robotic vision is also an important source of our revenue growth. Thank you. Thank you very much for your questions. We will conclude our meeting here. Thank you for your participation.