No. 1 Market Share, Why No Profit?

I work in automotive production line automation integration. Recently, I broke down Huanchuang Technology's IPO hearing materials into a production line cost sheet. We're used to looking at the actual takt time of the production line first, then the integration costs. Although robot vacuum LiDAR isn't on the final assembly line for cars, the supply chain logic is very similar: high market share among upstream sensor manufacturers doesn't mean OEMs are willing to pay more.

Let me explain a few terms first. LiDAR (Light Detection and Ranging) simply means the machine shoots out laser beams and measures distance based on the return signal to generate an environmental point cloud. A line laser sensor projects a linear laser beam, often used to measure contours and height. Spatial perception solutions refer to the combination of sensors that allow robot vacuums to detect walls, feet, wires, and thresholds.

During the preparation phase, I didn't run any real machines; I just pulled numbers from public documents into Excel. I opened summaries of the IPO hearing materials and financial reprint tables. The pages didn't have many fancy charts; key figures were scattered throughout the text. I copied them line by line and almost mixed up ten-thousands and hundred-millions yuan. I created four columns: year, revenue, net profit, and gross margin. Then I calculated two metrics: net profit margin equals net profit divided by revenue, and 'how much is left per 100 yuan of revenue' equals net profit margin multiplied by 100. This step is basic, but many people only look at global news without checking the denominator. Based on public data, revenue grew from 332 million yuan in 2023 to 614 million yuan in 2025. Net profits were -883,000 yuan, -31.375 million yuan, and 2.201 million yuan respectively. It only turned profitable in 2025, with an annual net profit margin of just 0.4%.

In the hands-on phase, I did three things. First, I looked at how much was left per 100 yuan of revenue: 0.4% means less than 5 mao (0.5 yuan). Second, I examined the quality of growth: revenue nearly doubled, but net profit remained in the millions, indicating they earn hard money. Third, I incorporated the drop in overall gross margin from 21.5% to 16.3% into my supplier negotiation model. On a production line, if the gross margin of a core component drops, it usually means they sold too cheaply, or upstream costs, yield rates, after-sales service, and customer price pressure squeezed out the margin. The only thing I found interesting was that they turned the abstract term 'spatial perception solution' into a quantifiable supply chain metric. For integrators, if metrics can be broken down, problems can be located. Public data shows that in 2024, the revenue shipment share of spatial perception solutions exceeded 50%, with a compound annual growth rate of 35.9%. High share indicates customers rely on them, but OEMs might also use this bargaining power against them; rapid expansion doesn't equal stable profitability.

The pitfall lies in the phrase 'market share.' People doing integration tend to misjudge that large share equals pricing power, which isn't necessarily true. Robot vacuums are consumer electronics products with strong attributes. When top brands like Ecovacs, Dreame, Roborock, and Narwal increase their shipment volumes, suppliers become cost items. The more you sell, the more customers demand cost reduction, quick switching, and after-sales guarantees. In the last two months, I encountered LiDAR modules in client projects. What annoyed me most was inconsistent calibration documentation, interface protocols needing changes, and interruptions to the production line takt time. Expensive sensors actually ranked lower in priority. Saving ten yuan on a module might save the OEM a year, but the supplier loses out themselves.

The reasons for the gross margin dropping from 21.5% to 16.3% weren't detailed in the materials. I can only reverse-engineer based on production line experience: it could be due to product mix adjustments, customer price pressure, or yield rates and after-sales eating into the space. Anyone who does automation retrofits knows that good bookkeeping doesn't guarantee stable delivery, and stable delivery doesn't guarantee retained profits.

The second pitfall is that turning profitable doesn't equal safety. From 2023 to 2025, net profit went from negative to positive; on paper, it turned around. But a 0.4% net profit margin means one customer return, one yield fluctuation, one exchange rate change, or one increase in R&D expenses could wipe out the profit. Actual production line takt times fear these thin margins the most. If equipment stops, losses are hourly; if supplier profits are thin, investment in service shrinks.

Conclusions depend on the situation. Those involved in the robot vacuum OEM supply chain should pay attention to upstream LiDAR manufacturers like Huanchuang. They have high shipment volumes and mature solutions; top brands likely already use them. Ordinary users don't need to buy a specific brand just because it's 'number one globally'; the overall user experience depends on algorithms, map maintenance, after-sales service, and real-world scenarios—the sensor is just one part of it. Investors should note that market share does not equal being number one in making money. For upstream components reaching global scale, what ultimately matters is yield rate, delivery capability, and how much the OEM is willing to let you earn.