OmniVision: Recovery Expected from 2Q26, with Emerging Business Opportunities Continuing to Emerge

Overview

This report is Citi's conference note on OmniVision released after the Citi Pan-Asia Conference 2026. OmniVision board secretary Ren Bing attended in Singapore on May 20, and management was optimistic about sequential recovery after demand bottomed in 1Q26. The report focuses on operating trends in smartphones, automotive, Emerging/IoT, medical CIS, and analog businesses, and provides valuation and risk judgments for the A-share and H-share listings.

Core views

Citi's core view is that OmniVision still faces short-term pressure from the smartphone industry downturn and memory price increases, but the drag on profits is narrowing. Automotive CIS orders are expected to recover in 2Q26, supported long term by higher in-car camera penetration and ASP increases. Emerging/IoT, medical CIS, and analog businesses are forming new profit growth drivers. The company is benefiting from China's semiconductor localization trend, with a relatively limited impact from export restrictions, leaving room for further re-rating.

Analysis framework

The report mainly analyzes the company based on management discussions, demand tracking by business segment, market share and TAM judgments, profit structure comparisons, and a P/E valuation framework. The A-share target price uses a 32x 2H26E-1H27E P/E, while the H-share target price uses a valuation multiple discounted by 25% relative to A shares.

Methodology notes

• Valuation methodsP/E target price method

  Deriving the target price from forecast earnings and a target P/E multiple

  The A-share target price of Rmb130 is based on a 32x 2H26E-1H27E P/E, close to the five-year average. The H-share target price of HK$110 is based on a 24x 2H26E-1H27E P/E, equivalent to a 25% discount to the A-share target multiple.

• Fundamental analysisSegment-level demand cycle and profit contribution analysis

  Separating demand and profit contributions across smartphone, automotive, IoT, medical, and analog businesses

  The report assesses growth quality and business mix improvement by comparing revenue growth, order recovery, TAM growth, and margin differences across business lines.

• Conference notesManagement communication

  Investment takeaways formed based on management's latest feedback at the Citi Pan-Asia Conference

  The report cites management's views on 2Q26 order recovery, new smart-glasses products, medical CIS profit contribution, and analog business demand.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 603501.SS

  A-share covered name, with Citi assigning a Buy rating and a Rmb130 target price.

  Strengths

  Higher share in premium automotive and smartphone CIS markets, benefiting from supply chain localization and improved product strategy; automotive CIS profit contribution is expected to strengthen.

  Weaknesses

  Smartphone revenue may decline materially this year, and Android demand and memory cost pressure remain.

  Comparison

  The A-share target multiple is 32x 2H26E-1H27E P/E, serving as the benchmark for the H-share valuation discount.

  Risks

  Further deterioration in Android shipments, weaker automotive CIS demand, intensifying competition, smartphone CIS downgrades, and rising foundry costs.

• 0501.HK

  H-share covered name, with Citi assigning a Buy rating and a HK$110 target price.

  Strengths

  Fundamentals are consistent with the A share and benefit from automotive CIS, IoT, medical CIS, and localization trends.

  Weaknesses

  The listing history is short, and the quantitative system flags high risk; H shares typically trade at a valuation discount to A shares.

  Comparison

  The report values H shares at a 25% discount to the A-share target multiple, and H shares have traded at roughly a 20-30% discount to A shares since listing.

  Risks

  Greater price volatility due to the short trading history, widening A/H discount, and the same industry demand and competition risks.

• Automotive CIS

  Core growth business and source of profit support.

  Strengths

  OmniVision has a globally leading market share, automotive CIS TAM is expected to grow at a double-digit CAGR, and the company's automotive CIS revenue is forecast to grow at a 20% CAGR from 2025 to 2028.

  Weaknesses

  In 1Q26, order cuts from a key EV customer weighed on performance.

  Comparison

  Compared with mobile CIS, automotive products are expected to contribute more than 50% of CIS profits, offsetting weak Android demand.

  Risks

  Insufficient domestic subsidies, stagnant overseas sales, or lower-than-expected ADAS penetration could hurt demand.

• Mobile CIS

  One of the legacy core businesses, under short-term pressure but expected to improve sequentially from 2Q26.

  Strengths

  The company is still winning more share from existing customers, and the new EVS product targets the ultra-high-end market with a higher ASP.

  Weaknesses

  Smartphone revenue may decline materially this year, affected by seasonal weakness and memory price increases.

  Comparison

  Its profit contribution is narrowing, and future growth needs to be offset by automotive, medical, and IoT businesses.

  Risks

  Deteriorating Android shipments, smartphone CIS downgrades caused by memory price increases, and higher wafer costs.

• Emerging/IoT

  Emerging growth business, including gimbal cameras and smart glasses.

  Strengths

  Revenue contribution could double this year, supported by gimbal camera ramp-up and new smart-glasses product launches in 2H26-2027.

  Weaknesses

  The business is still in a ramp-up and product-cycle validation phase.

  Comparison

  Compared with the mature smartphone business, Emerging/IoT offers greater growth flexibility.

  Risks

  The launch pace of new smart-glasses products, end-market demand, and spec upgrades may fall short of expectations.

• Medical CIS

  A high-margin niche business, mainly used in consumable scenarios such as endoscopy.

  Strengths

  The company is a globally leading supplier of consumable medical CIS products, with net margins 4-5 times higher than those of the smartphone business.

  Weaknesses

  It accounted for only about 5% of 2025 revenue, so the scale remains limited.

  Comparison

  Although revenue share is low, its profit contribution is significantly higher than its revenue contribution.

  Risks

  Medical end-market ramp-up, customer certification, or pricing changes could affect profit contribution.

• Analog

  A growth-oriented supporting business, including automotive PMICs and optical module-related products.

  Strengths

  The company is one of the largest local automotive PMIC suppliers in China, and demand for optical module products is strong.

  Weaknesses

  Analog accounted for about 6% of 2024 revenue, so the business base is relatively small.

  Comparison

  Compared with the core CIS business, Analog provides diversification and a new growth curve.

  Risks

  Changes in automotive electronics demand, optical module demand, and ASPs may affect growth sustainability.

Key data

• A-share target priceRmb130Based on a 32x 2H26E-1H27E P/E.
• H-share target priceHK$110Based on a 24x 2H26E-1H27E P/E, with a 25% discount to the A-share target multiple.
• Automotive CIS revenue forecast20% CAGR from 2025-2028Driven by higher in-car camera adoption and ASP increases.
• 2024 global ranking3rd in mobile CIS; 1st in automotive CISThe report says OmniVision ranked third globally in mobile CIS and first in automotive CIS in 2024.
• 2024 revenue mixOmniVision 75%; DDIC 4%; Analog 6%; Distribution 15%The company's predecessor, Will Semi, was renamed OmniVision in 2025.
• Medical CIS revenue shareAbout 5% in 2025Medical CIS has a net margin about 4-5 times that of the smartphone business, so its profit share is higher than its revenue share.
• Smart glasses TAMMay exceed 10mn unitsThe report says the smart-glasses TAM is growing rapidly, and OmniVision has opportunities in eye-tracking, CCC integration, and LCoS.
• Optical module-related ASPAround US$2Demand for optical module products in the analog business is very strong.

Impact & implications

If the expected sequential recovery in smartphone and automotive orders from 2Q26 materializes, concerns about Android demand weakness and memory price increases may ease further. Rising profit contributions from automotive CIS, medical CIS, and IoT businesses should help reduce the company's reliance on its traditional smartphone business and strengthen the re-rating logic as a beneficiary of China's semiconductor localization trend. For H shares, the report applies a discount valuation because the listing history is shorter and the stock trades at a 20-30% discount to A shares, but it still views the fundamentals as solid.

Risks

• Memory shortages leading to further deterioration in Android shipments.
• Weak automotive CIS demand caused by insufficient domestic subsidies or stagnant overseas sales.
• Intensifying competition among domestic and overseas CIS vendors.
• Smartphone OEMs downgrading CIS specifications to offset memory price increases.
• Rising input costs such as foundry expenses compressing margins.
• The short trading history of H shares may lead to higher share price volatility and a valuation discount.

What to watch

• Whether smartphone and automotive orders recover sequentially in 2Q26 as management expects.
• The sustainability of order replenishment from the key EV customer in overseas markets and China's sub-Rmb200k ADAS models.
• The launch cadence of new smart-glasses products in 2H26-2027 and higher content value per device for OmniVision.
• Whether profit contribution from medical CIS continues to expand.
• Whether demand for automotive PMICs and optical module products remains strong.
• Changes in Android demand, memory prices, and foundry costs.