乐鑫科技:EspressifSystems2026Q2&Half-

CONTENTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Contents

Message from the CEO 03 Management Report （Continued）

Developer-Centric Platform Strategy 20

About Espressif 07 Developer Community Content 21

Facts About Espressif 07 Research and Development 22

Key Technologies 08 Ownership of Securities 24

Risks and Uncertainties 25

Core Competitiveness 09

Consolidated Financial Statements 26

(Unaudited)

Business Highlights 10

Consolidated Balance Sheet 26

Key Financial Data (Unaudited) 10

Consolidated Income Statement 28

Key Financial Indicators (Unaudited) 10

Consolidated Cash Flow Statement 29

Financial Analysis 11 Consolidated Cash Flow Statement - Indirect

Method

Consolidated Statement of Changes in Equity 31

Management Report 13

Industry Overview 13

Product Positioning 15 Further Information 32

Key Products - Chip Matrix 16 Terms and Conditions of the Report 32

Product Market Tenure 17 List of abbreviations 33

Key Products - M5Stack Development Kits 18

B2D2B Business Model 19

2MESSAGE FROM THE CEO ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Message from the CEO

"We are building more than chips

— we are building a developer-driven platform for the AI era.”

Teo Swee Ann

Espressif’s Founder & CEO

Espressif continued to deliver steady growth in the first half of 2026. The Company generated

revenue of RMB 1.48 billion up 18.9% year on year. Gross margin improved by 4.1 percentage

points to 49.3% while net profit attributable to shareholders increased 27.9% to RMB 334 million.Growth momentum strengthened during the period with second-quarter revenue exceeding

RMB 800 million for the first time and gross margin reaching 50.0% reflecting continued

improvement in business quality.We believe sustained and effective R&D investment is the foundation for product differentiation

and long-term profitability. In the first half of 2026 R&D investment reached RMB 330 million

representing 22.3% of revenue with a continued focus on core technologies software platforms

and new product development. We allocate resources based on product execution customer

adoption and long-term value creation converting our technical capabilities into more

competitive products and stronger business performance.Our first-half performance was not driven by a single product cycle but by a broader product

portfolio a growing developer ecosystem and the supply resilience we have built over time.Together these factors supported revenue growth profitability improvement and the continued

expansion of the markets we serve.Picture source: The Business Times SPH Media Limited. Permission required for reproduction.

3MESSAGE FROM THE CEO ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Broadening our addressable market

* The ESP32-P4 is an important step beyond our traditional communications portfolio. It is a

high-performance microcontroller without an integrated radio designed for applications

requiring compute performance human-machine interfaces and edge processing. In many

customer designs it can operate alongside one of our connectivity products. This allows us to

address a larger share of the system while preserving the modularity customers need.* We also continued to expand our low-power wireless portfolio. The ESP32-H4 and ESP32-H21

support Bluetooth Low Energy and IEEE 802.15.4 providing a foundation for Zigbee Thread

and Matter applications. The H4 is designed for more demanding battery-powered products

requiring dual-core processing and advanced Bluetooth capabilities. The H21 extends the

portfolio toward cost- and power-sensitive sensing and control nodes. This portfolio matters

because connected homes buildings and industrial systems increasingly use several

communications protocols. Low-power mesh devices frequently operate alongside Wi-Fi

gateways and bridges. Supporting these applications through a common development

framework can reduce integration effort for customers shorten development cycles and

increase the number of applications that Espressif can serve.* The ESP32-S31 began sampling with customers in May and officially entered mass production

in July. The S31 combines our self-developed dual-core RISC-V architecture with SIMD

acceleration multi-protocol connectivity and interfaces for audio vision and human-machine

interaction. It is designed to support embedded AI and signal-processing workloads including

intelligent audio and basic computer-vision applications.* To address the growing demand for high-performance AI computing at the edge we are also

actively advancing the development of our next-generation AI edge chip based on our self-

developed RISC-V IP. Expected to be manufactured using an advanced 12nm process

technology this chip is designed to significantly improve energy efficiency and local AI

inference capabilities while enabling more complex algorithm deployment and exceptional

power efficiency. This development will further strengthen Espressif’s architectural

independence and competitive position in edge AI.The significance of these additions is not simply that we are releasing more chips. They expand

our addressable market from connectivity-focused microcontrollers into general-purpose

processing higher-performance wireless connectivity and edge intelligence. They also give

existing customers more reasons to use Espressif products across multiple functions within the

same system.

4MESSAGE FROM THE CEO ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

The Long-Term Value of Our Ecosystem

For more than a decade we have invested not only in silicon but also in the broader

infrastructure surrounding our chips including ESP-IDF open-source tools technical

documentation reference designs and our developer community. Many of these investments

began long before their financial returns became apparent.This ecosystem reduces the practical cost of adopting Espressif products. Engineers can

leverage existing software examples and community knowledge rather than starting each project

from scratch. This enables customers to move more quickly from product evaluation to working

designs and increases the likelihood that an initial design win evolves into a long-term customer

relationship.AI-assisted software development has the potential to further amplify the value of this advantage.Platforms with comprehensive well-structured documentation and extensive open-source code

are generally easier for both engineers and AI-assisted development tools to understand and

utilize. As these tools continue to evolve we expect our long-term investment in open software

and documentation assets to create even greater value.We do not view AI as a replacement for engineering expertise or customer support. AI-generated

firmware still requires validation for security reliability and performance. Our goal is to make

Espressif one of the most accessible and developer-friendly platforms for building reliable

embedded products whether developers use our tools directly or leverage AI assistance.We are also actively exploring new development paradigms in the AI era. Through initiatives such

as ESP-Claw and ESP-Vision as well as our support for emerging AI development technologies

such as MCP we aim to further lower the barriers between AI and physical devices enabling

developers worldwide to build intelligent applications for the real world at lower cost.At the same time our chips are becoming increasingly capable of running AI workloads locally.Edge processing can reduce latency dependence on cloud connectivity ongoing computing

costs and the transmission of sensitive data outside the device. We believe that combining more

capable edge computing with a high-productivity software ecosystem will further lower adoption

barriers and expand the range of commercially viable applications.Extending our engineering capability

The ESP32-E22 provides a further demonstration of the progress in our higher-performance

communications portfolio. During the second quarter it received Wi-Fi CERTIFIED 6E certification

from the Wi-Fi Alliance. The E22 supports tri-band Wi-Fi 6E across 2.4 GHz 5 GHz and 6 GHz

5MESSAGE FROM THE CEO ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

2×2 MU-MIMO and channel bandwidth of up to 160 MHz and is supported by an open-source

Linux driver.Certification is important because it independently validates standards compliance and

interoperability. More broadly developing a Wi-Fi 6E connectivity co-processor with this level of

radio digital and software complexity demonstrates the increasing scope of our internal R&D

capability. This capability will support our continued development toward Wi-Fi 7 which remains

an important part of our product roadmap. Our current objective is to reach Wi-Fi 7 capability by

mid-2027.Supply and working-capital discipline

We continue to plan for tight capacity in the parts of the semiconductor supply chain relevant to

our products. We have therefore maintained additional inventory and supply coverage to reduce

the risk of interruptions for customers.This strategy carries a cost. It uses working capital increases inventory exposure and can affect

cash conversion if demand or product transitions differ from our expectations. We believe the

resilience it provides is valuable particularly because reliable supply can influence customer

design decisions that last for several years. We will continue to balance that benefit against

demand visibility inventory ageing and capital efficiency.Looking ahead

The first half demonstrated progress on the priorities that matter most to Espressif's long-term

value: sustainable revenue growth improving gross margin continued R&D investment and

expansion into adjacent markets where our technology and ecosystem provide a credible

advantage.Our portfolio now extends from ultra-low-power Bluetooth LE and IEEE 802.15.4 devices through

general-purpose and AI-capable processing to higher-performance Wi-Fi connectivity. The

commercial opportunity is larger as a result but so is the execution challenge. We must convert

new products into durable customer designs manage operating expenses carefully and maintain

disciplined use of working capital.

6ABOUT ESPRESSIF ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Facts About Espressif

Espressif Systems (SSE: 688018.SH) is a leading fabless semiconductor company providing wireless connectivity

and edge intelligence solutions for IoT devices. The Company has expanded beyond chip supply to become a

platform enabler for hardware digitalization and intelligent transformation supported by an integrated combination of

silicon software tools and ecosystem resources.Built around the ESP32 product family which has emerged as a preferred and highly recognizable platform among

global developers Espressif has established strong ecosystem momentum. A large and active developer community

thousands of third-party software components and long-term platform continuity drive sustained adoption.Through this ecosystem-led approach Espressif enables customers to build scale and continuously evolve

intelligent hardware products positioning the Company to capture durable value as hardware digitalization and

intelligence continue to deepen globally.

1.5 Billion+ Global Leader 230+ Patents 10000+ 3 Million+

Global IoT Chip In Wi-Fi MCU In AIoT Satisfied Active Ecosystem

Shipment Market Technology Customers Developers

(Cumulative) Worldwide

Developer Flywheel Developer Growth More developers join

learn and build with

Espressif solutions.Ecosystem Application

Expansion Innovation

The ecosystem grows with Developers create innovative

more partners tools and applications and solutions

integrations enabling greater across diverse use cases.possibilities.Enterprise Adoption

Enterprises adopt Espressif's platform to commercialize and scale these innovations.

7ABOUT ESPRESSIF ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

As a global semiconductor innovator we deliver high-performance RISC-V SoCs and comprehensive solutions with

integrated AI in-house operating system robust security and seamless cloud integration—shaping the future of

smart connected systems.Al Agent Edge Al Co-processor Mesh Wi-Fi Sensing HMI Multimedia Cloud & Matter Security

Cloud &

Ecosystem

AI & IoT AI

SDK ESP-CLAW ESP-VISION ESP-SREdge AI Agent Framework Low-Code Edge AI Speech Recognition

ESP-WHO ESP-DL ESP-NN

Computer Vision Deep Learning Neural Network Library

IoT

ESP-Brookesia ESP-GMF ESP-loT-Solution

Al-Powered Ul Framework Audio&Video Processing Peripheral Integration

Operating In-House

System ESP-IDF Compilers & Tool Chains

Official loT OS

Third-Party

IC Design Connectivity

Wireless Communication

Wi-Fi 7/6E/6 | 2.4/5/6 GHz Tri-band

Bluetooth 6 (LE)｜Bluetooth Classic (BR/EDR)

IEEE 802.15.4

High-Speed Data Transmission

160 MHz Channel Bandwidth｜1024-QAM｜2x2 MU-MIMO

Computing

Core

32-bit RISC-V

AI FPU | Instruction Set Extensions

Multimedia ISP | H.264 Encoder | JPEG Codec

High-Speed Interfaces PCle | DDR | USB

8CORE COMPETITIVENESS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Brand Awareness ESP32 Google Trends100

The ESP32 and Espressif brands have a strong sense of

recognition among users. This recognition has become a key

factor in our competitive advantage and success. Users identify

with the ESP32 brand due to its reliability performance and 50

versatility which have been proven across various applications

and industries. This strong brand awareness not only fosters 25

customer retention but also attracts new users thereby solidifying

Espressif's position in the market. 0

2019-072026-06

Exceptional IC Design Capability Espressif Google Trends

100

Espressif independently designs and develops its own chip

products with core IPs being self-developed. These chips are

equipped with rich features ensuring that Espressif’s products

stand out in the market and avoid the pitfalls of homogenized

competition. By controlling the entire design process Espressif 50

can innovate rapidly and introduce unique functionalities that set

our products apart from competitors providing a distinctive edge 25

in the IoT semiconductor industry.

2019-072026-06

Full-Stack Engineering Capability

Espressif possesses comprehensive engineering development capabilities that span from IP development to

complete chip design operating systems firmware software frameworks application solutions hardware design

edge AI cloud and apps. This full-stack engineering expertise allows Espressif to offer highly integrated solutions

that meet a wide range of customer needs. The ability to control and optimize every layer of the technology stack is

unique in the industry and enables Espressif to deliver superior products and services that are seamlessly integrated

and highly efficient.Superior Cost-Effective and Stable Support

Espressif's products are known for their high performance and low cost making them competitive in the market. We

provide the cost efficiency necessary to promote large-scale commercialization in downstream industries.Additionally we ensure the long-term availability of our products and offer stable and enduring software support

ensuring that customers can rely on their investments for extended periods. This commitment to value and reliability

strengthens customer trust.Extensive Developer Community Support

Espressif has garnered support from a vast community of professional engineers who are familiar with Espressif's

development platform and actively promote its value proposition. This large and engaged community not only aids in

the rapid adoption and dissemination of Espressif’s technologies but also contributes to continuous improvement

through feedback and shared knowledge. The robust community support amplifies Espressif's market presence and

enhances our reputation as a trusted and innovative leader in the industry.

9BUSINESS HIGHLIGHTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Business Highlights

Key Financial Data (Unaudited)

Three Months Ended Six Months Ended

CNY Jun 30 2026 Jun 30 2025 Jun 30 2026 Jun 30 2025

Consolidated Statement of Income Data

Revenue 832739862 687690927 1480711294 1245540796

Gross profit 415932633 321088233 730254956 563035750

Selling expenses 24787914 20891691 47935740 37911612

General and administrative expenses 25665226 20014920 47402114 37868504

Research and development expenses 175180569 142052489 329666051 268244538

Net income 199233110 168598092 335278541 263039765

Net income attributable to Espressif 198583901 167557823 334226057 261262177

Earnings per share:

Basic 1.4314 1.2049

Diluted 1.4314 1.2049

Consolidated Cash Flow Data

Net cash provided by operating activities 69029210 39450437 72446512 114422825

Non-GAAP Adjustment

Stock-based compensation 21540785 13481337 28066954 18790505

Non-GAAP net income attributable to Espressif 220124685 181039160 362293011 280052682

Jun 30 2026 Dec 31 2025

Consolidated Balance Sheet Data

Working capital 3737844947 3518352994

Total assets 5280396574 5047755518

Long-term obligations 154215210 141345125

Total shareholders’ equity 4737937020 4489877928

N.B.: Due to the company's implementation of a capital reserve to equity conversion in 2026 the earnings per share for each reporting period have been recalculated

based on the adjusted share count.Key Financial Indicators (Unaudited)

Three Months Ended Six Months Ended

Jun 30 2026 Jun 30 2025 Jun 30 2026 Jun 30 2025

Gross margin 49.95% 46.69% 49.32% 45.20%

R&D-to-sales ratio 21.04% 20.66% 22.26% 21.54%

EBITDA margin 27.88% 26.69% 26.27% 23.24%

Net income margin 23.93% 24.52% 22.64% 21.12%

Weighted ROE 7.26% 11.30%

Number of Espressif employees 954 840

10BUSINESS HIGHLIGHTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Financial Analysis

Revenue & Margin:

First-half revenue reached CNY 1.48 billion representing an 18.9% YoY increase with second-quarter revenue

growth exceeding 20%.Although global smart home demand moderated to single-digit growth amid a challenging macroeconomic

environment and ongoing geopolitical uncertainties Espressif continued to benefit from the diversification of its

application portfolio. Non-smart home segments—including industrial automation smart agriculture energy

management and AI-driven developer and innovation activities—continued to deliver solid growth.Supported by the Company's strong developer ecosystem broad customer base and recognized brand position

Espressif continued to demonstrate pricing power in the market. Together with ongoing product mix optimization

these factors contributed to an overall gross margin of 49.3% remaining at a high level.Revenue by Area:

* China’s Mainland revenue saw a 31.0% QoQ increase and a 15.9% YoY growth for the second quarter bringing the

H1 cumulative YoY growth to 12.2%.* Overseas revenue grew by 23.5% QoQ and 34.1% YoY in Q2 with an H1 cumulative YoY growth rate of 35.8%.Revenue by Product Category:

* Chips: Revenue grew by 6.6% YoY reflecting steady demand from the customer base that prefers direct chip-level

design and in-house hardware development.* Modules & Development Kits: Revenue grew by 26.8% YoY as the IoT ecosystem continues to mature. An

increasing number of customers are choosing pre-certified module solutions to simplify hardware development

shorten product development cycles and concentrate engineering resources on software AI and application

innovation.Revenue by Area Revenue by Sales Top-5 Customer

in H1 2026 Mode in H1 2026 Concentration Rate

26.4%28.1%

23.9%22.3%20.3%

67.7%71.1%

China's Mailand Rest of the World Direct Indirect 2022 2023 2024 2025 H1 2026

Revenue by Product Category

Chip Module & DevKits Others

H1 2025 38.9% 60.5% 0.6%

H1 2026 34.9% 64.5% 0.6%

11BUSINESS HIGHLIGHTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Financial Analysis (Continued)

Profitability & Resilience: Net income attributable to shareholders reached CNY 334.23 million representing a

27.9% year-on-year increase outpacing revenue growth. Despite a softer market environment the Company

continued to demonstrate strong operational resilience through sustained margin expansion diversified end-market

exposure and continued execution of its long-term growth strategy.R&D investment: R&D expenses increased by 22.9% YoY primarily driven by higher R&D headcount and employee

compensation. The increase reflects the Company's continued investment in expanding its technology capabilities

in response to the industry's evolution from basic IoT connectivity toward intelligent edge computing and Physical AI

applications.Cash Flow & Inventory: During the reporting period memory prices increased and procurement lead times

extended. To secure supply and ensure stable production and deliveries the Company strategically increased

inventory reserves. Consequently inventory rose by CNY 214.20 million compared with the end of 2025 which was

the primary reason why net cash generated from operating activities stood at CNY 72.45 million lower than net

profit. This deliberate working capital investment is expected to normalize as supply chain conditions stabilize.ROE & Capital: The decline in ROE was a result of capital dilution following the new share issuance completed in Q3

2025 rather than a shift in underlying profitability.

Key Financial Indicators

H1 2025 H1 2026

49.3%

45.2%

26.3%

23.2%21.5%22.3%21.1%22.6%

11.3%

6.1%6.4%7.3%

Overall GM EBITDA SG&A as % of R&D as % of Net Income ROE (H1)

Margin sales sales Margin

12MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Industry Overview

The rapid development of artificial intelligence (AI) technology is propelling the Internet of Things (IoT) industry into

a new phase of growth. As generative AI edge computing wireless communications and open-source software

ecosystems continue to mature the foundational logic driving smart terminal development is undergoing a profound

shift. The focus of industry competition has gradually expanded from traditional device connectivity to computing

power intelligent interaction capabilities and software ecosystem capabilities. The convergence of AI and IoT (AIoT)

is continuously spawning new application scenarios while driving the smart terminal industry toward a more open

and diversified development stage.

1. AI Drives Smart Terminals from "Connectivity" to "Intelligence"

Over the past decade the development of the IoT industry primarily revolved around device networking data

collection and remote control where connectivity served as the most critical foundational capability for smart

terminals. With the rapid evolution of large language models (LLMs) edge AI and multimodal technologies terminal

devices are increasingly equipped with visual perception voice interaction local inference and autonomous

decision-making capabilities. Consequently the industry's focus is shifting from "whether a device is connected" to

"what tasks it can accomplish."

Concurrently AI computing architectures are undergoing structural shifts. To satisfy requirements for real-time

response privacy protection network bandwidth and power consumption control an increasing volume of AI

inference is migrating from the cloud to the edge. According to IDC forecasts the global edge computing market is

expected to maintain double-digit growth over the coming years with market size exceeding $380 billion by 2028.Gartner also notes that a vast amount of enterprise data will be generated and processed at the edge in the future

making edge computing an essential component of AI deployment. This trend will continuously drive the demand for

edge computing platforms high-performance MCUs SoCs and related software platforms.Meanwhile the global volume of smart devices continues to experience long-term growth. According to forecasts by

TSR annual shipments in the wireless connectivity chip market will exceed 15 billion units by 2032 with connected

endpoints continuously expanding into industrial automation energy management smart agriculture commercial

equipment robotics and various emerging fields. The continuous enhancement of AI capabilities is enabling smart

terminals to gradually evolve from simple "connected devices" into a new generation of intelligent devices capable of

autonomous perception and smart interaction.

2. Shifting Drivers of Innovation: Developers Emerging as a Core Force

Beyond the continuous upgrading of terminal form factors AI is fundamentally changing the innovation model of the

smart hardware industry.In the past new product R&D relied heavily on large terminal manufacturers characterized by longer R&D cycles and

highly concentrated innovation directions. In recent years however the rapid proliferation of LLMs open-source

software open-source hardware and AI development tools has significantly lowered the barriers to smart hardware

development. An increasing number of startups academic and research institutions individual developers and

open-source communities are actively participating in smart terminal innovation resulting in a more decentralized

diversified and rapidly iterative industry landscape.According to GitHub's Octoverse report AI has become one of the fastest-growing open-source technology

domains globally with the number of AI-related open-source projects and developers increasing rapidly.Simultaneously novel products such as robotics AI toys intelligent companion devices edge vision terminals

wearable devices and smart commercial terminals are continually emerging. A vast majority of these innovative

applications are prototyped and verified by developers first before gradually moving toward commercialization.

13MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Industry Overview (Continued)

Moving forward industry innovation will increasingly originate from global developers startup teams and open

communities rather than relying solely on a small number of enterprise giants. The strategic importance of

development efficiency software ecosystems and innovative toolchains will continue to elevate.

3. Platform-Based Competition Becomes a Key AIoT Trend

Alongside the rapid adoption of AI applications industry competitive dynamics are evolving.The traditional semiconductor industry competed primarily on chip performance process nodes cost efficiency and

supply chain capabilities. In contrast the AI era introduces significantly higher software complexity. Developers today

focus not only on hardware performance but even more so on development tools software frameworks AI model

support operating systems open-source ecosystems and cross-platform development capabilities.Software ecosystems open-source collaboration and developer toolchains have become critical factors influencing

R&D efficiency. An increasing number of enterprises are leveraging open software platforms unified development

frameworks and comprehensive toolsets to help developers shorten product development cycles and accelerate

the commercial rollout of innovations.At the same time the application boundaries of AI terminals continue to expand. Extending beyond smart homes into

robotics industrial automation smart energy smart agriculture healthcare and commercial terminals many

emerging applications remain in a phase of rapid exploration with fluid market boundaries. This implies that future

industry growth will stem not only from increased penetration in existing markets but also from the continuous

emergence of new applications and market demands.In summary artificial intelligence is pushing the smart terminal industry into a brand-new phase of development. The

ongoing advancement of edge intelligence multimodal interaction wireless connectivity open-source software and

developer ecosystems is collectively shifting AIoT competition from standalone hardware specs to platform- and

ecosystem-centric strength. As AI continuously lowers the barriers to innovation future smart terminal innovation will

become increasingly vibrant and application scenarios will continue to expand opening up long-term strategic

opportunities for the entire industry.

14MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

From Connectivity to AI

Espressif’s Product Positioning Across Device Evolution

Passive + System | Connectivity as Infrastructure AI / System-level Devices

From MCU to AI-enabled System Platforms

Systematic Connectivity Physical AI & High-Interaction

C / E / H-Series (Connectivity & Gateway) S / P-Series (AI & Computing)

* Gateway / Thread / Matter Node

* AI Hardware (Voice / Vision) Robotics AI Agent

* Systematic (Stacks / Multi-protocol)

* Multi-modal High Compute

* Low Interaction Proactive Interaction Path to

higher Add-on Value

Basic IoT Interactive Devices

ESP8266 ｜ Entry ESP32 ｜ C / H-Series Mainstream ESP32 ｜ S-Series

* Sensor Basic Connected Device Low-cost IoT

* Lightweight Voice Display Device

* Passive Connectivity-focused * Interaction Basic System Capability

Interactive Devices

Basic IoT | Connectivity as a Feature Interaction Emerges on top of Connectivity

Passive Interaction Active

Unified Developer Ecosystem across all segments

The Company's product roadmap is structured around four application-oriented capability layers: Basic IoT

Systematic Connectivity Interactive Devices and Physical AI & High-Interaction. This roadmap reflects the

evolution of connected devices from simple sensing and communication toward intelligent autonomous and

interactive systems.Basic IoT focuses on delivering reliable cost-effective connectivity for large-scale embedded devices. Products

such as the ESP32-C series provide highly integrated Wi-Fi and Bluetooth connectivity with optimized power

consumption and cost efficiency enabling broad adoption across smart home devices consumer electronics

industrial control and other mainstream IoT applications.Building upon basic connectivity Systematic Connectivity addresses increasingly complex networking

environments where multiple wireless technologies operate together. The Company's portfolio supports Wi-Fi

Bluetooth LE Thread Zigbee Matter and Wi-Fi 6/6E enabling devices to participate in heterogeneous networks

with improved bandwidth lower latency stronger reliability and lower power consumption. This capability allows

customers to build scalable and interoperable connected systems rather than isolated devices.Interactive Devices combine connectivity with local intelligence to enable richer human-device interaction.Products including the ESP32-S series integrate AI acceleration vector instructions graphics capabilities and

multimedia processing to support voice interaction vision processing display control and other real-time edge AI

applications enabling a new generation of intelligent terminals.Looking further ahead the Company is expanding toward Physical AI & High-Interaction. Products such as the

ESP32-P series provide significantly higher computing performance richer peripheral interfaces multimedia

capabilities and support for embedded Linux forming the computing foundation for next-generation intelligent

control systems robotics and AI Agent applications. At the software layer the Company is also investing in

technologies such as MCP integration ESP-Claw and AI-native development frameworks to help developers more

easily build intelligent interactive devices and Physical AI applications.Through this four-layer strategy the Company is building a unified platform that supports customers from basic IoT

connectivity to intelligent edge computing and future Physical AI applications. 15

System Integration / Capability

Low HighMANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Key Products - Chip Matrix

AI AI AI

ESP 32 ESP32 ESP32 ESP3232 ESP S3 ESP32 - S3 P4 ESP32 - P4 S31 ESP32 - S31

2x HP Core @240 MHz 2x HP Core @240 MHz 2x HP Core @400 MHz 2x HP Core @320 MHz

1x ULP Core @8 MHz 1x ULP Core @17.5 MHz 1x LP Core @40 MHz 1x ULP Core @40 MHz

H.264 encoding

Function-

Driven ESP32ESP32 ESP32 - S2 H4 ESP32 -S2 H4

2x Core @96 MHz

1x Core @240 MHz

ESP32

C5 ESP32 - C5

1x HP Core @ 240MHz

1x LP Core @ 40MHz ESP32

E22 ESP32 -E22

2x Core @500 MHz

2×2 MIMO

ESP32

C6 ESP32 - C6

1x HP Core @160 MHz

1x LP Core @20 MHz ESP32

ESP 8266 C61 ESP32 - C61

1x Core @160 MHz 1x Core @160 MHz

ESP32

C3 ESP32 - C3

1x Core @160 MHz

Connectivity-

Driven ESP32H21 ESP32 -H21

ESP32

C2 ESP32 - C2 1x Core @96 MHz

1x Core @120 MHz

ESP32

H2 ESP32 - H2

1x Core @96 MHz

Legacy Growth Emerging / Sampling

Wi-Fi 4 Bluetooth

Wi-Fi 6 Thread

N.B.: Wi-Fi 6E Zigbee

All products shown above are 32-bit MCU-based chips.Matter Ultra-Low Power

16MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Product Market Tenure

Annual Revenue Trend Legacy Growth Emerging Sampling

ESPP3322-E-2E22

ESP3322-H-H212 1

EESPS3P23-H2-4H4

ESPP3322-S-S313 1 <1 YEAR

ESEPS3P23-P24-P4 2 YEARS

ESP3322--CC6161 2 YEARS

EESPS3P23-2C-5C5 2 YEARS

EESPS3P23-H2-2H2 4 YEARS

EESPS3P23-2C-6C6 4 YEARS

EESPS3P23-2C-2C2 5 YEARS

EESPS3P23-2C-3C3 6 YEARS

ESEPS3P23-S23-S3 6 YEARS

ESEPS3P23-S22-S2 7 YEARS

ESP3E2S P(O32ri g(Oinriagli)nal) 11 YEARS (SINCE 2016)

ESEP8S2P686266 13 YEARS (SINCE 2014)

20142015201620172018201920202021202220232024202520262027

Product Lifecycle Classification

* Sampling: The product has completed development and entered the sampling phase undergoing customer

design-in and validation.* Emerging: The product has achieved initial mass production and begun generating revenue though overall

scale remains limited.* Growth: The product enters a ramp-up phase making a significant contribution to revenue growth.* Legacy: The product has reached a stable shipment scale with sales trending flat or gradually declining; certain

product may enter the later stage of their lifecycle.* EOL: End of Life. No products have reached this stage yet.Market Tenure as a Core Asset

In the IoT industry a product’s market tenure serves as a critical indicator of credibility. It reflects long-term validation

and stable performance across complex application environments—reliability that cannot be replicated by speed or

short-term iteration alone.Long-Tail Value

Products within the IoT ecosystem are capable of sustaining revenue contributions over extended periods.Unlike consumer mobile devices IoT chips typically follow a "Slow Burn High Retention" model where reliability is

the primary purchasing driver.

17MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Key Products - M5Stack Development Kits

In addition to the ESP32 chip brand Espressif also owns the M5Stack development kit brand. M5Stack is renowned

for its innovative approach to hardware development and offers a modular open-source platform that simplifies the

creation of IoT and embedded system solutions greatly enhancing deployment efficiency.Beyond its hardware prowess M5Stack has cultivated an exceptionally vibrant global developer community

commanding high brand mindshare within the ecosystem. With an extensive lineup exceeding 400 products

M5Stack continues to drive rapid innovation by launching a new product every week. M5Stack enables developers

to rapidly prototype and iterate. This vast community serves as a continuous validation engine where grassroots

innovation frequently translates into mature market-ready solutions.In the first half of 2026 M5Stack successfully debuted two new products through Kickstarter crowdfunding

campaigns. The initiatives were highly successful attracting a broader base of new developers to the M5Stack

brand. Post-crowdfunding the products sustained high traction with both new acquisitions and repeat purchases

throughout standard retail underscoring a robust long-tail effect. M5Stack is progressively becoming an 'Everyday

Carry' (EDC) staple for engineers further reinforcing our Direct-to-Consumer (DTC) market strategy.HK$ 3582197

4142 Backers

HK$ 14960226

13644 Backers

M5Stack’s modular and standardized development kits significantly lower the barrier to entry for students educators

and creative developers. Its plug-and-play design makes embedded systems and IoT development more accessible

supporting classroom adoption STEM programs and hands-on experimentation.Developers who gain experience with Espressif-based platforms during their education or prototyping phase are

more likely to continue using the same ecosystem in future professional or commercial projects.

18MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Business Model

Business-to-Developer-to-Business (B2D2B)

We believe developers are the primary drivers of technological innovation. By serving developers first we enable the

creation of new products new applications and ultimately new markets.Our growth model is built on the global developer ecosystem through two complementary layers: Business-to-

Developer (B2D) and Business-to-Developer-to-Business (B2D2B).B2D (Business-to-Developer) forms the foundation of our ecosystem. We regard developers as our primary direct

users and continuously invest in a comprehensive development platform including processors software

frameworks operating systems development tools development kits and technical support. Through our open-

source ecosystem technical community developer events and continuous software enhancements we maintain

long-term engagement with developers worldwide. In this sense B2D resembles a direct-to-consumer (DTC)

model where the "consumer" is the global developer community.B2D2B (Business-to-Developer-to-Business) transforms developer adoption of our platform into enterprise

adoption of our technologies. As developers build innovative products on our platform they bring our technologies

into their organizations and industries driving the development and commercialization of intelligent hardware

applications across industrial automation energy management smart agriculture consumer electronics AI-enabled

devices and many other markets.Together these two layers form Espressif's Developer Flywheel where developers create new applications that

drive enterprise adoption while growing enterprise adoption attracts more developers reinforcing a self-sustaining

cycle of developer growth application innovation enterprise adoption and ecosystem expansion.B2D2B Model

Core Chip Software Tools

Smart Home Smart Lighting Industrial Control Charging Pile

Module Branch B

2D Developer (Product Prototype)

Community

Portable Energy Storage

Branch A

(DIY Enthusiast)

Development Board

(DevKit) Photovoltaic Inverter

Smart Agriculture 3D Printer Smart Internet of Vehicles

Healthcare

19MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Behind Every Smart Devices is a

Developer-Centric Platform Strategy

CONNECTED DEVICE SMART INTERACTION EDGE AI DEVELOPERS

DEVELOPERS DEVELOPERS EDGE AI DEVELOPERS

DESCRIPTION DESCRIPTION DESCRIPTION

Build reliable low-power connected Create devices that interact naturally Develop intelligent devices capable

devices for IoT applications with a with people through displays touch of running AI inference locally for

focus on wireless connectivity voice cameras and multimodal vision audio robotics and

energy efficiency and security. interfaces. automation.TYPICAL FOCUS TYPICAL FOCUS TYPICAL FOCUS

Smart home Matter Thread AI toys smart displays HMI Machine vision robotics AI cameras

sensors wearables industrial IoT education consumer electronics industrial AI edge computing

HIGH-PERFORMANCE LINUX APPLICATION

CONNECTIVITY DEVELOPERS DEVELOPERS AI-NATIVE DEVELOPERS

DESCRIPTION DESCRIPTION

DESCRIPTION Build sophisticated embedded Build hardware applications with AI as

Design products that require high applications using Linux leveraging the primary development interface

bandwidth low latency and modern software frameworks and using natural language AI coding

advanced wireless connectivity. open-source ecosystems. assistants and low-code workflows.TYPICAL FOCUS TYPICAL FOCUS TYPICAL FOCUS

Video streaming industrial gateways Python ROS OpenCV edge Vibe coding MCP AI IDEs rapid

XR multimedia networking computing robotics AI terminals prototyping

Espressif's long-term development strategy is centered on continuously expanding the developer ecosystem served

by its technology platform. As intelligent connected devices evolve the required skill sets and development

workflows continue to diversify. Accordingly the Company is broadening its technology portfolio to support an

increasingly diverse range of developer communities.Today Espressif's platforms are widely adopted by Connected Device Developers who focus on low-power wireless

IoT applications and Smart Interaction Developers who build products featuring displays voice cameras touch

interfaces and multimodal user experiences. The growing adoption of on-device AI has also expanded the

Company's engagement with Edge AI Developers while increasing demand for higher bandwidth and lower latency

has created new opportunities among High-Performance Connectivity Developers developing multimedia

industrial networking and advanced wireless applications.Looking forward the Company is making strategic investments to support the next generation of embedded

software development. This includes ongoing research and development of Linux-capable platforms and software

frameworks intended to serve Linux Application Developers enabling more sophisticated embedded computing

applications. In parallel the Company is exploring AI-native development frameworks and workflows including AI-

assisted programming MCP integration and low-code development tools with the objective of supporting the

emerging community of AI-Native Developers as artificial intelligence reshapes embedded system development.By expanding its developer communities the Company aims to strengthen its software ecosystem accelerate

technology adoption and support long-term business growth.

20MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Developer Community Content @20260630

Cumulative Number of GitHub

ESP32 Projects 179 K

BOOKS

Global Code Hosting Platform Social Networking Site Developer-written books

235800196359>300

ESP32 and ESP8266 ESP32 Group Members Covering more than 10

Projects languages

2016-122026-06

Daily Increase on GitHub

ESP32 Projects 319

Chinese Video Sharing Platform Global Video Sharing Platform

5.17 M 3.76 M 903 K

Most Viewed ESP32 Most Viewed ESP32 Most Viewed ESP32

Video (2026) Short (2026) Video (2026)

2016Q4 2026Q2

Always a on Social Media

Posted on 13 Jul 2026 Posted on 2 Feb 2026 Posted on 9 Jul 2026 Posted on 26 Jul 2026

Researchers built a soft floating robot ，从零硬啃机械臂！电机的是谱めくりペダル（作）できた…for indoor interaction. 体式步进+驱动， CAN 总线，主控是I Built a Tiny World Cup Live Score

ESP32-S3 Gadget 今回は幅にを省くためにGeminiに

It uses helium and flapping fins instead 助けてもらっちゃいました

of propellers. I built a tiny DIY FIFA World Cup Live

The result is quiet lightweight and Score Gadget powered by an ESP32!

safe to touch.It can follow people give reminders In this video I'll show you how I built a

and act as a study buddy. compact ESP32-based World Cup live

score tracker that displays live football

scores goal alerts match statistics……

https://www.bilibili.com/video/

BV1G9Nw6kEZE/ https://x.com/tyuuuytrewq/status/2081183509989949858

https://x.com/clankrmedia/status/

2076593164744376707

Searched on 16 Jul 2026

Posted on 26 June 2026 https://www.youtube.com/watch

Made a coffee journal gadget v=vdqnaEQesAk

("Espresso Post") that tracks ambient

Posted on 7 Jul 2026 humidity/temp/pressure and nudges

my grind

This ESP32 Sisyphus Sand Table

Creates Endless Art [D.I.Y] (THE BUILD Posted on 24 May 2026Got tired of re-dialing every time the

VIDEO) weather changed and never knowing if

it was the climate or just me being

I built this DIY Sand Table for under inconsistent so I built a thing to track

$160! In this video I take you through it.the entire engineering process—from

the initial 3D design and laser cutting

to the final ESP32 firmware……

https://www.reddit.com/r/esp32/ 21

comments/1ufkm1o/

made_a_coffee_journal_gadget_espre

sso_post_that/MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Research and Development

R&D Investment

As the Company's product roadmap advances from Basic IoT to Systematic Connectivity Interactive Devices and

ultimately Physical AI & High-Interaction R&D efforts have expanded beyond wireless connectivity to include

embedded computing multimedia processing embedded Linux AI software frameworks developer tools and edge

AI technologies. The growing complexity of both hardware and software platforms requires broader engineering

expertise and deeper cross-disciplinary collaboration.Accordingly the increase in R&D investment reflects not only the expansion of product development activities but

also the Company's continued transition from a connectivity semiconductor supplier to a provider of integrated

computing connectivity and software platforms for intelligent edge devices.Fiscal Year

CNY June 30 2026 June 30 2025 change (%)

R&D Expenses 329666051 268244538 22.90

R&D-to-sales ratio 22.26% 21.54%

Intellectual Property

371

We seek to protect our technologies through a combination of patents software Applied for

239 intellectual property rights. We continue to file new applications relating to our 239

recent R&D innovations. Granted

List of Intellectual Property Rights Applied and Granted

H1 2026 Cumulative number

Applied for Granted Applied for Granted

Invention patents 15 4 196 114

Utility model patents 1 1 41 39

Design patents 5 4 20 15

Software copyright 0 0 27 27

Others 9 3 87 44

Total 30 12 371 239N.B.: The number of intellectual property rights that have been “applied for" does not include the rejected applications in China or the PCT patent applications notsubmitted to any particular country or any patent applications beyond the reporting period. The number of “granted" patents includes those with expired IP rights. Thecategory of “others” includes overseas (non-Chinese) patent applications i.e. PCT applications patent applications filed in the United States under the Paris

Convention and first-filed patent applications in India and Singapore.

22MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

R&D Employees

We continue to enrich our engineering organization with talent spanning embedded systems wireless connectivity

AI operating systems Linux software frameworks graphics multimedia cloud services and developer tools. This

multidisciplinary expertise enables us to support a broader developer community—from embedded engineers and

product designers to AI application developers and software engineers—while lowering the barriers to building

intelligent connected products.We view hardware and software as a unified technology stack rather than separate disciplines. Alongside our

semiconductor roadmap we continue to invest in AI-native software platforms operating systems development

frameworks toolchains middleware and cloud services. Our objective is to provide developers with an integrated

end-to-end development experience that accelerates innovation from prototype to mass production.At the same time AI is transforming the way we build products internally. Across software development hardware

design testing documentation and knowledge management our engineering teams are increasingly adopting AI-

assisted tools to automate repetitive work improve collaboration and shorten development cycles. Rather than

replacing engineers these tools enable them to dedicate more time to system architecture product innovation and

solving complex engineering challenges.Looking ahead we will continue to invest in both engineering talent and AI-enabled productivity. We believe that the

combination of a world-class engineering team an expanding software platform and continuously improving

development efficiency will strengthen our ability to serve developers worldwide and reinforce the long-term

competitiveness of the Espressif ecosystem.Fiscal Year

June 30 2026 June 30 2025

R&D employees 653 589

R&D employees as a percentage of total employees 68.45% 70.12%

Total compensation of R&D employees (CNY in thousands) 239268 206006

Average compensation of R&D employees (CNY in thousands) 373 361

R&D Expenses R&D Employees

28.2%

26.5%76.1%77.4%

24.4%23.5%71.8%70.0%68.5%

22.3%

603

629653

490553

404484

337330440

2022 2023 2024 2025 H1 2026 2022 2023 2024 2025 H1 2026

R&D expenses (in million) R&D-to-sales ratio R&D employees R&D employees %

N.B.: As the subsidiary M5Stack operates its own production lines and manufacturing workforce its production headcount has expanded in tandem with business

growth. Consequently while the Group's total R&D headcount continued to rise its proportion of the total workforce declined.

23MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Ownership of Securities

Basic information of securities

Share types Ordinary share

Share capital 234384311 (as of June 30 2026)

Listing Shanghai Stock Exchange (SSE)

Ticker 688018.SH

Listing Date 2019-07-22

Shareholder Structure as of June 30 2026

Shareholder Share Numbers Percentage (%)

Espressif (Hong Kong) Investment Ltd. 85694801 36.56

Hong Kong Securities Clearing Company Limited 9763374 4.17

NSSF Portfolio 114 5826557 2.49

Wisdomshire Asset Management Co. Ltd. - Wisdomshire Youfu 3059418 1.31

Private Equity Securities Investment Fund No.1

Wisdomshire Asset Management Co. Ltd. - Wisdomshire Youfu 2948417 1.26

Private Equity Securities Investment Fund No.3

Shinvest Holding Ltd. 2613100 1.11

CITIC Securities Co. Ltd. – Harvest SSE STAR Market Chip Tradable 2123123 0.91

Open-ended Index Securities Investment Fund

Shanghai Letun Enterprise Management Partnership (Limited 2047763 0.87

Partnership)

Wisdomshire Asset Management Co. Ltd. - Wisdomshire Youfu 1746146 0.74

Private Equity Securities Investment Fund No.2

Schroder Investment Management (Hong Kong) Limited – 1743979 0.74

Schroder International Selection Fund China A

Top 10 shareholders 117566678 50.16

Espressif Systems (Shanghai) Co. Ltd. Repurchase Special 17161 0.01

Securities Account

Other public shareholders 116800472 49.83

Total of outstanding shares 234384311 100.00

24MANAGEMENT REPORT ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Risks and Uncertainties

Financial Risk

The Company performs periodic credit evaluations of its customers’ financial condition

and generally requires of its customers no collateral. The Company provides an

allowance for expected credit losses based on the net amount expected to be

collected on such receivables. Losses have not been significant for any of the periods

presented in this report.R&D Risk

Espressif’s research and development strategy is focused on leveraging new

technologies for the creation of innovative AIoT products. Any delays or changes in

the development of these technologies by our industry partners or a failure of our

products to achieve market acceptance could compromise our competitive position.Competitors

As the market for AIoT products grows we face an increasing antagonism from

relatively large competitors such as Realtek MediaTek Infineon NXP Qualcomm

Nordic Silicon Labs and others. Intense competition from current players may reduce

our product sales and market share.Suppliers

A significant portion of the Company’s products is fabricated by the Taiwan

Semiconductor Manufacturing Company Limited (TSMC). The inability of TSMC to

deliver wafers to the Company in a timely manner could impact the production of the

Company’s products for a certain period of time which could have an adverse effect

on the Company’s business financial condition results of operations and cash flow.Customers

The Company sells directly to end customers distributors solution providers and

contract manufacturers. Our customers are a mix of several big customers and

numerous small customers. The concentration ratio for our top-five customers was

20.32% in H1 2026.

25CONSOLIDATED FINANCIAL STATEMENTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Consolidated Financial

Statements

Consolidated Balance Sheet (unaudited)

CNY June 30 2026 December 31 2025

Assets

Current assets:

Cash and cash equivalents 1046434961 1024792840

Held for trading financial assets 959223426 876009608

Notes receivable 65260013 65534507

Accounts receivable net 402622501 298106030

Accounts receivable financing

Prepayments 35145634 19427100

Other receivables 12729758 11439963

Including: Interest receivable

Inventories 841841457 627637513

Other current assets 762831541 1011937898

Total current assets 4126089291 3934885459

Non-current assets:

Debt investment 227331300 210430400

Investment in other equity assets 42036070 42036070

Other non-current financial assets 41937416 41937416

Fixed assets 565342798 556813866

Right-of-use assets 31817803 29091243

Intangible assets 24566324 26662076

Goodwill 74654024 74654024

Long-term deferred expenses 35355949 22753695

Deferred income tax assets 111265600 108491271

Other non-current assets

Total assets 5280396574 5047755518

26CONSOLIDATED FINANCIAL STATEMENTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Consolidated Balance Sheet (unaudited)

CNY June 30 2026 December 31 2025

Liabilities & Shareholders’ Equity

Current liabilities:

Short-term loan

Accounts payable 208799546 187528762

Contract liabilities 39540112 23381055

Payroll payable 101451947 157619024

Taxes payable 14368511 2581791

Other payable 12999787 37303747

Including: Interest payable

Non-current liabilities due within one year 8234046 6944668

Other current liabilities 2850395 1173418

Total current liabilities 388244344 416532465

Non-current liabilities:

Lease liabilities 25590935 23701708

Provisions 613480 636582

Deferred income tax liabilities 128010796 117006835

Total liabilities 542459554 557877590

Owners’ equity (or shareholders' equity):

Share capital 234384311 167143010

Capital reserves 2931361639 3040623359

Less: Treasury stock 2428497 67433448

Other comprehensive income -8865004 17636423

Surplus reserves 123024049 123024049

Retained earnings 1428044425 1177520921

Total Espressif shareholders’ equity 4705520923 4458514314

Non-controlling interests 32416097 31363613

Total shareholders’ equity 4737937020 4489877928

Total liabilities and shareholders' equity 5280396574 5047755518

27CONSOLIDATED FINANCIAL STATEMENTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Consolidated Income Statement (unaudited)

Three Months Ended Six Months Ended

CNY June 30 2026 June 30 2025 June 30 2026 June 30 2025

Revenue 832739862 687690927 1480711294 1245540796

Cost of Revenue 416807229 366602694 750456338 682505046

Gross Profit 415932633 321088233 730254956 563035750

Taxes and surcharges 4176684 1589116 6335746 3298890

Selling expenses 24787914 20891691 47935740 37911612

General and administrative expenses 25665226 20014920 47402114 37868504

Research and development expenses 175180569 142052489 329666051 268244538

Financial expenses -2402476 -5996833 -3139201 -6651209

Including: Interest expenses 293088 2052299 563351 3081212

Interest income 5623753 5960944 11109906 10965268

Add: Other income 14517799 23421071 24250650 31368576

Investment income (mark"-" for loss) 8832122 3834033 16830951 8433933

Income from changes in fair value (mark"-" for loss) -281634 1531484

Credit impairment losses (mark"-" for loss) 11675 -350123 45592 -350123

Assets impairment losses (mark"-" for loss) -1677242 -1134405 -2346421 -1237829

Assets disposal income (mark"-" for loss) -14041 3770 -29598

Operating Income 209927436 168293384 342370531 260548373

Add: Non-operating revenue 200 2120470 330200

Less: Non-operating expenses 19381 21582 59472 68606

Income before income taxes 209908055 168272002 344431529 260809967

Provision (benefit) for income taxes 10674945 -326090 9152988 -2229798

Net Income 199233110 168598092 335278541 263039765

Net Income attributable to non-controlling interests 649209 1040269 1052484 1777588

Net Income attributable to Espressif 198583901 167557823 334226057 261262177

Earnings per share

Basic 1.4314 1.2049

Diluted 1.4314 1.2049

N.B.: Due to the company's implementation of a capital reserve to equity conversion in 2026 the earnings per share for each reporting period have been recalculated

based on the adjusted share count.Three Months Ended Six Months Ended

CNY June 30 2026 June 30 2025 June 30 2026 June 30 2025

Net Income 199233110 168598092 335278541 263039765

Other comprehensive income (loss) after tax

Changes to the fair value of investment in other equity

instruments

Currency translation reserves -14307689 -2128567 -26501427 -3176361

Other comprehensive income (loss) -14307689 -2128567 -26501427 -3176361

Other comprehensive income (loss) attributable to

non-controlling interests

Comprehensive income 184925421 166469525 308777113 259863404

Comprehensive income attributable to non-controlling interests 649209 1040269 1052484 1777588

Comprehensive income attributable to Espressif 184276211 165429256 307724630 258085816

28CONSOLIDATED FINANCIAL STATEMENTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Consolidated Cash Flow Statement (unaudited)

Three Months Ended Six Months Ended

CNY June 30 2026 June 30 2025 June 30 2026 June 30 2025

Operating Activities

Cash from sales of merchandise and provision of services 830969409 715198826 1534393420 1299783415

Tax refund 21187864 13185173 67576043 28015360

Other received cash related to operational activities -27148778 -45501690 15598124 33464916

Subtotal of cash inflow from operational activities 825008495 682882310 1617567587 1361263691

Cash paid for merchandise and services 566020819 463960282 1051726843 823406616

Cash paid to and for employees 117221726 102495783 354196844 299522061

Cash paid for taxes and surcharges 23311363 32383487 32074870 51323421

Other paid cash related to operational activities 49425377 44592320 107122518 72588769

Subtotal of cash outflow from operational activities 755979285 643431872 1545121075 1246840866

Net cash provided by operating activities 69029210 39450437 72446512 114422825

Investing activities

Cash arising from the disposal of investments 1435334105 140000000 2325868418 140000000

Cash arising from investment income 12428500 12967233 13328500 12967233

Net cash arising from the disposal of fixed assets intangible 7138 15770 14905

assets and other long-term assets

Other received cash relating to investment activities 1212050 922050 2331103 1500100

Subtotal of cash inflow from investment activities 1448974655 153896421 2341543791 154482238

Cash paid for the purchase and construction of fixed assets 47134787 429684593 79326076 444170619

intangible assets and other long-term assets

Cash paid for investments 1479000000 2193000000

Net cash paid for acquisition of subsidiaries and other

business units

Other paid cash relating to investment activities 900000 1200000

Subtotal of cash outflow from investment activities 1526134787 430584593 2272326076 445370619

Net cash provided by investment activities -77160131 -276688172 69217716 -290888381

Financing activities

Cash arising from the issuance of common stock 92934718 71091637 93024211 71091637

Including: Cash arising from subsidiaries absorbing

investments by minority shareholders

Cash received from borrowings 139750000 362350000

Subtotal of cash inflow from financing activities 92934718 210841637 93024211 433441637

Cash paid to repay debt 9900000 10400000

Cash paid for the distribution of dividends and profits or 83702554 68546838 83702554 69199894

payment of interests

Including: dividends and profits paid to minority

shareholders by subsidiaries

Other paid cash relating to financing activities 7213678 3533815 103108735 7321215

Subtotal of cash outflow from financing activities 90916231 81980653 186811288 86921110

Net cash provided by financing activities 2018487 128860984 -93787077 346520527

Impact of fluctuation in exchange rates on cash and cash -12186523 1428324 -30741710 1021156

equivalents

Net increase in cash and cash equivalents -18298957 -106948426 17135440 171076127

Add: Cash and cash equivalent at the commencement 1053458169 945656860 1018023771 667632307

of the period

Cash and cash equivalents at the end of the period 1035159212 838708434 1035159212 838708434

29CONSOLIDATED FINANCIAL STATEMENTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Consolidated Cash Flow Statement

- Indirect Method (unaudited)

Three Months Ended Six Months Ended

CNY June 30 2026 June 30 2025 June 30 2026 June 30 2025

Additional information

Net income 199233110 168598092 335278541 263039765

Adjustments to cash provided by operating activities for

the purpose of reconciling net income:

Add: provision for the impairment of assets 1677242 1134405 2346421 1237829

Credit impairment provision -11675 350123 -45592 350123

Depreciation of fixed assets 15627907 6567933 31593337 12596104

Depreciation of right-of-use assets 2061678 3023758 4158780 6105592

Amortization of intangible assets 1047876 1047876 2095752 2095752

Amortization of long-term prepaid expenses 3241762 2592226 6073768 4754862

Losses on disposal of fixed assets intangible assets and 14041 -3770 29598

other long-term assets (mark"-" for income)

Losses on scrapping of fixed assets (mark"-" for income) 6642 1631

Losses on fair value changes（mark"-" for income） 281634 -1531484

Financial expenses（mark"-" for income） 2750362 -313428 7074767 3703390

Losses on investment（mark"-" for income） -8832122 -3834033 -16830951 -8433933Decrease on deferred income tax assets（mark”-" for 5097900 4878478 -2815227 -10066168increase）Increase on deferred income tax liabilities（mark"-" for 5432693 3233445 11003961 7156215decrease）

Changes in operating assets and liabilities:

Decrease in inventories（mark"-" for increase） -107457933 -42601732 -223792547 -29798410Decrease in operational receivables（mark"-" for -97445069 -59874969 -80632236 -88776390increase）Increase in operational payables（mark"-" for 24783061 -58847115 -29600603 -68363642decrease）

Others 21540785 13481337 28066954 18790505

Net cash flow provided by operating activities 69029210 39450437 72446512 114422825

30CONSOLIDATED FINANCIAL STATEMENTS ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Consolidated Statement of Changes in Equity

(unaudited)

Equity attributable to Espresssif

Non-

controlling Total

Less: equityOther Total Interests

Share Capital Treasury comprehensive Surplus Retained Espressif

CNY capital reserves stock income reserves earnings equity

Balance as of

December 31 112200431 1351379589 208684568 25620966 76858747 792599518 2149974683 29394537 2179369221

2024

Comprehensive

income -3176361 261262177 258085816 1777588 259863404

Capital increase 44502291 -67134906 -130566230 107933615 107933615

Repurchase

Stock-based

compensation -18051473 -18051473 -18051473

Surplus reserves

Subsidiary

Acquisition

Dividends -66753437 -66753437 -66753437

Balance as of

June 30 2025 156702722 1266193209 78118338 22444605 76858747 987108258 2431189203 31172125 2462361328

Equity attributable to Espresssif

Non-

controlling Total

Less: equityOther Total Interests

Share Capital Treasury comprehensive Surplus Retained Espressif

CNY capital reserves stock income reserves earnings equity

Balance as of

December 31 167143010 3040623359 67433448 17636423 123024049 1177520921 4458514314 31363613 4489877928

2025

Comprehensive

income -26501427 334226057 307724630 1052484 308777113

Capital increase 67241301 -92203253 -163300264 138338312 138338312

Repurchase 98295312 -98295312 -98295312

Stock-based

compensation -17058467 -17058467 -17058467

Surplus reserves

Subsidiary

Acquisition

Dividends -83702554 -83702554 -83702554

Balance as of

June 30 2026 234384311 2931361639 2428497 -8865004 123024049 1428044425 4705520923 32416097 4737937020

N.B.: In April 2026 the Company issued 279258 ordinary shares at an issue price of RMB 120.29 per share increasing share capital by RMB 279258. The remaining proceeds after

deducting issuance expenses were recorded in capital reserves. In June 2026 the Company capitalized its capital reserve into share capital resulting in an increase in share capital

of RMB 66962043.

31FURTHER INFORMATION ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

Further Information

Terms and Conditions of the Report

Responsibility Statement

The Board of Directors and the executive management of the Company warrant that the contents of this report are

true accurate and complete and do not contain any false information misleading statements or material omissions

severally and jointly accepting any legal responsibility thereof.Shanghai 30 July 2026

Espressif Systems

Board of Directors Executive Management

Teo Swee Ann Teo Swee Ann

Founder and Chairman Founder and CEO

Ng Pei Chi Wang Jue

Information Technology Director Board Secretary

Wang Jue Shao Jingbo

Board Secretary Financial Director

Teo Teck Leong

Shareholder-elected

Chen Myn

Independent Director

Lee Kian Soon

Independent Director

Leong Foo Leng ESP

RESSIF

Independent Director

Declaration

Forward-looking Statements SYS MS

This report contains forward-looking statements and/or assessments about the business TE

financial condition performance and strategy of the Espressif Group. These statements and/or

assessments are based on assumptions and management expectations resting upon currently

available information and current estimates. These are subject to a multitude of uncertainties

and risks many of which are partially or entirely beyond Espressif’s control. Espressif’s actual

business development financial condition performance and strategy may therefore differ from

what is discussed in this report.

32FURTHER INFORMATION ESPRESSIF SYSTEMS 2026 Q2 & HALF-YEAR REPORT

List of abbreviations

AI Artificial Intelligence

AIoT Artificial Intelligence and Internet of Things

Bluetooth LE Bluetooth Low Energy

CEO Chief Executive Officer

EBITDA Earnings Before Interest Taxes Depreciation and Amortization

Espressif ESPRESSIF SYSTEMS (SHANGHAI) CO. LTD.G&A General and Administrative

GM Gross Margin

HMI Human-Machine Interaction

IC Integrated Circuit

IoT Internet of Things

LLM Large Language Model

MCU Microcontroller Unit

MCP Model Context Protocol

QoQ Quarter-on-Quarter

R&D Research and Development

RF Radio Frequency

RISC-V Reduced Instruction Set Computer-V

ROE Return on Earnings

SG&A Selling General and Administrative

SH Shanghai

SoCs System on Chips

STEM Science Technology Engineering and Mathematics

YoY Year-on-Year

33Investor Relations Social Media

ir@espressif.com twitter.com/EspressifSystem

facebook.com/espressif

Official Platforms linkedin.com/company/espressif-systems

www.espressif.com youtube.com/EspressifSystems

blog.espressif.com instagram.com/espressif_systems_official

github.com/espressif bilibili.espressif.com

esp32.com

reserved. All trade names trademarks and registered trademarks

mentioned in this document are the property of their respective

owners and are hereby acknowledged. The term “Espressif” refers to

Espressif Systems (Shanghai) Co. Ltd. and/or its subsidiaries. This

report is written in both Chinese and English. In case of any

discrepancies between Chinese and foreign interpretations the

Chinese version shall prevail.All amounts presented in these condensed Consolidated Financial

Statements are shown in CNY unless stated otherwise. Slight

discrepancies between the amounts presented may occur due to

rounding.

行情