Dawei Limited has suffered consecutive losses over the past three years, with the projected return on investment rate for the capital increase project expected to be three times the gross margin of existing operations.

Recently, Dawei Co., Ltd. plans to raise 108.5 million yuan through a private placement to fund the embedded memory research and development project.

Currently, one of Dawei’s main businesses is the design and sales of semiconductor memory. In 2025, the company’s revenue is projected to reach 1.222 billion yuan, seemingly a 16.74% increase, but its net profit attributable to shareholders is a loss of 15.62 million yuan. More concerning is the operating cash flow: in 2025, it is expected to have a net outflow of 180 million yuan.

In 2023 and 2024, Dawei’s net profits attributable to shareholders were -67 million yuan and -48 million yuan, respectively, and 2025 marks the third consecutive year of losses.

In the private placement plan, Dawei describes itself as a high-tech storage company benefiting from a “super cycle of price increases + domestic substitution + AI demand.” However, the company’s semiconductor memory business remains questionable: in 2025, the gross profit margin for this segment is only 4.43%.

What does this mean? Compared to listed storage companies in the A-share market, even those mainly engaged in OEM manufacturing of storage modules, many have gross margins between 8% and 15%. Companies with chip design capabilities, such as Zhaoyi Innovation, maintain gross margins above 35% year-round.

The company emphasizes in its research that its self-developed eMMC and DDR products have been mass-produced. But a gross margin of 4.43% reveals the true quality of its “self-developed” products. In the semiconductor industry, only those that master core technologies (such as main control design and firmware development) can achieve high profits.

The “embedded memory research and industrialization project” funded by this issuance claims an after-tax internal rate of return of 13.83%. But can a company with a 4.43% gross margin, which has been losing money for three consecutive years, achieve a 13.83% profit rate?

Dawei’s predecessor was Teljia, a company that made automotive retarders. After going public in 2008, it remained quiet for many years. It wasn’t until 2020, when the capital market began to favor semiconductors, that the company acquired Chip Huiqun to enter the storage field and renamed itself Dawei Co., Ltd. At the end of 2022, with the rise of new energy lithium mining, the company quickly signed a contract with Guiyang County, Hunan, and heavily invested to enter the lithium battery new energy sector.

Every crossover into a new field has precisely targeted market hotspots. However, in terms of results, each transition has failed to bring sustained returns to investors. Over the past three years, the company has suffered continuous losses, with total losses exceeding 130 million yuan.

Overall, Dawei’s 108.5 million yuan private placement is a desperate move amid declining core business, transformation obstacles, and tight capital chains. For a company that has been losing money for three consecutive years and has a gross margin of only 4% in its main business, can an additional 100 million yuan of funding lead to successful R&D? Time will tell.

Note: This article is generated with AI tools and does not constitute investment advice. The market carries risks; invest cautiously.