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On February 25, 2026, Jiangsu Xinhua Semiconductor Technology Co., Ltd. (hereinafter referred to as “Xinhua Semiconductor”) was accepted for its Sci-Tech Innovation Board IPO, becoming the first semiconductor IPO of the Year of the Horse.

Image source: Shanghai Stock Exchange

According to public information, Xinhua Semiconductor was registered and established in December 2015, jointly funded by Jiangsu Zhongneng Silicon Industry and the National Integrated Circuit Industry Investment Fund (National Big Fund). After years of development, the company has become a leading player in China’s electronic-grade polysilicon for semiconductors.

The prospectus shows that, according to data from the Semiconductor Materials Branch of the China Electronic Materials Industry Association, in 2024, Xinhua Semiconductor’s market share of high-purity electronic-grade polysilicon for integrated circuits in China exceeded 50%. It is also currently the only domestic enterprise capable of providing large-scale, stable supply for 12-inch silicon wafers.

As a domestic leader in electronic-grade polysilicon, the company plans to raise 1.32 billion yuan to expand production and R&D. However, behind its impressive image, there are hidden concerns in its IPO process, including issues with performance stability, asset quality, and core competitiveness that cannot be ignored.

Image source: Xinhua Semiconductor IPO prospectus

Financial Concerns: Volatile Performance and Pressure on Asset Quality

Financial stability is the core confidence for an IPO, but Xinhua Semiconductor’s profitability has shown a “rollercoaster” pattern, with fluctuations far exceeding industry averages. In 2022, net profit was 143 million yuan; in 2023, it plummeted by over 75% to 36.33 million yuan; in 2024, it slightly recovered to 62.28 million yuan; and in the first three quarters of 2025, it rebounded to 123 million yuan, indicating a lack of sustained profitability.

Regarding gross profit margin, the company’s comprehensive gross margin was 23.81% in 2022, 15.63% in 2023, 22.44% in 2024, and 24.56% in the first three quarters of 2025, also showing significant volatility.

Image source: Xinhua Semiconductor IPO prospectus

Based on the prospectus and QYResearch data, the main reason for the dramatic performance fluctuations is insufficient support from the core semiconductor business, which is highly dependent on by-products from photovoltaic-grade polysilicon. The by-products generated during electronic-grade polysilicon production are sold as solar-grade polysilicon. In 2022, favorable photovoltaic market conditions led to a surge in performance, but in 2023, the sharp decline in photovoltaic silicon prices caused a significant drop in performance.

In addition to performance volatility, the company’s asset quality is also under pressure. As of the end of September 2025, inventory book value was 372 million yuan, accounting for 17.55% of current assets.

Image source: Xinhua Semiconductor IPO prospectus

The risk of inventory devaluation is also prominent, with provisions for inventory impairment soaring from 3 million yuan in 2022 to 95.9175 million yuan as of September 2025, accounting for 20.49%, meaning that for every 5 yuan of inventory, 1 yuan may be impaired.

Image source: Xinhua Semiconductor IPO prospectus

Internal Governance: Weak Internal Controls and High Customer Concentration

For a company planning to list on the Sci-Tech Innovation Board, internal control standards and core competitiveness are critical. However, Xinhua Semiconductor has clear shortcomings in both areas. Its dispersed shareholding structure and lack of a controlling shareholder pose concerns.

Image source: Xinhua Semiconductor IPO prospectus

Looking back to August 2025, during the critical period of preparing IPO materials, the company’s former largest shareholder, Jiangsu CanSemi, with deep “GCL” background, transferred all 24.55% of its stake in Xinhua Technology—valued at 1.472 billion yuan—to Hefei Guocai No.3 Enterprise Management Partnership (Limited Partnership). The transaction was completed swiftly in September of that year. This move directly resulted in GCL Group founder Zhu Gongsan no longer holding shares, and the company became a state of no actual controlling shareholder.

As of the signing date of the prospectus, the largest shareholder was Hefei Guocai No.3 Enterprise Management Partnership (Limited Partnership), holding 24.55%; the National Big Fund held 20.62%, ranking second. No single entity can effectively control the company. The prospectus notes that this may impact decision-making efficiency and pose risks of control rights changes.

Image source: Xinhua Semiconductor IPO prospectus

Regarding customer concentration, the company’s customer base is highly concentrated and has been increasing. In 2022, the top five customers accounted for 53.84% of sales; from January to September 2025, this proportion rose to 71.34%, intensifying customer concentration risk.

Notably, some customers within this highly concentrated group have related-party connections with the company’s shareholders, forming overlapping relationships between related customers and shareholders. The company has disclosed that related-party transactions are conducted at fair prices, but in the context of intertwined relationships, further evidence is needed to substantiate the fairness of these prices.

From a business independence perspective, if the company’s main revenue and profit sources heavily depend on related customers, its ability to independently acquire orders and compete in the market will be uncertain. This issue affects not only financial stability but also the independence and sustainability of the company’s core competitiveness. Given the related-party transaction risks disclosed in the prospectus, if key related customers experience strategic adjustments, operational pressures, or changes in cooperation, it could adversely impact the company’s performance stability. This risk warrants close attention.

Image source: Xinhua Semiconductor IPO prospectus

Additionally, during the reporting period, the company engaged in irregular related-party fund borrowing, with 77 million yuan in private loans involving GCL Group and related parties, and lent 4 million yuan to unrelated enterprises. Although the company claims to have rectified and recovered all principal and interest, internal control vulnerabilities remain.

Image source: Xinhua Semiconductor IPO prospectus

Fundraising and Environment: Increasing Survival Pressure

In this IPO, the company plans to raise 1.32 billion yuan, which will be invested in projects including a 10,000-ton/year high-purity electronic-grade polysilicon cluster, a 1,500-ton/year ultra-high-purity polysilicon project, a 1,500-ton/year zone-melting polysilicon project, a high-purity silicon material R&D base, and working capital. The total investment in these projects is 4.141 billion yuan, with planned use of funds as follows: 180 million yuan, 240 million yuan, 500 million yuan, 200 million yuan, and 200 million yuan respectively.

The company states that after the projects are implemented, it will further expand advanced capacity, accelerate high-end product industrialization, and strengthen technological innovation, which will help consolidate market position, enhance overall competitiveness, and support the domestic semiconductor industry chain’s independence and control.

As a leading domestic electronic-grade polysilicon enterprise, if the company successfully expands capacity and improves its high-end product structure, it may gain a more advantageous position in industry competition. However, the industry features high technological barriers and long customer certification cycles. Although new entrants are unlikely to cause short-term effective disruption, the company still faces long-term competitive pressures from international manufacturers in technology, customer resources, branding, and certification systems.

Image source: Xinhua Semiconductor IPO prospectus

For capital markets, Xinhua Semiconductor’s journey is not only a company’s listing process but also a typical example to observe the true competitiveness, governance level, and sustainable operation capability of domestic semiconductor material enterprises. Whether it can deliver a convincing performance amid both opportunities and risks will be crucial for approval and investor confidence. (Produced by “Financial Weekly - Financial Insights”)