Deep Analysis of the ChipXing Microelectronics Prospectus: 103.4% Surge in Orders Behind a Three-Year Continuous 10.5 Percentage Point Decline in Gross Margin

IPO Prospectus Interpretation

Main Business: Dual-Drive Model of SiPaaS

VeriSilicon is a chip customization solutions provider with a comprehensive portfolio of semiconductor IP. Its core business model is “Chip Design Platform as a Service” ( SiPaaS ), driven by a dual engine of chip customization solutions (design services + mass production services) and semiconductor IP licensing services (licensing fees + royalty fees). As of December 31, 2025, the company has served a total of 350 chip customization clients and 465 IP licensing clients worldwide, with 9 R&D centers and 11 sales offices, and overseas revenue accounting for 32.6%.

Revenue Growth: Surge of 35.9% in 2025, Reaching a Three-Year High

The company’s revenue increased from 2.33B yuan in 2023 to 3.15B yuan in 2025, with a compound annual growth rate of 16.8%. Notably, in 2025, revenue grew 35.9% year-over-year, mainly driven by orders related to AI computing power. It is worth noting that in the second half of 2025, revenue reached 2.2 billion yuan, a sharp increase of 124.3% from the first half, indicating an accelerating growth trend.

Net Profit: Three Consecutive Years of Loss, Totaling 1.07B Yuan

Despite significant revenue growth, the company remains unprofitable. The annual losses for 2023-2025 were 296 million yuan, 601 million yuan, and 528 million yuan respectively. The loss in 2024 expanded by 102.7% year-over-year, while in 2025, the loss narrowed by 12.2%. Adjusted EBITDA losses widened from 56.5 million yuan in 2023 to 298.6 million yuan in 2024, then narrowed to 164 million yuan in 2025, indicating some improvement in operational efficiency.

Gross Margin: Cumulative Decline of 10.5 Percentage Points Over Three Years

The company’s overall gross margin declined from 44.6% in 2023 to 34.1% in 2025, a cumulative decrease of 10.5 percentage points over three years. The main reason is the increasing proportion of lower-margin chip customization solutions revenue from 67.1% to 75.2%, while high-margin semiconductor IP licensing revenue decreased from 32.9% to 24.8%.

Net Profit Margin: Loss Rate Remains Double-Digit

The net profit margin (loss rate) worsened from -12.7% in 2023 to -26.0% in 2024, then improved to -16.9% in 2025. Adjusted net loss margin deteriorated from -12.5% in 2023 to -25.7% in 2024, then improved to -15.6% in 2025. R&D expense ratio increased from 40.7% in 2023 to 53.8% in 2024, then decreased to 41.7% in 2025, indicating sustained high R&D investment.

Revenue Composition: Mass Production Services Surge by 74% as Growth Driver

Within chip customization solutions, mass production service revenue grew from 1.08B yuan in 2023 to 1.49 billion yuan in 2025, with a compound growth rate of 18.7%. In 2025, year-over-year growth was 74.0%, making it the main driver of revenue growth. IP licensing revenue grew more slowly, increasing 6.3% YoY to 782 million yuan in 2025.

By end-market application, data processing saw the most significant growth, from 315 million yuan in 2023 to 1.01B yuan in 2025, with a CAGR of 73.6%, accounting for 34.3% of total revenue in 2025. AI-related revenue increased from 2.03B yuan in 2023 to 1.44M yuan in 2025, with its share rising from 43.2% to 64.5%.

Related-Party Transactions: Procurement of Packaging and Testing Services from Affiliates

From 2023 to 2025, the company purchased chip packaging and testing services from related parties Yemo Semiconductor for 1.436 million yuan, 18.19M yuan, and 6.64M yuan respectively, accounting for 0.2%, 1.5%, and 0.3% of total procurement. The annual cap for this transaction from 2026 to 2028 is set at 20 million yuan, representing a low proportion of expected procurement, with limited impact on financials.

Financial Challenges: Threefold Pressures on Sustainable Operations

The company faces three major financial challenges: first, three consecutive years of net losses totaling 1.43B yuan; second, negative cash flow from operating activities for three years, with net outflows of 85 million yuan, 346 million yuan, and 222 million yuan in 2023-2025; third, high accounts receivable turnover days, reaching 162 days in 2025, indicating significant working capital occupation.

Peer Comparison: Fourth Largest Globally, Market Share Only 0.8%

According to data from IC Insights, in 2025, VeriSilicon ranked as the fourth-largest full-stack chip customization solutions provider globally and the largest in Mainland China, with a market share of 0.8%. In the semiconductor IP field, the company is the eighth-largest IP provider worldwide and the largest in Mainland China, ranking sixth globally based on IP licensing revenue.

Customer Concentration: Top Five Customers Contribute 45.6% of Revenue

From 2023 to 2025, sales to the top five customers accounted for 46.7%, 44.6%, and 45.6% of total revenue respectively, indicating high customer concentration. The proportion of sales to the largest customer decreased from 23.0% in 2023 to 16.0% in 2025, showing some improvement in customer diversification. The top five customers in 2025 include one US multinational tech company and four Chinese firms, mainly from e-commerce, IC design, and smartphone sectors.

Supplier Concentration: Top Five Suppliers Account for 67.7% of Purchases

From 2023 to 2025, procurement from the top five suppliers accounted for 73.6%, 67.2%, and 67.7% of total procurement respectively, indicating high supplier concentration. The largest supplier’s share decreased from 29.6% in 2023 to 17.9% in 2024, then increased again to 28.5% in 2025. Major suppliers include global semiconductor manufacturers and IP/EDA providers.

Ownership Structure: No Controlling Shareholder, Dispersed Equity

The company has no single controlling shareholder; ownership is dispersed. As of the latest practical date, VeriSilicon Limited holds 11.39%, Fuchuang Holdings 6.55%, National IC Fund 5.40%, and other A-share shareholders 76.66%. Founder Dr. Wayne Wei-Ming Dai directly owns 1.90% and holds additional interests via offshore employee stock ownership platforms.

Core Management: Average Industry Experience of 20-30 Years

The board comprises 11 members, including 5 executive directors, 2 non-executive directors, and 4 independent non-executive directors. The core management team has an average of 20-30 years of industry experience, mainly from global semiconductor companies such as Broadcom, AMD, Mianbao, and Cadence. In 2025, share-based compensation expenses reached 41.61M yuan, significantly up from 7.29 million yuan in 2024, reflecting increased talent incentives.

Risk Factors: Five Major Risks Investors Should Watch

The company faces multiple risks: first, intense industry competition, with the top three full-stack chip customization providers holding a combined market share of 36.5%; second, high R&D investment, with 1.31B yuan spent in 2025, accounting for 41.7% of revenue; third, high customer concentration, with the top five customers contributing nearly half of revenue; fourth, continuous decline in gross margin from 44.6% in 2023 to 34.1% in 2025; fifth, uncertainties in the international trade environment, with 32.6% of revenue from overseas, facing export control risks.

As a leading domestic provider of chip customization solutions and IP licensing, VeriSilicon is experiencing rapid growth amid exploding AI computing power demand. In 2025, new orders signed reached 6 billion yuan, a 103.4% YoY increase, with on-hand orders of 5.1 billion yuan, providing strong future growth momentum. However, the company needs to address issues such as declining gross margins, high R&D costs, and profitability pressures to sustain development. Investors should closely monitor order conversion efficiency and cost control capabilities.

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Editor: Xiaolang Kuaibao