A-share subscription | 12-inch silicon wafer R&D company Xi'an Yicai (688783.SH) opens subscription, expected to exceed 10% global market share by 2026.

On October 16, Xi'an Yicai (688783.SH) launched its initial public offering (IPO) with an issue price of 8.62 yuan per share and a maximum subscription limit of 53,500 shares. It is listed on the Shanghai Stock Exchange, with CITIC SEC as its sponsor. The prospectus disclosed that Xi'an Yicai focuses on the research, development, production, and sales of 12-inch silicon wafers. Based on the monthly average shipment volume and capacity by the end of 2024, the company is the largest 12-inch silicon wafer manufacturer in mainland China and the sixth largest globally. Its monthly average shipment volume and capacity account for approximately 6% and 7% globally during the same period. By the end of 2024, the company held the most authorized domestic and foreign invention patents in mainland China for 12-inch silicon wafers. Xi'an Yicai's products have been used in the mass production of various categories of chips that enable core functions such as data computation, storage, transmission, and human-machine interaction, including NAND Flash/DRAM/Nor Flash storage chips, CPU/GPU/mobile SoC/embedded MCU logic chips, power management, display drivers, and CIS. These chips are ultimately used in smartphones, personal computers, data centers, the Internet of Things, smart cars, and Siasun Robot&Automation, among other intelligent terminals in the era of artificial intelligence. According to SEMI statistics, 12-inch silicon wafers are the most mainstream specification in the industry, contributing to over 75% of the global silicon wafer shipment area in 2024. The global 12-inch silicon wafer market has been dominated by a few major players for many years, with the top five global manufacturers accounting for about 80% of supply in 2024. It is projected that China's 12-inch wafer factory capacity will exceed 30% of the global total by 2026. Xi'an Yicai stated that the company formulated a strategic plan for the years 2020 to 2035 upon entering the field, aiming to establish 2 to 3 core manufacturing bases and build several modern intelligent manufacturing plants by 2035. By the signing date of the IPO prospectus, the company's first core manufacturing base has been established in Xi'an, with the first factory reaching production in 2023. The second factory for the proceeds of this IPO was officially commissioned in 2024, with plans to reach full production capacity by 2026. By the end of 2024, the company's consolidated capacity had reached 710,000 wafers per month, accounting for approximately 7% of the global 12-inch silicon wafer capacity during the same period. According to SEMI statistics, global demand for 12-inch silicon wafers will exceed 10 million wafers per month in 2026, with China's mainland region requiring over 3 million wafers per month. Through technological innovation and efficiency improvements, the company has increased the capacity of its first factory from 500,000 wafers per month to over 600,000 wafers per month. The combined capacity of the first and second factories in 2026 is projected to reach 1.2 million wafers per month, meeting 40% of China's mainland demand for 12-inch silicon wafers at that time. The company's global market share is expected to exceed 10%. Financially, the company generated operating revenues of approximately 1.055 billion yuan, 1.474 billion yuan, and 2.121 billion yuan in 2022, 2023, and 2024 respectively, with net losses of approximately 533 million yuan, 683 million yuan, and 738 million yuan during the same periods. Xi'an Yicai noted that the company has not yet achieved profitability, primarily due to: 1) the high unit investment intensity of 12-inch silicon wafers in the semiconductor industry chain, with fixed costs increasing annually as capacity expands, impairing profitability; 2) the increasing research and development investment required as 12-inch silicon wafers are used in more advanced and rapidly evolving logic and storage chips, leading to higher costs; and 3) high concentration and stringent requirements in the downstream industry, necessitating a longer period and higher prices to secure mass production orders. As such, it is expected that new players in the industry may experience a period of losses before achieving profitability. The depreciation and amortization costs for the first and second factories have been increasing annually. As the second factory reaches full production capacity by 2026, the depreciation and amortization costs are expected to rise further, adding to the pressure on profitability. Failure to achieve profitability could adversely affect the company's development and its ability to distribute dividends to shareholders.