New Stock Analysis| Silicon Carbide Epitaxial Wafer Leader Can't Escape "Growing Pains," Will Tianyu Semiconductor's Hong Kong Listing Activate Momentum?

With the rapid growth of the silicon carbide market, the related companies in the industry chain have been actively seeking capital market opportunities this year. A recent case is that Guangdong Tianyu Semiconductor Co., Ltd. ("Tianyu Semiconductor") has passed the hearing of the Hong Kong Stock Exchange, and the company may soon become listed on the main board of the Hong Kong stock market. According to the information collected after the hearing, Tianyu Semiconductor is the largest silicon carbide epitaxial wafer manufacturer in China, with market shares of 30.6% and 32.5% in terms of revenue and sales volume generated in the Chinese market by 2024, respectively. Additionally, as of the end of May this year, Tianyu Semiconductor's annual production capacity of 6-inch and 8-inch epitaxial wafers is about 420,000 pieces, making it one of the companies in the industry with the largest production capacity in China. However, it is intriguing that despite its prominent market position, this does not seem to have translated into financial growth. From 2022 to May 2025, Tianyu Semiconductor's revenue and net profit indicators have shown some volatility. It seems that Tianyu Semiconductor, whose fundamentals still need to be strengthened, will be able to win the favor of Hong Kong market investors after a successful listing. How does the head of the fundamentals hold up under stress testing? Power semiconductor devices are semiconductor devices used as switches or rectifiers in power electronic products, and epitaxial wafers are the key raw materials for producing power semiconductor devices. As a leading manufacturer of silicon carbide epitaxial wafers, Tianyu Semiconductor's revenue mainly comes from the sale of self-made 4-inch, 6-inch, and 8-inch silicon carbide epitaxial wafers and the provision of related value-added services. As a top supplier of third-generation silicon carbide semiconductor materials, Tianyu Semiconductor's growth path is closely related to the development of the new energy industry. Data shows that Tianyu Semiconductor's sales volume in 2023 was 130,700 pieces, several times higher than the 44,500 pieces in 2022. However, in 2024, due to factors such as global trade friction, the company's epitaxial wafer sales volume dropped significantly to 78,900 pieces. In the first five months of this year, Tianyu Semiconductor's epitaxial wafer sales volume was 77,700 pieces, returning to a growth trajectory. The fluctuation in product sales naturally also affects the financial statements. From 2022 to 2024, Tianyu Semiconductor's revenue was 437 million yuan, 1.171 billion yuan, and 520 million yuan, respectively. In the first five months of 2025, the company's revenue was 257 million yuan, further declining from the 297 million yuan in the same period of 2024. Although Tianyu Semiconductor's product sales volume surged in the first five months of this year, the average selling price dropped from 7,924 yuan per piece in the same period last year to 3,813 yuan per piece, leading to a further decrease in revenue generated from self-made epitaxial wafers sales and dragging down overall revenue. It is worth mentioning that although the majority of Tianyu Semiconductor's revenue in the reporting period comes from the sale of self-made silicon carbide epitaxial wafers, the company also has a small portion of revenue contributed by other sales and services. The proportion of other business income from 2022 to 2024 was 8.8%, 3.8%, and 6.8%, respectively, and the proportion of this business income expanded to 12.6% in the first five months of 2025. In terms of profitability, from 2022 to May 2025, Tianyu Semiconductor's gross profit was 87.486 million yuan, 217 million yuan, -374 million yuan, and 57.765 million yuan, with corresponding gross margins of 20%, 18.5%, -72%, and 22.5%, respectively. According to GMTEight's observations, the company's profitability suffered a major setback in 2024 due to a sharp drop in product market prices, as well as a decrease in production volume and an increase in fixed costs due to the expansion of new production lines, which further squeezed profits. During the same period, Tianyu Semiconductor's net profit was 2.814 million yuan, 95.882 million yuan, -500 million yuan, and 9.515 million yuan, with the company recording a huge loss in 2024. Listing in Hong Kong as a further development "springboard"? Due to the cyclical oversupply in the industry, the market prices of silicon carbide epitaxial wafers and substrates have been continuously declining over the past year. At the same time, fluctuations in trade tensions have also added some uncertainty to this still evolving industry. Despite being under pressure in the industry, Tianyu Semiconductor has shown a strong willingness to expand against the trend. It is reported that in order to better prepare for potential market demand for silicon carbide products, Tianyu Semiconductor is continuously expanding its production capacity. At present, the construction of the company's production base in the eco-park has been completed and is expected to be put into operation by the end of this year, at which time the production capacity of the company's 8-inch silicon carbide epitaxial wafers will be greatly increased. It is estimated that this new production base will add 380,000 pieces of epitaxial wafer capacity to the company's annual capacity within the year, bringing the company's total capacity to about 800,000 pieces. In this way, Tianyu Semiconductor will further consolidate its production capacity advantage. Furthermore, Tianyu Semiconductor also stated in its prospectus that the company will plan to expand in Southeast Asia to match overseas customers according to actual demand, but Tianyu did not provide a further timetable. In order to cope with the current international trade friction and geopolitical uncertainties, Tianyu Semiconductor will also prioritize deepening its market position in China, focusing on meeting the needs of domestic customers and improving customer loyalty to gain domestic customers. Of particular note is the emerging trend that the domestic 8-inch silicon carbide epitaxial wafer market surpassed the testing phase in 2023 and has now entered a phase of accelerated capacity release. In response to this future trend in the industry, Tianyu Semiconductor has adopted a sales strategy driven by quantity and made sufficient preparations to increase production capacity to capture potential market demand for 8-inch silicon carbide epitaxial wafers. However, it is important to note that Tianyu Semiconductor obviously does not want to give up the large "cake" of the overseas market. Although the current growth in the company's overseas sales seems to have stagnated, Tianyu still aims to expand its business to other promising overseas countries as one of its long-term development goals. According to its introduction, in order to achieve this goal, Tianyu Semiconductor plans to establish sales centers in Malaysia, Italy, and Japan to expand its global sales and marketing network. With a grand development blueprint, the prerequisite for all of this is that Tianyu Semiconductor can ensure that it stays at the table. Listing in Hong Kong is likely to be a key "springboard". After all, as of the end of May this year, the company's cash and cash equivalents amounted to only 95.349 million yuan, further declining from 115 million yuan in the same period last year. After a successful listing, Tianyu Semiconductor's financing channels are expected to become more accessible, and listing in Hong Kong is also expected to have a positive impact on the company's subsequent development of overseas clients. As to whether Tianyu Semiconductor can break through the "bottleneck" and achieve greater development, as well as how the company's stock price will evolve after listing, GMTEight will also continue to monitor.