New Stock Outlook | "A+H" Dual Platform Layout, can JoulWatt Technology use high R&D to exchange for a ticket to the AI era?

In the era when the global semiconductor industry is entering a transformation driven by AI and automotive electronics, analog integrated circuits (ICs) as a bridge connecting the physical world and the digital world, their strategic position is becoming increasingly prominent. JoulWatt Technology, a leading analog integrated circuit design enterprise listed on the A-share Sci-Tech Innovation Board, is taking the next step in its capital strategy by seeking an H-share listing on the Hong Kong Stock Exchange to build a dual financing platform "A+H". According to Frost & Sullivan data, JoulWatt Technology has taken a leading position in the Chinese analog integrated circuit market, especially in the power management integrated circuit sector, which is the main market track, where its revenue scale ranks among the top four Chinese companies. However, the company is facing severe financial challenges in recent years with sustained net losses and negative operating cash flow despite its solid market position. Behind this is the company's firm strategy of high research and development investment, pouring significant resources into technology innovation and product matrix expansion. Faced with the dual pressures of industry cyclicality and intense competition, JoulWatt Technology chooses to exchange continued high investment in research and development for future growth potential, whether this is a visionary bold move or a financial constraint that is difficult to overcome in the short term. Deepening the "Virtual IDM" Moat: Balancing Flexibility and Process Innovation As one of the first companies in the Chinese analog integrated circuit design industry to adopt the "Virtual IDM" model, the strategic positioning and business model of JoulWatt Technology are the cornerstones of its core competitiveness. It is understood that the "Virtual IDM" model adopted by JoulWatt Technology is an innovative business form between traditional IDM (integrated design, manufacturing, and testing) and Fabless models. Similar to Fabless companies, JoulWatt Technology focuses on the most demanding research and development and integrated circuit design processes, while outsourcing capital-intensive wafer production, packaging, and testing processes. However, unlike pure Fabless companies, JoulWatt Technology is deeply involved in and controls key technical processes in the production flow. By independently developing proprietary process platforms, the company can directly design and control key production steps at the wafer level. This model allows JoulWatt Technology to avoid heavy capital investment and management burdens of manufacturing facilities, thereby gaining higher operational flexibility, enabling it to focus resources on technology innovation and product sales. During the performance period, the company's revenue has demonstrated strong recovery. In the first ten months of 2022, 2023, 2024, and 2025, JoulWatt Technology achieved revenues of 1.448 billion yuan, 1.297 billion yuan, 1.679 billion yuan, and 2.113 billion yuan respectively. Despite a slight decline in 2023 due to industry destocking cycles and weak consumer electronics demand, with the outbreak of demand in emerging fields such as AI infrastructure and new energy vehicles in 2024, the company's revenue growth rate has significantly rebounded, reaching a year-on-year increase of 59.8% in the first ten months of 2025. However, behind the high growth, JoulWatt Technology is currently still in a loss-making phase. In the first ten months of 2023, 2024, and 2025, the company realized net losses of 533 million yuan, 611 million yuan, and 496 million yuan respectively. This loss structure exhibits a distinct "technology-intensive" feature: On one hand, due to the company's continued increase in research and development investment, JoulWatt Technology's research and development expenditure has long maintained at over 35% of revenue, with research and development investment reaching as high as 746 million yuan in the first ten months of 2025. This "forward investment" aims to seize strategic opportunities in AI servers and automotive electronics, accelerating the mass production of high-performance products such as DrMOS and multiphase controllers. On the other hand, inventory impairment losses caused by the industry downturn in 2023 also temporarily suppressed profits, but with the market demand recovery in 2024 and the strengthening of the company's inventory management measures, the impact of inventory impairment on gross margin has been weakening. It is worth noting that the profitability quality of JoulWatt Technology is gradually improving. In the first ten months of 2025, the company's overall gross margin rebounded to 22.6%, doubling from 11.8% in 2023, mainly due to the continuous increase in the proportion of high value-added computing and storage, and automotive electronics in revenue. Crossing the Profit-Loss Equilibrium Line: Can the Technology Dividend be Transformed into Growth Moat? Competition in the analog chip industry has entered a "deep water zone." Although JoulWatt Technology has taken the lead in the domestic substitution field, it still needs to face long-term technological moats of global giants such as Texas Instruments (TI) and Analog Devices (ADI). For JoulWatt Technology, the virtual IDM model, while reducing the financial pressure of heavy capital investment, also places higher demands on wafer factory capacity coordination and exclusivity of process technology rights. Under the current industry trend of reshaping the global semiconductor supply chain, whether it can further narrow the technology gap with global giants through continued high research and development investment, and leverage the advantage of domestic production in long-cycle application scenarios such as automotive electronics, will be crucial in determining its future industry position. In terms of market share, JoulWatt Technology's global rankings and performance in specific areas are impressive: in 2024, it ranked thirteenth in the global analog integrated circuit market in China; in the more lucrative Chinese DC-DC integrated circuit market, JoulWatt Technology ranks sixth globally and second among domestic enterprises, with a market share of 1.9%. Especially in the field of computational power infrastructure, JoulWatt Technology ranks second among Chinese enterprises in the Chinese computing and storage power management market, laying a solid business foundation for its long-term growth in the AI wave. It is understood that the proceeds from JoulWatt Technology's Hong Kong listing will focus on the development of high-end power management chips and signal chain chips, not only to address product line completeness but also to seize a strategic position in high-value growth areas such as computational power infrastructure and new energy vehicles. For JoulWatt Technology, the future breakthrough lies in whether it can use the flexible supply capabilities brought by the virtual IDM model to achieve large-scale substitution of imported brands in high-tech premium areas such as computational power sources such as multiphase controllers and DrMOS. If the losses of the past few years have been the "ticket" paid for the underlying process platform and full product layout, then the core focus of the next three years will be whether these technological reserves can be translated into commercial dividends with positive operating cash flow in high-demand niche markets, thereby establishing an operational moat to withstand valuation adjustments in the volatile semiconductor cycle.