New Stock Outlook | China Micro Semicon (Shenzhen) (688380.SH) Sprinting towards "A+H", Can Open up New Space with Vehicle Regulation Chips?

China Micro Semicon (Shenzhen) (688380.SH), the champion of MCU shipments in China, is now launching a dual capital platform layout of "A+H." According to the Hong Kong Stock Exchange, on March 30, China Micro Semicon (Shenzhen) submitted an application for listing on the main board of the Hong Kong Stock Exchange, with China Securities Co., Ltd. International as the exclusive sponsor. The company plans to raise funds to enhance research and development and expand globally, while consolidating its advantages in the consumer electronics and smart home appliance markets, further expanding into high value-added sectors such as industrial control and automotive electronics. Leading provider of intelligent control solutions in China The prospectus shows that China Micro Semicon (Shenzhen) is a leading provider of intelligent control solutions in China. According to Frost & Sullivan data, the company is one of the earliest in China to independently design and develop MCUs. The core business of the company focuses on the design and delivery of integrated circuit chips, with MCUs as its core product. The product portfolio has expanded to include system-level chips (SoC), application-specific integrated circuits (ASIC), and other categories, providing customers with one-stop solutions for the chips and underlying algorithms needed for intelligent control. Past performance has mainly come from the sales of MCU, SoC, ASIC solutions, and related products. Specifically, the MCU solution business is expected to account for 75.4% of revenue by 2025, covering 8-bit and 32-bit series. With features such as low power consumption, high reliability, and low cost, MCUs are widely used in scenarios such as household appliances, smart meters, and basic automotive modules. The revenue share of SoC products, which are highly integrated multifunctional modules supporting multicore parallel processing and complex calculations, has increased to 21.5% by 2025. ASIC, as a fully customized circuit focusing on specific functional requirements, is expected to account for 2.8% of revenue in 2025. In terms of market positioning, China Micro Semicon (Shenzhen) has already formed core competitive advantages in both the general consumption and high-end tracks. In the general consumption field, the company's MCU chips have a leading position in the consumer electronics and smart home appliance sectors. By revenue in 2024, the company ranked first in the Chinese smart home appliance MCU chip market and second in the consumer electronics MCU chip market. Meanwhile, the company has successfully penetrated the high-end applications of MCU chips and entered the high-growth sectors of industrial control and automotive electronics. Data from the prospectus shows that in 2024, the company's MCU products ranked first in market shipments in China with a market share of 12.6%, and ranked third by revenue. In terms of operations, the company adopts a combination structure of "no wafer fab + self-owned production line," balancing the requirements of scalable delivery and flexible iterative demands. On the one hand, the company focuses on core processes such as chip design, platform development, and market innovation, establishing long-term partnerships with top global wafer foundries and assembly and testing service providers to ensure efficient production and delivery of products. On the other hand, the company has a self-owned packaging and testing production line in Suining, with packaging capacity reaching 120 million units and testing capacity reaching 1.2 billion units in 2025, with utilization rates of 74.9% and 65.9% respectively, mainly responsible for rapid testing of new products, customized packaging, and final product testing tasks. Turning losses into profits, stable financial structure In terms of performance, from 2023 to 2025, the revenue scale of China Micro Semicon (Shenzhen) increased from 714 million yuan to 1.122 billion yuan, maintaining a steady upward trend; the gross profit margin improved from 9.7% to 32.9%. This improvement is directly related to the increase in the proportion of high-end businesses such as SoC, industrial control, and automotive electronics, which effectively boosted the overall profit level through the continuous penetration of high value-added products. In terms of profitability, the company has achieved significant recovery during industry cycle fluctuations. In 2023, the company incurred a loss of 21.949 million yuan due to industry downturn and inventory adjustments. By 2024, with downstream demand picking up, product structure optimization, and effective cost control, the company successfully turned losses into profits, achieving a profit of 137 million yuan; in 2025, the profit further increased to 284 million yuan. Cash flow and asset structure are also stable. In 2025, the company's net cash flow from operating activities reached 300 million yuan, providing reliable financial support for continued research and development investments, capacity optimization, and market expansion. As of the end of 2025, the company's total assets reached 3.679 billion yuan, with a net asset value of 3.177 billion yuan, and the asset-liability ratio remained at a relatively low level. Research and development capabilities and customer resource advantages are the core driving factors behind the performance growth of China Micro Semicon (Shenzhen). As of the end of 2025, the company had 241 research and development personnel, accounting for 52.5% of total employees, forming a comprehensive technical team covering chip design, analog circuits, and embedded algorithms. Research and development expenditure of the company remained stable at 120-130 million yuan from 2023 to 2025, with a total investment of over 370 million yuan over three years, accumulating 17 core technologies, owning 72 patents, 228 integrated circuit layouts, and 28 copyrights. In 2024, the company obtained ISO 26262 automotive functional safety ASILD process certification, and its automotive-grade chip capabilities reached an industry-leading level, further opening up high-end market space. At the customer level, as of the end of 2025, China Micro Semicon (Shenzhen) had served over 1,000 clients, covering top companies and well-known brands in the consumer electronics, smart home appliances, industrial control, and automotive electronics fields. The customer retention rates from 2023 to 2025 were 63.5%, 73.2%, and 82.8%, respectively, showing continuously increasing customer stickiness. Supported by industry prosperity, focusing on high-end and globalization From an external perspective, the expansion of industry scale and deepening of domestic substitution have provided growth momentum for the company. As the penetration rate of intelligent control chips in sectors such as home appliances, industrial control, and automotive continues to increase, the continuous expansion of the domestic MCU and SoC market demand has brought broader market space for local manufacturers with technology and customer bases, serving as important external support for the performance recovery and structural upgrade of China Micro Semicon (Shenzhen). According to Frost & Sullivan data, the global semiconductor industry continues to grow, with the Chinese market leading in growth, and MCU as a core component of intelligent control with persistent strong demand. The Chinese MCU market size reached 56.8 billion yuan in 2024 and is expected to increase to 96.9 billion yuan by 2029, with a compound annual growth rate of 11.3%. Emerging sectors such as automotive electronics, edge AI, and Siasun Robot & Automation have become core growth drivers. The SoC market also has vast potential, with the Chinese market size expected to reach 637 billion yuan by 2029, a compound annual growth rate of 13.3%, providing broad space for the company's multi-product development. According to the prospectus, the proceeds from the Hong Kong fundraising will be mainly used in four directions: enhancing research and development capabilities, strategic investments and acquisitions, establishing a global operation and R&D center in Hong Kong, and supplementing operational funds. The research and development investment will focus on high computing power automotive-grade MCUs, industrial control motor driver chips, AI, and Siasun Robot & Automation dedicated chips in high-end fields, further strengthening technological barriers. The establishment of a global operation and R&D center in Hong Kong aims to integrate G-RESOURCES, accelerate overseas market expansion and high-end talent reserve, promote global layout, and enhance brand international influence. Although the company faces common risks such as fluctuations in the semiconductor industry cycle, its partnerships with multiple wafer fabs, diversification of application scenarios, and relatively stable financial condition have provided a certain cushion against risks. The establishment of this dual capital platform of "A+H" will further enrich the company's financing channels and leverage the international attributes of the Hong Kong stock market to potentially introduce long-term capital and industrial cooperation resources. With the overall trend of domestic substitution in the semiconductor industry in China, China Micro Semicon (Shenzhen), relying on its existing market share, technological reserves, customer resources, and financial foundation, has a foundation to further expand in high-end fields such as industrial control and automotive electronics. In the future, as capital support gradually lands, the company's research and development investment and globalization layout may strengthen accordingly, optimizing its business structure continuously. The subsequent performance will still require continuous observation from the market.