New Stock Preview | Weichao Semiconductor: Core business fluctuates, will revenue increase in 2026 without increasing profits?

Driven by factors such as price and accelerated domestic substitution, power semiconductors have always been a hot track for market speculation. As the largest WLCSP MOSFET product supplier in Mainland China, Weizhao Semiconductor has made two attempts to list on the Hong Kong Stock Exchange. It was recently revealed that Weizhao Semiconductor has once again submitted an application for listing on the mainboard of the Hong Kong Stock Exchange, with GF SEC as the exclusive sponsor. The company is a leading domestic supplier of high-performance power semiconductor devices. According to Zhoushi Consultancy, based on 2025 revenue calculations, the company ranks sixth among non-IDM power semiconductor device providers in China and is the largest WLCSP MOSFET product supplier in Mainland China. Power semiconductor devices are core components for energy conversion and management, and their importance is highlighted as the global energy structure accelerates towards low-carbonization. They are widely used in consumer electronics, automotive electronics, industrial control, electric vehicles, energy storage systems, AI data centers, and other fields. According to Zhoushi Consultancy, the market size of China's power semiconductor device industry is expected to reach 109 billion yuan by 2025, and is projected to grow to 180.4 billion yuan by 2030, with a compound annual growth rate of 10.4%. Benefitting from the growth in industry demand, the company's performance has been on the rise. From 2023 to 2025, revenue and net profit are expected to grow at a compound annual rate of 19% and 90% respectively, with net profit margins increasing from 2.4% to 6.2%. However, there is a significant slowdown in growth expected in 2026. In the first five months of 2026, revenue was 353 million yuan, an increase of only 1.73% year-on-year, with a net loss of 510,000 yuan compared to a net profit of 27 million yuan last year. As of May 2026, the company had cash and cash equivalents of 118 million yuan. The company focuses on the design, research, development, and sales of power semiconductor device products, with a primary focus on consumer electronics, automotive electronics, and industrial applications. Its products mainly include low-voltage power semiconductor devices such as WLCSP products and non-WLCSP products, as well as high-voltage power semiconductor devices such as SJ MOSFETs, Planar MOSFETs, IGBTs, and SiC MOSFETs. In terms of product revenue, low-voltage power semiconductor devices account for the majority of revenue, with contributions exceeding 90% in previous years. However, the performance of WLCSP and non-WLCSP products has been unstable, with revenue contributions showing variability. In the first five months of 2026, this business segment contributed 97% of revenue, with WLCSP products and non-WLCSP products contributing 27.4% and 69.6% respectively. High-voltage power semiconductor device business revenue contributions are relatively low, accounting for less than 2% in previous years. Within the low-voltage product segment, the company focuses on non-WLCSP products, strategically positioning WLCSP products. The former is widely used in consumer electronics, industrial electronics, and automotive electronics, while the latter is a key component in lithium battery protection applications for smartphones, tablets, and wearable electronic devices. The WLCSP technology integrates wafer-level packaging with chip-scale packaging technology, placing the company in a leading position in the global power semiconductor packaging technology field. In terms of sales volume and price, the sales volume of non-WLCSP and WLCSP products has shown a growth trend over the past three years. However, in the first five months of 2026, the sales volume of WLCSP products decreased by 30%, but this was offset by an 83.2% increase in non-WLCSP product sales volume, resulting in an overall growth of 25.4%. Prices of both products have been on a downward trend, with average prices falling by more than 15% in the first five months of 2026. Weizhao Semiconductor's customers are mainly concentrated in the consumer electronics and industrial applications industries. In the first five months of 2025, these two industries accounted for 61.9% and 31.6% of revenue respectively, totaling 93.5%. While revenue growth in consumer electronics has been relatively stable, industrial applications have shown more fluctuation, mainly due to a rapid fall in revenue after a surge in 2024, followed by a return to double-digit growth in 2026. The company has a high concentration of customers, with the top five customers contributing 48.7%, 53.8%, 57.6%, and 67.9% from 2023 to the first five months of 2026, with the largest customer accounting for 13.8%, 16.6%, 23.1%, and 29.7% respectively. In terms of profitability, the company's gross profit margin has fluctuated slightly, with rates of 15.2%, 17.4%, 23.6%, and 17.9% from 2023 to the first five months of 2026. The main drivers of this were improvements in the gross margin of the two core products in the first three years, followed by a decline in 2026. The gross profit margins of non-WLCSP and WLCSP products decreased to 16.6% and 23.9% respectively. Additionally, various expense rates have been increasing over this period, with sales expense ratios increasing from 3.7% to 4.2%, administrative expense ratios increasing from 3.8% to 8.4%, and research and development expense ratios increasing from 6.6% to 8.2%. It is worth noting that the company's interest-bearing debts have been increasing rapidly in recent years, amounting to 50 million yuan, 108 million yuan, 140 million yuan, and 233 million yuan from 2023 to the first five months of 2026, mainly consisting of non-current interest-bearing borrowings. The company's operating cash flow has remained positive for the past three years, and financing cash flows have been able to cover investment expenditures, resulting in a relatively healthy debt ratio. As of May 2026, the company had cash and cash equivalents of 118 million yuan. From an industry perspective, in the Chinese power semiconductor device market, low-voltage power semiconductor devices account for over 40% of the market share, with low-voltage MOSFET power semiconductor devices maintaining the largest market share. The industry was worth 27.2 billion yuan in 2025, with a compounded annual growth rate of only 3.2% over the past five years. However, with the growth in demand for power management, it is expected to reach 50 billion yuan by 2030, with a compounded annual growth rate of 12.5%. Weizhao Semiconductor does not stand out in the Chinese power semiconductor device market, with a market share of only 0.7% in 2025. According to Zhoushi Consultancy, the concentration of the Chinese power semiconductor device industry was relatively high in 2025, with the top ten market participants accounting for approximately 56.0% of the market. The company ranked 18th in terms of market share. While the company may not have a competitive advantage in terms of scale, it does have a certain level of competitiveness in specific submarkets. For example, it ranks sixth among non-IDM suppliers and tenth among low-voltage MOSFET discrete device suppliers. The company is actively investing in research and development to gain a technological advantage. It owns core technologies such as WLCSP technology, SJ MOSFET design and process technology, and low-voltage SGT MOSFET design and process technology. From 2023 to the first five months of 2026, the company's research and development expense ratios were 6.6%, 7.6%, 7.3%, and 8.2% respectively. Currently, it has 116 authorized patents and 47 patent applications both in China and overseas, as well as 107 integrated circuit layout design registrations, four copyrights, and 54 registered trademarks. Weizhao Semiconductor's production capacity is expanding, with a manufacturing base in Zhuhai. Prior to the operation of the Zhuhai factory, its WLCSP product packaging business was outsourced. Since the Zhuhai factory started production in 2024, its production capacity has increased by 5.56 times in 2025 and a further 92.8% in the first five months of 2026. However, there has been significant fluctuation in the utilization rate of production capacity, which was only 54.3% in the first five months of 2026, compared to 96% in the same period last year. It is worth mentioning that from 2020 to 2022, the company received investments in rounds A to C, involving institutions such as Yancheng Venture Capital, Fenglin Venture Capital, Nanshan Zhixin Investment, and Kunqiao Semiconductor. The latest round was in December 2022, with a post-investment valuation of 2.89 billion yuan. Even based on the 2025 net profit, the PE valuation would be 57.8 times, indicating a relatively high valuation. In summary, Weizhao Semiconductor's fundamentals are moderate. The revenue of its core business in low-voltage power semiconductor devices fluctuates due to volume and price factors but is overall trending upwards. The company's profitability has slightly declined, mainly due to rising expense ratios. Additionally, the company's increasing level of interest-bearing debts may lead to debt pressures. While the industry is experiencing growth, the company lacks scale advantages and has previously received high valuations in its financing rounds, which may pose risks to potential investors in its current listing.