Yuexin Semiconductor Files for IPO with Over 10 Billion Yuan in Accumulated Losses
Chinese foundry Yuexin Semiconductor files for IPO. Rapid sales growth but accumulated losses exceed 10 billion yuan; gross margin of main business is negative. High R&D costs fail to monetize, posing profitability challenges.
Yuexin Semiconductor Technology Co., Ltd. (hereinafter referred to as Yuexin Semiconductor) filed for an IPO on the Growth Enterprise Market (GEM) of the Shenzhen Stock Exchange on June 15, 2026. The company plans to offer up to 78.85 million shares in the public offering.
The company’s revenue from 2023 to 2025 grew rapidly from 1.044 billion yuan to 1.681 billion yuan and then to 2.582 billion yuan, achieving an average annual growth rate of 57.26%. However, net losses during the same period continued to expand, reaching 1.917 billion yuan, 2.327 billion yuan, and 2.49 billion yuan respectively, bringing the cumulative loss over three years to 6.734 billion yuan. As of the end of 2025, retained losses stood at negative 10.081 billion yuan, meaning the company has accumulated over 10 billion yuan in losses since its establishment seven years ago.
The most critical issue is that both of its main businesses—integrated circuit (IC) foundry and power device foundry—have operated with negative gross margins for an extended period. From 2023 to 2025, gross margins for the IC foundry were -122.02%, -67.74%, and -52.43%, respectively. For the power device foundry, gross margins were -94.59%, -84.24%, and -79.67%, showing a narrowing trend but still with costs far exceeding revenue. In 2023, for every 100 yuan in revenue from IC foundry, costs exceeded 122 yuan, resulting in a loss of over 22 yuan.
Dependence on High R&D Expenses and
Government Subsidies
A key factor behind the company’s losses is its high R&D spending. From 2023 to 2025, R&D expenses were 605 million yuan, 446 million yuan, and 422 million yuan respectively, totaling approximately 1.473 billion yuan over three years. The R&D expense ratio relative to revenue was 57.31%, 25.58%, and 15.29%, significantly exceeding the industry average in all years except 2025 (industry averages over the same period were 15.35%, 16.37%, and 19.04%). Meanwhile, selling expenses over the three years totaled only 116 million yuan, reflecting a clear “R&D-focused, marketing-light” approach.
Customer concentration is also high. Revenue from the top five customers accounted for 550.202 million yuan (53.9% of revenue) in 2023, 984.6077 million yuan (60.34%) in 2024, and 1.5738956 billion yuan (62.68%) in 2025, meaning over half of revenue depends on the top five customers. The company disclosed in its prospectus that stagnation in new customer acquisition or deterioration in relationships with existing customers could materially impact its operations.
Yuexin Semiconductor also benefits from substantial government subsidies. Government subsidies recognized in profit or loss during the reporting period were 536.9093 million yuan, 253.3266 million yuan, and 412.7023 million yuan, totaling approximately 1.203 billion yuan over three years. Without these subsidies, the losses would have been even larger.
Business Structure as a Specialty Process Foundry
Yuexin Semiconductor specializes in 12-inch wafer foundry for specialty processes, providing contract manufacturing services to semiconductor design companies domestically and internationally. According to its prospectus, IC foundry accounts for approximately 74-80% of revenue, with power device foundry making up the remainder.
Despite substantial R&D investment, it has not translated into improved gross margins or the creation of new revenue streams. In 2023, the company spent 57% of its revenue on R&D, yet the gross margin remained severely negative at -122%. By 2025, the R&D expense ratio had dropped to 15.29%, and the gross margin improved to -52.43%, but profitability remains elusive.
In the context of China’s push for domestic semiconductor production, Yuexin Semiconductor is well-positioned to receive policy support. However, its revenue structure dependent on government subsidies carries risks from future policy changes. The company also warns in its prospectus that “changes in government preferential policies could worsen operating performance.”
Comparison with Competitors and
Profitability Hurdles
Compared to peers, Yuexin Semiconductor’s high R&D expense ratio stands out. While a direct comparison with major foundries like Taiwan’s TSMC or China’s SMIC is not straightforward, the typical R&D expense ratio in the foundry industry is around 15-20%, whereas Yuexin recorded 57% in 2023. The subsequent decline is due to scale expansion, but it has yet to lead to improved profitability.
The revenue growth rate of 57.26% reflects the rising demand for semiconductors in China. However, a negative gross margin means manufacturing costs exceed selling prices. While economies of scale could lower unit costs over time, the effect is currently limited. The company’s business model resembles a strategy of “expanding market share through loss-making orders, aiming for a turnaround via future scale advantages,” but the likelihood of achieving this remains uncertain.
Editorial View
Short-term impact: Whether Yuexin Semiconductor’s IPO is approved depends on how much the Shenzhen Stock Exchange emphasizes profitability. China promotes domestic semiconductor production as a national strategy, which could give weight to strategic significance. However, financial health marked by over 10 billion yuan in accumulated losses and negative gross margins in core businesses may deter institutional investors. The IPO review outcome is expected within three to six months. Even after listing, the company will likely need to demonstrate ongoing fundraising capabilities and a clear roadmap to eliminate losses.
Long-term perspective: In China’s semiconductor foundry market, established players such as SMIC and Hua Hong Semiconductor already exist. For Yuexin to differentiate, establishing technological advantages in specialty processes is essential. Over a 1–3 year horizon, the key focus is whether it can reduce reliance on government subsidies and turn gross margins positive. If R&D investments bear fruit and enable mass production of high-value-added processes, the path to eliminating losses could open. However, if the current situation persists, the unsustainable model of “covering R&D losses through revenue growth” is likely to continue.
Editor’s question: Yuexin Semiconductor’s case symbolizes the dilemma Chinese semiconductor startups face “between policy support and market competition.” How to resolve the trade-off between revenue growth and profitability is a challenge not only for this company but for China’s entire semiconductor industry. Additionally, could external factors such as technology commoditization or patent barriers prevent high R&D investment from translating into profits? Considering these points, investors are left with room for debate on what evaluation criteria they should use to judge the company.
Reference
Frequently Asked Questions
- What are Yuexin Semiconductor's main businesses?
- Integrated circuit foundry and power device foundry using 12-inch wafers. IC foundry accounts for about 80% of revenue.
- What does negative gross margin mean?
- It means the selling price of products is below manufacturing cost. For example, generating 100 yuan in revenue incurs over 122 yuan in costs, meaning orders are taken at a loss.
- Why does revenue grow but losses persist?
- The main reasons are high R&D expenses and negative gross margins. While gross margins are improving due to scale expansion, losses are still widening, and a path to profitability is not yet visible.
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