HD Smartchip makes its third attempt at a Hong Kong listing, with 70% of revenue from distribution and weak self-generated earnings from in-house chips

On June 26, Shenzhen HD Smartchip Technology Co., Ltd. (hereinafter referred to as "HD Smartchip") filed an updated prospectus for its third attempt at a Hong Kong IPO. If this offering is successfully completed, HD Smartchip will become the first BeiDou navigation chip company listed on the Hong Kong stock market.

Spun off from China Electronics, valued at RMB 4.4 billion

Established in December 2016 and headquartered in Shenzhen, HD Smart Microelectronics initially had seven shareholders, led by CEI Valley, with strategic investments from SAIC Motor Venture Capital, Bird Group, BAIC Group, Jingjia Group, and an employee stock ownership platform.

HD Smart Microelectronics was founded to take over and independently develop the navigation chip design business formerly under China Electronics Corporation (CEC). In March 2017, the company acquired this business segment through a bidding process for RMB 100 million, after which the navigation chip design operations began independent operations.

Following its spin-off, HD Smart Microelectronics has focused on the research and development of GNSS positioning chips and achieved mass production of dual-frequency, high-precision GNSS SoC chips in 2019. The company has become a leading domestic supplier of ground application chips for the BeiDou Navigation Satellite System, playing a pivotal role in promoting the civilian, consumer-oriented, and large-scale adoption of BeiDou.

Since its inception, HD Smart Microelectronics has completed multiple rounds of financing, attracting strategic investors and funds including CEI CICC Fund, Yunfeng Fund, CPE Source Peak, BYD, SAIC Motor, Jiangling Motors, Gree Venture Capital, Bosch Venture Capital, TCL Technology, and AVIC Industry Investment.

During its Series C-2 funding round in January 2022, HD Smart Microelectronics raised capital at RMB 5.09 per share, implying a valuation of RMB 4.4 billion. Notably, in August 2023, BYD sold a small stake to an investment firm at a 25% discount.

To date, the largest shareholder group remains affiliated with China Electronics. CEI Valley, CEI CICC Fund, and CEI Port—subsidiaries or affiliates of China Electronics—collectively hold 11.24% of the company’s shares, making them the single largest shareholder bloc.

Father and son team up in BeiDou navigation

The key leader of HD Smart Microelectronics is Chairman and President Sun Zhongliang. A seasoned industry veteran, Sun has drawn significant attention due to his identity as the son of Academician Sun Jiadong, widely known as the 'father of Chinese satellites.'

Sun Jiadong previously served as Chief Designer of China’s Lunar Exploration Program and the first and second generations of the BeiDou Navigation Satellite System. He is a recipient of China’s State Preeminent Science and Technology Award, the 'Two Bombs, One Satellite' Meritorious Medal, and the Medal of the Republic.

Sun Zhongliang is 63 years old and earned his bachelor's degree in engineering surveying from Beijing University of Civil Engineering and Architecture (formerly Beijing Institute of Civil Engineering and Architecture). He currently serves as Vice Chairman of the China Association of Satellite Navigation and Positioning and Deputy Director of the Central State-Owned Enterprises BeiDou Industry Collaborative Development Platform.

Sun Zhongliang has also carried forward his father’s satellite navigation legacy. In the early stages of the BeiDou navigation system’s development, he led BeiDou-related SoC chip business at Huada Electronics and launched China’s first 'BeiDou Chip Open Platform.'

Following Huada Electronics’ spin-off of its GNSS (Global Navigation Satellite System) chip business, Sun Zhongliang spearheaded the establishment of HDStar (Huada BeiDou) and set up an academician workstation named after Sun Jiadong within the company to continuously strengthen its technical capabilities.

Seventy percent of revenue comes from distribution business; core operations struggle to generate profits

HDStar primarily provides satellite navigation-related chips, modules, and associated solutions supporting major GNSS systems including BeiDou, GPS, GLONASS, Galileo, QZSS, and NavIC. Its products are used in transportation, consumer electronics, environmental monitoring and early warning systems, and BeiDou short message communication services.

In 2025, by shipment volume, HDStar ranked fifth globally in the GNSS chip and module market with a 7.4% market share, making it the second-largest mainland Chinese company behind BDStar Navigation.

In niche markets, HDStar has established a dominant competitive advantage in shared bicycles, serving as the largest navigation chip supplier for Meituan, Hellobike, and Didi Qingju. In 2025, it held over 60% market share in China’s shared bicycle sector and had cumulatively shipped 15 million navigation chips for shared bikes by the end of 2024.

Financially, HDStar reported annual revenues of RMB 645 million, RMB 840 million, and RMB 1.014 billion in 2023, 2024, and 2025, respectively, with corresponding net losses of RMB 289 million, RMB 141 million, and RMB 113 million, resulting in a cumulative loss of RMB 543 million over the three-year period.

Excluding share-based compensation expenses accounted for under equity-settled arrangements, HDStar’s adjusted net losses for 2023–2025 were RMB 274 million, RMB 120 million, and RMB 75 million, respectively, showing a clear narrowing of losses.

Notably, despite positioning itself as a developer of proprietary navigation chips, HDStar exhibits an inverted revenue structure—its integrated chip and module business (which involves procuring communication, memory, and RF chips and modules from external suppliers for resale) has consistently accounted for around 70% of total revenue.

The distribution business is essentially a trading model that profits from price differentials, with a gross margin of only 2.7%, albeit at relatively high volume. Currently, HDAT has incorporated chip solutions from 22 third-party brands. This situation also reflects the weak 'self-sustaining' capability of the company’s core in-house navigation chips, necessitating support from the 'externally sourced' distribution business to sustain overall operations.

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Edited by Liu Siting

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