The revenue scale is relatively thin, with ongoing substantial losses. Xizhi Technology is attempting a Hong Kong stock listing under high debt.

Written by | Planet

Source | Beiduo Business & Beiduo Finance

Recently, the domestic hard technology IPO lineup has added another "niche champion." According to Beiduo Business and Beiduo Finance, Shanghai Xizhi Technology Co., Ltd. (hereinafter referred to as "Xizhi Technology") passed the Hong Kong Stock Exchange listing hearing on April 12, with CICC and Guotai Haitong serving as joint sponsors.

Combining information from Tianyancha App and public sources, Xizhi Technology was founded in 2017 by MIT Ph.D. Yichen Shen. Focusing on the cutting-edge field of optoelectronic hybrid computing power, it has raised over 2.3 billion yuan in cumulative financing over nine years and holds an 88.3% market share, firmly securing the top position in China's Scale-up optical interconnect market.

However, beneath the dazzling technological barriers of the 'world's first pure-play AI optical computing stock' and its star-studded shareholder lineup lies a financial reality: revenue barely surpassing 100 million yuan in 2025, net losses exceeding 1.3 billion yuan, and a debt-to-asset ratio as high as 473%. Faced with the vast gap between R&D achievements and commercialization, this 'dark horse's' real test on the public market has only just begun.

1. A Sub-Champion with Nearly 90% Market Share

In 2017, Shen Yichen published a cover article in Nature Photonics, which for the first time demonstrated the feasibility of using electro-optical hybrid computing for deep learning. This scientific breakthrough laid the theoretical foundation for subsequent developments in the electro-optical hybrid computing field and became the technological cornerstone for the birth of XtalPi Tech.

Starting from this point, XtalPi Tech has focused on the electro-optical hybrid computing sector that integrates the dual advantages of photonics and electronics over the past nine years. It has now built a portfolio of products and solutions centered on optical interconnects and optical computing, supported by proprietary electro-optical hybrid chip technology, offering customers scalable and cost-effective solutions.

The forward-looking nature of this technical direction precisely addresses the structural defects of current computing infrastructure. In the AI era, computing demand continues to rise, but the world still relies predominantly on electronic computing and electronic interconnects. Constrained by Moore’s Law and physical limitations, the cost, scalability, and energy consumption bottlenecks of traditional electronic systems are becoming increasingly prominent, exacerbating the shortage of computing power.

Against this backdrop, XtalPi Tech’s electro-optical hybrid computing solution, characterized by low latency, high throughput, and low power consumption, breaks through the performance ceiling of traditional electronic systems via more efficient single-chip computing and optical interconnects, providing critical support for computing infrastructure in the AI era.

XtalPi Tech’s electro-optical hybrid computing products are based on three core chip technologies: on-chip optical network (oNOC), inter-chip optical network (oNET), and photonic matrix computing (oMAC). These can work alongside traditional electronic chips, overcoming industry development bottlenecks such as the 'memory wall' and 'power wall'.

At the product level, XtalPi Tech provides comprehensive solutions in the optical interconnect field based on electro-optical chip technology, connecting various computing devices through optical signals to enhance computing capabilities within a single server or node (Scale-up) or linking multiple independent servers or nodes to form large clusters (Scale-out).

According to Frost & Sullivan, XtalPi Tech dominates among independent Scale-up optical interconnect solution providers in China, not only securing the top revenue position with an impressive 88.3% market share but also standing as the only independent supplier capable of offering end-to-end integrated large-scale Scale-up optical interconnect solutions.

Additionally, XtalPi Tech’s optical computing solutions have given rise to noteworthy products, including the world’s first electro-optical hybrid computing accelerator card based on on-chip optical network (oNOC), OptiHummingbird, and the world’s first electro-optical hybrid computing accelerator card with 3D TSV packaging, PACE 2 (XtalPi Polaris).

By the end of 2025, Xizhi Technology had achieved commercial deployment with 44 customers, providing support for several thousand-GPU clusters and increasing the average model floating-point utilization (MFU) by over 50%. It has empowered multiple sectors including big data, cloud computing, finance, autonomous driving, biomedicine, and materials research.

II. Profit Dilemma Behind High Growth

From a financial perspective, the commercial implementation of its products is continuously driving up Xizhi Technology's performance curve. The company’s revenue increased from RMB 38.235 million in 2023 to RMB 60.191 million in 2024, marking an increase of approximately 57.4%, mainly due to the mass production phase of its Scale-up optical interconnect product.

In 2025, the scaled delivery of the Scale-up OCS product pushed Xizhi Technology’s revenue further to RMB 106 million, breaking through the RMB 100 million mark for the first time. However, for a market leader holding nearly 90% of the niche market, a cumulative three-year revenue of only about RMB 200 million still appears somewhat modest.

Contrasting with the revenue growth, Xizhi Technology’s gross margin has been declining year by year: it was maintained at a high of 60.7% in 2023, dropped to 53.5% in 2024, and further slid to 39.0% in 2025, shrinking by more than 21 percentage points within three years, continuously compressing profitability.

Behind the pressure on gross margins lies a dual squeeze from Xizhi Technology’s structure and cost side. On one hand, the revenue share of its optical interconnect products, which have relatively lower gross margins, as well as the components of the optical computing cluster excluding PACE 2, has risen. On the other hand, the scale production and complex processing requirements led to a 132.0% year-on-year surge in sales costs in 2025.

More alarmingly, Xizhi Technology has yet to achieve a breakeven point. In 2023, 2024, and 2025 (the 'reporting period'), the company incurred net losses of RMB 414 million, RMB 735 million, and RMB 1.342 billion respectively, accumulating a total loss of nearly RMB 2.5 billion over three years, raising concerns about the awkward situation of 'selling more but losing more.'

In its prospectus, Xizhi Technology explained that during each reporting period, the fair value change of financial instruments issued to investors showed an upward trend, amounting to RMB 56.612 million, RMB 379 million, and RMB 843 million respectively. This portion of the change belongs to non-cash items and does not directly equate to operational bleeding.

But putting aside these factors, Xizhi Technology’s operational losses remain significant and are primarily attributed to continuous high R&D investments. As a hard-tech enterprise centered on optoelectronic hybrid computing power, the company’s R&D expense ratio reached as high as 731.8%, 584.9%, and 450.4% respectively during the reporting periods.

Although this ratio shows a downward trend year by year, the absolute amount keeps growing. During the reporting period, Xizhi Technology’s R&D expenditures were RMB 280 million, RMB 352 million, and RMB 479 million respectively, accumulating an R&D investment of over RMB 1.1 billion across three years, with substantial funds used for the development and iteration of specialized technology products.

It is also worth noting that, XtalPi has been in a continuous 'cash burn' state. By the end of 2025, the company's total assets are approximately 1.138 billion yuan, but its total liabilities have reached 5.386 billion yuan, with net debt amounting to 4.248 billion yuan. With a staggering debt-to-asset ratio of 473%, the pressure to repay debts is self-evident.

Summary

The funding supporting XtalPi’s long-term R&D and operations mainly comes from external institutional 'infusions.' The prospectus shows that since its establishment, the company has raised about 2.3 billion yuan in cumulative financing, with well-known enterprises and institutions like Tencent, Baidu, Sequoia China, and CICC Capital all joining in. After completing its Series C4 round of financing in April 2025, its post-money valuation reached 7.8 billion yuan.

This 'trade losses for technology' strategy is not uncommon among hard tech companies. However, the question remains: can its valuation logic withstand scrutiny from the capital markets? And how long are investors willing to wait for this technological vision?

The leap from 'breaking one billion in revenue' to 'breaking even' may be XtalPi’s ultimate answer to resolving this dilemma.

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