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Building chips in Shenzhen, but hit by Xiaomi’s fire sale! Vanguard Semiconductor makes second IPO attempt amid sharp earnings reversal

Produced by | Bullet Finance

Author | Xingkong

Editor | Wang Yajing

Art Direction by | Qianqian

Reviewed | Songwen

On July 14, 2026, Weizhao Semiconductor submitted its prospectus to the Hong Kong Stock Exchange for the second time, continuing its push for an IPO.

Shenzhen Weizhao Semiconductor Co., Ltd. (hereinafter referred to as 'Weizhao Semiconductor') is a Shenzhen-based power semiconductor design company. Its core products include MOSFETs, IGBTs, and other power switch chips. Its flagship offering is wafer-level chip-scale packaged (WLCSP) low- and medium-voltage devices—miniature chips widely used in battery protection circuits for smartphones, fast-charging systems, smartwatches, and other portable electronics.

Meanwhile, the company has also expanded into high-voltage power devices, targeting markets such as automotive power systems and industrial energy storage.

Just before filing with the Hong Kong Stock Exchange, Hubei Xiaomi Yangtze River Industrial Fund exited its stake at a low price.

In the first few months of 2026 alone, the company swung from profit to loss—caught between earnings pressure from a downturn in the industry cycle and ongoing cash burn from its diversification efforts.

Moreover, the company faces multiple challenges, including drastic channel restructuring, high customer concentration, and persistent downward pressure on product pricing.

This 'little giant' in the chip industry, heavily tied to consumer electronics, is now engaged in a difficult strategic battle—to counter cyclical headwinds and break free from path dependency.

1. A humanities graduate ventures into semiconductors; Xiaomi exits at a low price just before the IPO

Li Weicong, chairman of Weizhao Semiconductor, is a native of the Chaoshan region. In Chaoshan business circles, there’s a long-standing entrepreneurial creed: 'Better to sleep on the floor than not be your own boss.' This bold and tenacious spirit is clearly reflected in his character.

Li Weicong was born in 1987 in Chao'an District, Chaozhou City, Guangdong Province. He is currently 39 years old and majored in English at Beijing Normal University Zhuhai Campus, holding a purely liberal arts background.

After graduating from university in 2011, he immediately plunged into Huaqiangbei in Shenzhen, immersing himself in the semiconductor components trading business. Within just one year, he gained deep insight into both upstream and downstream supply chains as well as end-customer demands, laying the groundwork for his future entrepreneurial venture.

In 2012, Li Weicong invested all his savings to found Weichip Semiconductor, with an initial registered capital of only RMB 1 million. In its early days, the company was wholly owned by him and his mother.

Unlike peers crowding into the low-end, generic MOSFET segment amid intense competition, Li leveraged market insights accumulated through his Huaqiangbei trading experience to bet on the differentiated niche of WLCSP (wafer-level chip-scale packaging), focusing specifically on ultra-thin power chips for fast-charging smartphones and miniaturized wearable devices. This strategy successfully secured entry into the supply chains of leading smartphone brands such as OPPO and Xiaomi.

According to CIC Consulting, by revenue from power semiconductor devices in 2025, Weichip Semiconductor ranks 18th in China’s power semiconductor market with a market share of just 0.7%. By revenue from low- and mid-voltage MOSFET discrete devices in 2025, the company ranks 10th in the industry with a 2.8% market share. In the even more specialized segment of WLCSP MOSFET suppliers, it ranked second in 2025 by revenue, capturing a 10.5% market share.

During the entrepreneurial journey, Li Weicong led Weichip Semiconductor through multiple rounds of financing.

In the Series A round in 2021, investors including OPPO, Fenhu Qinhé, and Hubei Xiaomi Yangtze River Industry Fund (hereinafter referred to as 'Hubei Xiaomi') participated. Among them, Hubei Xiaomi invested RMB 19.1 million for RMB 615,700 of registered capital. According to the prospectus, the Series A investors’ entry price was RMB 12.79 per share.

(Figure / Prospectus)

In 2022, the company raised funds from Intel Asia-Pacific in its Series B round and welcomed CATL in its Series C round. During this cross-financing phase, the company’s post-money valuation soared to RMB 2.8877 billion—representing a 5.42-fold increase from its initial valuation in just over two years.

(Figure / Prospectus)

However, at the critical juncture of the company’s push toward a Hong Kong IPO, Hubei Xiaomi opted to fully exit its stake at a transfer price of merely RMB 32.32 per share—lower than the entry price of approximately RMB 36.43 per share paid by investors in Weichip Semiconductor’s 2022 Series C round.

By comparison, in August and November 2025, Tianjin TEDA Hengding’s share transfer prices were RMB 57.33 per share and Chongtou Xinwei’s was RMB 45.63 per share, respectively. Hubei Xiaomi’s exit price was significantly below those of its peers, marking a low-price departure.

(Figure / Prospectus)

Hubei Xiaomi completed the full equity transfer in two tranches:In December 2025, it sold a portion of its equity to individual investors Chen Yongyang and Jiang Changlong, and in February 2026 transferred all remaining shares to China Electronics Smart Energy. The acquirer is precisely the entity under regulatory scrutiny for acquiring stakes at low prices.

In its filing review for overseas listings, the China Securities Regulatory Commission (CSRC) specifically launched a detailed investigation into these acquiring shareholders, focusing on the reasonableness of share subscription prices by new shareholders within the past 12 months, the reasons for price differences among different shareholders, and whether any improper benefit transfers occurred.

However, in Weizhao Semiconductor’s latest prospectus, the company merely explained the price discrepancies among shareholder transactions as being 'primarily due to differences in original investors’ capital contributions and investment timing.'

Regarding these questions, Bullet Caijing also sent an interview request to Weizhao Semiconductor, but had not received a response as of publication time.

2. Swinging from profit to loss: Why did earnings reverse so abruptly within half a year?

If one considers only the financial data from 2023 to 2025, Weizhao Semiconductor indeed delivered an impressive performance:

The company’s revenue rose from RMB 575 million to RMB 814 million, representing a compound annual growth rate (CAGR) of approximately 18.9%; net profit increased from RMB 139.77 million to RMB 505.16 million, a CAGR of about 90%; and gross margin steadily improved from 15.2% to 23.6%.

(Figure / Prospectus)

Notably, in 2025, after the Zhuhai factory came online, the unit cost of WLCSP products dropped by approximately 23.4%, driving the product’s gross margin up from 18.6% in 2024 to 31.7%, making it the key driver of profit growth that year.

However, this rosy picture came to an abrupt halt as soon as 2026 began.

From January to May 2026, Vichip Semiconductor reported revenue of RMB 353 million, a mere 1.8% year-over-year increase, indicating near-stagnation in growth; net profit swung from a profit of RMB 26.529 million in the same period last year to a loss of RMB 5.1 million; gross margin plummeted by 4.5 percentage points to 17.9% from 22.4%.

For a company with annual revenue exceeding RMB 800 million, a RMB 5.1 million loss may seem insignificant in absolute terms, but the directional shift from profit to loss—and the underlying issues it reveals—are the real warning signs.

In the first five months of 2026, revenue from WLCSP products—the core profit driver for Vichip Semiconductor—amounted to RMB 966.86 million, a sharp 39.8% year-over-year decline, and its share of total revenue dropped to 27.4% from 46.3% in the same period last year.

(Figure / Prospectus)

The prospectus attributed this to 'smartphone manufacturers adopting more conservative production and procurement plans.'

Meanwhile, revenue from non-WLCSP products rose by 52.6% year-over-year to RMB 246 million, but this segment’s gross margin was only 16.6%, significantly lower than the 23.9% margin of WLCSP products.

As the revenue mix shifts from high-margin WLCSP products toward lower-margin traditional packaging offerings, the company inevitably finds itself in a 'revenue-up, profit-down' dilemma.

Moreover, during the reporting period—from 2023 through the first five months of 2026—Vichip Semiconductor’s average selling prices (ASPs) across all product categories have been on a continuous downward trend. In January–May 2026, the ASP for both WLCSP and non-WLCSP products stood at RMB 0.48 per unit, down 12.73% and 17.24% year-over-year, respectively; the ASP for high-voltage power semiconductor devices was RMB 1.60 per unit, a steep 24.53% year-over-year decline.

(Figure / Prospectus)

In the semiconductor industry, offering price cuts to secure large orders is not uncommon, but Vichip Semiconductor’s problem lies in the fact that:The price reductions have not translated into a significant sales volume increase.

In the first five months of 2026, the company’s core WLCSP products suffered a dual blow of falling prices and shrinking volumes: sales volume declined 30.2% year-over-year, while prices dropped 12.73% year-over-year, underscoring a weakening pricing power.

In addition, Weizhao Semiconductor’s distribution network has undergone a sharp contraction, leading to an increase in customer concentration.

During the reporting period, the number of Weizhao Semiconductor’s distributors plummeted from 658 to 103, a reduction of over 80% within three years.

In its prospectus, the company explained that most terminated partnerships were due to 'failure to meet performance evaluation criteria,' while a smaller portion resulted from 'breach of contractual terms and regional sales restrictions.' Regardless, the disappearance of more than 500 distributors within two years is itself a cause for concern.

(Figure / Prospectus)

Meanwhile, during the reporting period, revenue contribution from the company’s top five customers rose steadily from 48.7% to 67.9%. In the first five months of 2026, the largest single customer accounted for 29.7% of revenue.

The simultaneous emergence of three risks—deteriorating financial performance, drastic channel contraction, and heightened customer concentration—within the same timeframe starkly reveals fundamental weaknesses in the company’s product portfolio, distribution strategy, and customer structure.

3. Betting on automotive electronics: Can it break free from dependence on the smartphone industry?

In fact, Weizhao Semiconductor is actively pursuing a second growth curve, with its automotive electronics business holding significant promise.

The company began laying the groundwork for automotive-grade products as early as 2021. Its new factory in Zhoushan explicitly prioritizes power modules and automotive-grade components as key development areas.

But while the vision is ambitious, reality is harsh.

According to Weizhao Semiconductor’s revenue breakdown, consumer electronics still accounted for 61.9% of total revenue in the first five months of 2026, remaining the company’s core business, while automotive electronics contributed only 4.8%—a negligible presence on the financial statements.

(Figure / Prospectus)

More seriously, Weizhao Semiconductor's high-voltage power semiconductor business for automotive electronics is not only small in scale but also exhibits unstable profitability.

In 2025, the gross margin of its high-voltage products plummeted to -42.6%. Although it rebounded to 14.8% in the first five months of 2026, revenue during this period amounted to only RMB 4.264 million, representing just 1.2% of total revenue.

This indicates that the company’s strategic push into automotive-grade semiconductors has yet to achieve meaningful scale or profitability, and thus cannot offset the downward pressure on its core consumer electronics business in the near term.

The pace of capacity expansion has further amplified Weizhao Semiconductor’s current operational challenges.

Its Zhuhai factory, which serves as the primary production base for the company’s core WLCSP packaging capacity, commenced operations in 2024 but recorded a full-year capacity utilization rate of only 24.2%. Although utilization rose to 86% for the full year of 2025, demand weakness in the smartphone industry subsequently led to...a decline in the company’s capacity utilization to 54.3% in the first five months of 2026, leaving nearly half of its production lines idle.

(Figure / Prospectus)

Despite the sharp drop in capacity utilization and insufficient absorption of output at its existing Zhuhai facility, the company continues to advance construction and commissioning of its automotive-grade semiconductor plant in Zhoushan, committing significant capital expenditures on land, equipment, and production line setup. Going forward, the company may face a dual burden of underutilized legacy and new production lines, along with double fixed-cost amortization, which will continue to weigh on profitability.

Cash flow risks are equally concerning.From 2023 to 2025, Weizhao Semiconductor reported substantial net operating cash inflows of RMB 31.165 million, RMB 58.154 million, and RMB 89.062 million, respectively. However, in the first five months of 2026, its core business’s cash-generating ability weakened significantly, resulting in a net operating cash outflow of RMB 54.127 million—compared with a net outflow of RMB 21.647 million during the same period in 2025.

(Figure / Prospectus)

Currently, Weizhao Semiconductor faces declining demand and turning losses in its core business segments, leading to substantial operating cash outflows. Compounded by ongoing rigid capital expenditure requirements from the expansion of two major factories, its cash burn pressure has intensified further.If demand for consumer electronics remains weak and the automotive electronics business fails to scale as expected, the company could face a dual risk of liquidity strain and rising refinancing costs.

This second attempt at a Hong Kong IPO represents both a critical opportunity for Weizhao Semiconductor to leverage capital markets to break through its current challenges and a comprehensive test of its operational capabilities and transformation strength. Xiaomi’s recent exit at a low valuation has already served as a warning to the market.

In the short term, the company urgently needs to stem losses, restore profitability, optimize its channel and customer mix, and activate idle production capacity to ease cash flow pressure. Over the long term, it must accelerate its expansion into high-growth segments such as automotive-grade and industrial electronics, diversify its business structure, and break free from the constraints of the consumer electronics cycle to effectively overcome its growth ceiling.

*The featured image in this article is sourced from SheTu.com under the VRF license.

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