Preview of New Stocks in US Stock Market | Taking $21.78 million in revenue to the US, Jie Microchip aims to become the "water seller" in the construction of the metaverse.

The global metaverse industry is experiencing a spiral rise cycle of hardware, software, and ecology. According to the latest data from IDC, the global shipment of AR/VR devices is expected to reach 76.7 million units by 2024, a year-on-year growth of 32.8%, driving a surge in demand for GPU/CPU customization. In this context, the metaverse in China has also experienced a path from hot to cooling off to stable development, but any wave coming will bring a large number of "water sellers", who may be the future "hidden champions". Recently, Semidux (Cayman) Holding, the parent company of Jie Microchip Technology Co., Ltd., a provider of metaverse computing infrastructure products and services in China, updated its IPO application to the U.S. Securities and Exchange Commission (SEC) and plans to list on Nasdaq under the stock code "JIE". It confidentially filed with the SEC on June 6, 2023, and publicly disclosed its prospectus on January 26, 2024. Despite rapid revenue growth, cash flow is under pressure. Jie Microchip is a provider and service provider of metaverse computing infrastructure in China, with main products including chips, custom servers, cloud gaming terminals, as well as software, technology, maintenance services, and server rentals to meet the ever-changing needs of the metaverse industry. By independently researching and selling upstream customized chip products, midstream customized server products, and downstream cloud gaming terminal products, the company has built a vertically integrated business model. However, in the ever-changing metaverse race, it seems that Jie Microchip is destined to have a fate closely connected with the word "volatility". From the financial reports, the company's revenue in the past fiscal years of 2023, 2024 (fiscal year ends on March 31), and the first six months of 2025 (ending on September 30, 2024) were $9.5387 million, $21.7808 million, and $9.8872 million, respectively, with net profits of -$0.8091 million, $1.3575 million, and $0.5383 million, respectively, showing breakthroughs in both revenue and profit in 2024. Looking at the revenue structure, hardware sales are the core drive. In the fiscal year 2024, the revenue from sales of chips, custom servers, and cloud gaming terminals accounted for 80.9% of the total revenue, a significant year-on-year growth of 151.4%, serving as the "backbone". Among them, the chip business has been particularly outstanding, with its self-developed "Stardust No. 1" and "Starlight Series" chips targeting cloud computing and cloud gaming scenarios, reducing latency through customized hardware acceleration modules, and becoming the key to supporting revenue growth. In fact, this seems unsurprising as the demand for computing resources is expected to grow exponentially with the rapid expansion of metaverse users and content. According to Frost & Sullivan, future cloud computing and edge computing servers will both have metaverse features. Rendering servers, edge servers, cloud servers, etc., processing graphics, blockchain resources, and low-latency computing are expected to become mainstream in future metaverse computing. According to the company's official website, the Stardust No. 1 custom chip is mainly used for cloud gaming and cloud computing, using advanced semiconductor technology, with built-in customized hardware acceleration algorithms and modules, greatly reducing latency in metaverse scenarios such as cloud computing and cloud gaming. The chip design combines two implementation methods based on standard circuits and custom circuits to optimize power consumption, area, and yield. In addition, Jie Microchip's self-developed Starlight series chips can enhance server performance by full-speed expansion of GPU/FPGA and other computing power acceleration cards without replacing existing servers, avoiding issues such as heat dissipation and power supply efficiency of graphics processing units (GPU) concentrated in the internal space of servers, reducing the iteration of servers. However, from the customer perspective, in the six months ending on September 30, 2024, four customers accounted for approximately 32.0%, 13.6%, 11.0%, and 10.8% of the company's total revenue respectively. In the fiscal year ended March 31, 2024, one customer accounted for approximately 45.9% of its total revenue. In the fiscal year ended March 31, 2023, two customers accounted for approximately 54.8% of total revenue. It is easy to see that this over-reliance on a single customer makes Jie Microchip's performance highly vulnerable to changes in customer demand and presents a significant fluctuation risk. If the company faces the situation of losing one or more important customers, this will have a significant adverse impact on its revenue and business performance. On the other hand, cash flow pressure remains a hidden concern. As of September 30, 2024, the company only had $0.99 million in cash on hand, and this IPO fundraising may be an important step in easing liquidity constraints and expanding research and development investment. Similarly, this will require Jie Microchip to not only work hard to expand its customer base and reduce reliance on a single customer in the future, but also to strengthen cash flow management to ensure the company's stable operation. The metaverse is on the rise, but the landing scenario is yet to be determined. In recent years, with the support of technologies such as 5G and AR, the metaverse has become extremely popular through word of mouth, realizing real-time massive information interaction and immersive experiences based on continuously improving underlying technologies such as communication and data processing. The rapid adoption of China's 5G technology and the continuous upgrade of computing capabilities will enhance user immersion and further drive the development of the metaverse. After many years of development, interactive hardware technology has rapidly matured, and various industries are now entering a phase of rapid development. According to PricewaterhouseCoopers, the global metaverse scale will grow at a compound annual growth rate of 36%, reaching 303.74 billion yuan (about 47.3 billion U.S. dollars) by 2025. However, in the past two years, the heat of the metaverse has visibly declined, and the current stage of the metaverse race still faces the dilemma of "concept heat, slow implementation": the outbreak of AIGC has diluted market attention, and the maturity of hardware performance and content ecology has not yet matched user expectations. Currently, the application scenarios of Jie Microchip's products are mainly in the entertainment scene. For the company, the opportunity for "overtaking in a curve" lies in the dividend of China's 5G infrastructure and computing power upgrades. A Frost & Sullivan report points out that in the future, cloud computing and edge computing servers will both have metaverse characteristics. It is expected that processing resources adapted to graphics rendering servers, edge servers, cloud servers, blockchain resources, and low latency computing will become mainstream in the future metaverse computing. According to the company's official website, the Stardust No. 1 custom chip is mainly used for cloud gaming and cloud computing, using advanced semiconductor technology, with built-in customized hardware acceleration algorithms and modules, greatly reducing latency in metaverse scenarios such as cloud computing and cloud gaming. The chip design combines two implementation methods based on standard circuits and custom circuits to optimize power consumption, area, and yield. In addition, Jie Microchip's self-developed Starlight series chips can enhance server performance by full-speed expansion of GPU/FPGA and other computing power acceleration cards without replacing existing servers, avoiding issues such as heat dissipation and power supply efficiency of graphics processing units (GPU) concentrated in the internal space of servers, reducing the iteration of servers. However, from the customer perspective, in the six months ending on September 30, 2024, four customers accounted for approximately 32.0%, 13.6%, 11.0%, and 10.8% of the company's total revenue respectively. In the fiscal year ended March 31, 2024, one customer accounted for approximately 45.9% of its total revenue. In the fiscal year ended March 31, 2023, two customers accounted for approximately 54.8% of total revenue. It is easy to see that this over-reliance on a single customer makes Jie Microchip's performance highly vulnerable to changes in customer demand and presents a significant fluctuation risk. If the company faces the situation of losing one or more important customers, this will have a significant adverse impact on its revenue and business performance. On the other hand, cash flow pressure remains a hidden concern. As of September 30, 2024, the company only had $0.99 million in cash on hand, and this IPO fundraising may be an important step in easing liquidity constraints and expanding research and development investment. Similarly, this will require Jie Microchip to not only work hard to expand its customer base and reduce reliance on a single customer in the future, but also to strengthen cash flow management to ensure the company's stable operation. The metaverse is on the rise, but the landing scenario is yet to be determined. In recent years, with the support of technologies such as 5G and AR, the metaverse has become extremely popular through word of mouth, realizing real-time massive information interaction and immersive experiences based on continuously improving underlying technologies such as communication and data processing. The rapid adoption of China's 5G technology and the continuous upgrade of computing capabilities will enhance user immersion and further drive the development of the metaverse. After many years of development, interactive hardware technology has rapidly matured, and various industries are now entering a phase of rapid development. According to PricewaterhouseCoopers, the global metaverse scale will grow at a compound annual growth rate of 36%, reaching 303.74 billion yuan (about 47.3 billion U.S. dollars) by 2025. However, in the past two years, the heat of the metaverse has visibly declined, and the current stage of the metaverse race still faces the dilemma of "concept heat, slow implementation": the outbreak of AIGC has diluted market attention, and the maturity of hardware performance and content ecology has not yet matched user expectations. Currently, the application scenarios of Jie Microchip's products are mainly in the entertainment scene. For the company, the opportunity for "overtaking in a curve" lies in the dividend of China's 5G infrastructure and computing power upgrades. A Frost & Sullivan report points out that in the future, cloud computing and edge computing servers will both have metaverse characteristics. It is expected that processing resources adapted to graphics rendering servers, edge servers, cloud servers, blockchain resources, and low latency computing will become mainstream in the future metaverse computing.The ultimate computing in the universe will rely on new infrastructure such as rendering servers, edge computing, which is highly compatible with the company's business. However, the challenges are also clear: how to penetrate the wider B-end market, such as industry and education, from the entertainment scene, and resist the dimensional attacks from international giants.As a company mainly focused on hardware sales, JieWei Chip undoubtedly plays the role of a "water vendor" in the field of metaverse infrastructure construction. This strategic choice not only considers avoiding the risks of competition in the end market, but also exposes the shortcoming of insufficient core technological reserves. Its IPO in the United States is not only a key initiative to break through the funding bottleneck, but also will face the stringent scrutiny of the international capital market. In this metaverse hardware competition, JieWei Chip is like a marathon runner who has just finished the first water station. Ahead lies a golden track with unlimited opportunities, but also a triple peak of technology, capital, and ecosystem. Whether it can transform with the help of the capital market remains to be seen, and time will provide the answer.