New Stock Outlook | Juchen Semiconductor IPO: What is the Strength of the Storage Chip Leader Under the AI Dividend?

While hot sectors like GPUs and HBM continue to attract capital attention, the market value of non-volatile memory chips, which are essential components in AI servers, automotive electronics, and consumer electronics systems, is being reassessed. Recently, A-share listed company Juchen Semiconductor submitted an application to the Hong Kong Stock Exchange, planning to further expand its international financing channels. As a fabless chip design company established for over 16 years, Juchen Semiconductor's business covers multiple product areas, including EEPROM, SPD, NOR Flash, camera motor driver chips, and NFC chips, among which SPD chips have become the fastest-growing segment in recent years. According to Frost & Sullivan data, the company is set to become the worlds second-largest supplier of DDR5 SPD chips by revenue by 2025, and ranks third in the global EEPROM market, with over 40% market share in the DDR5 SPD market. Against the backdrop of the rapid increase in AI server deployments, ongoing advancements in automotive intelligence, and deepening domestic substitutions, Juchen Semiconductor's growth logic is gradually evolving from a traditional memory chip manufacturer to a high-performance storage platform enterprise. However, amid the complex global geopolitical environment, inherent cyclical fluctuations in the semiconductor industry, and high dependence on third-party foundries, Juchen Semiconductor's journey toward internationalization must still confront uncertainties such as pressures from technological iterations and supply chain security. AI catalyzes demand release, with DDR5 and automotive electronics establishing growth engines Juchen Semiconductor's growth momentum primarily stems from its differentiated competitive advantage established in the non-volatile memory sector, especially in the areas of AI servers and AI PCs, which are now entering a harvest phase. In the AI era, while computing power is undoubtedly important, storage capacity also plays a foundational role in data collection, transmission, and persistence. The expansion of large model training scales has directly driven the demand for accompanying chips for high-performance memory modules. The company has deeply participated in the co-development of DDR5 memory interface solutions, and its SPD chip products have been widely adopted by major global memory module giants, with the companys revenue share in the global DDR5 SPD chip market exceeding 40% by 2025. With the number of memory modules deployed in mainstream AI servers doubling and the increase in DRAM capacity requirements for AI PCs, the companys commercially launched SPD chips and the VPD chips currently in certification phase are expected to be more widely deployed among cloud service providers and server manufacturers, further consolidating its leading position in the AI infrastructure sector. Additionally, the company's breakthroughs in the VPD chip area are particularly significant, as it has become the first developer to enter the design verification phase for the next-generation eSSD and CXL memory modules of leading global storage manufacturers, marking a successful expansion of its module management expertise from the DRAM domain to a broader high-performance storage ecosystem. The automotive electronics business is another core pillar for Juchen Semiconductor's long-term growth trajectory, benefiting from the trend of vehicle electronic architecture evolving towards domain control. Currently, the transformation towards intelligence and connectivity has led to an increase in the number of storage chips equipped in vehicles from "a few key nodes" to "multiple domains and nodes," encompassing multiple core modules such as intelligent driving, smart cockpits, body control, and battery management. The companys automotive-grade EEPROM and NOR Flash products, known for their high reliability and stability, have passed AEC-Q100 series standard testing and IATF 16949 quality management system certification, with failure rates far below the industry-standard 50 PPM threshold and data retention times of up to 200 years. At present, the companys products have penetrated 16 of the top 20 global automotive brands and more than 85% of China's independent passenger car brands, creating high customer stickiness and technical barriers in the automotive-grade sub-market. In terms of financial performance, Juchen Semiconductor's gross margin is steadily increasing from 46.6% in 2023 to 57.3% in 2025, reflecting the effectiveness of transforming its product mix towards high-value applications. Even during the industry destocking cycle, the company's revenue is expected to grow from RMB 703 million in 2023 to RMB 1.221 billion in 2025, with annual profits soaring from RMB 82.7 million to RMB 356 million. This growth in performance is primarily attributed to the rapid scaling of SPD chips and automotive-grade products. Meanwhile, to support future sustained expansion, the company has maintained high levels of R&D investment, with R&D expenses exceeding RMB 207 million in 2025, focusing on smaller storage cell designs, new sensing technologies, and advanced packaging processes, aiming to maintain a technological edge through ongoing generational iterations. The funding purposes for the company's Hong Kong IPO also clearly target strengthening core storage and mixed-signal technology R&D, improving global supply chain layout, and pursuing strategic acquisitions, showcasing the management's strategic direction to accelerate platform transformation through capital power and create a global fabless semiconductor giant. Short-term performance pressures emerge, while long-term competitiveness remains to be continuously validated Besides the optimistic growth expectations, Juchen Semiconductor must also contend with the inherent cyclical characteristics of the semiconductor industry and financial volatility risks stemming from intense market competition. Preliminary financial data for Q1 2026 has already revealed these challenges. It was reported that affected by changes in product mix, increased R&D expenditures, and fluctuations in downstream markets, the company's net profit for the quarter decreased to RMB 32.53 million from RMB 97.44 million in the same period last year, with the net profit margin dropping from 37.3% to 11.6%. In particular, the memory module supporting chip business has seen a decline in revenue share due to pricing pressures stemming from tight supply of packaged DRAM and NAND chips, leading to short-term fluctuations in the downstream market. Moreover, competition in the non-volatile memory chip market is fierce, with international semiconductor giants often possessing stronger risk resistance in resource acquisition, customer stability, and pricing strategies. If the company fails to consistently launch higher-value iterative products, ongoing pricing pressures may negatively impact long-term gross margin performance. It is worth noting that the vulnerability of the supply chain poses a significant operational concern under the fabless model. Currently, Juchen Semiconductor still has a considerable dependency on a few third-party foundries. During the performance record period, the procurement proportion from the companys largest foundry supplier once exceeded 50%. Although the two parties have maintained a long-term cooperative relationship, any disruptions caused by insufficient production capacity, significant price increases, or financial difficulties could have a considerable impact on the companys operations. Especially since critical raw materials needed for wafer manufacturing are affected by geopolitical issues and trade disputes, the stability of supply is uncertain, and the company may experience delays in passing increased procurement costs onto downstream customers, thereby squeezing profit margins. Additionally, the companys inventory turnover days reached 241 days in Q1 2026, which is relatively high in the industry. While this helps to respond quickly when the market recovers, it also raises potential risks of inventory obsolescence, impairment, and liquidity pressure. Furthermore, it is understood that approximately half of the companys revenue comes from overseas markets, with plans to further deepen its presence in Europe, Singapore, and South Korea. Compliance with cross-jurisdictional laws, transfer pricing audits, foreign exchange controls, and cultural differences all place higher demands on the company's global governance capabilities. In summary, Juchen Semiconductor has demonstrated strong technological realization capabilities and market sensitivity in the non-volatile memory chip sector, particularly in the thriving sub-sectors of AI and automotive electronics, securing significant competitive positioning and profitability. However, while its growth potential is promising, careful assessment of its financial resilience against industry cyclical fluctuations, control over the upstream supply chain, and long-term capacity to maintain technological autonomy and compliant operations in an increasingly challenging international trade environment is essential. The listing on the Hong Kong Stock Exchange represents a crucial step in the companys internationalization strategy, but whether it can achieve leapfrog growth across cycles will still depend on its sustained investment efficiency in new technology platform development and its strategic resolve in optimizing resource allocation globally to mitigate geopolitical shocks.