We are one of the analog IC patterned wafer providers with a prominent market position in China. Our deliverable products are analog IC patterned wafers with completed built-on circuits, which can then be fabricated into individual IC chips after standard and straightforward packaging and testing steps performed by our downstream customers at their discretion or using our available packaging and testing solutions. Frost & Sullivan has advised that the analog IC patterned wafer market is fragmented as the top five providers in aggregate accounting for just 5.0% market share in China in 2022. According to the same source, we are the largest provider of analog IC patterned wafers in China in terms of revenue in 2022, accounting for a market share of 1.7% of the total market size of RMB21.3 billion in China in the same year.
The integrated circuit, or IC, is a miniature electronic device or component that combines multiple elements to form a complete electronic circuit. Serving as the fundamental building blocks and central components of the global information technology industry, ICs can be further segmented by delivery forms (including patterned wafers and chips) and functions (including digital ICs and analog ICs).
‧ Patterned wafers. Patterned wafers are wafers with built-on circuits. Each piece of patterned wafers contains a number of dies, which can be easily turned into chips after subsequent packaging and testing by downstream customers. Compared to chips, patterned wafers provide downstream customers with a cost-effective manner to launch new products, flexible packaging and assembling options and design flexibility.
‧ Analog ICs. Analog ICs, as opposed to digital ICs, modulate real-world signals, such as sound, temperature, pressure or images, by conditioning them, amplifying them and often converting them into a stream of digital data that can be processed by other semiconductor devices. Analog ICs are also used to manage power usage in electronic equipment by converting, distributing, storing, discharging, isolating and measuring electrical energy.
The production of IC products consists of three stages, namely design, manufacturing, and packaging and testing. After determining the anticipated functionality of ICs, the design engineer creates layouts combining numerous electronic elements, including transistors, resistors, and capacitors, to realize the desired functions. As the design process generally involves a large volume of IC elements and complicated processes including schematic editing, circuit simulation and layout editing, design tools provided by upstream EDA software and IP companies are widely used to assist in the design process. When an analog IC design becomes available, a photomask is prepared based on the layout. Manufacturers then use the photomask to engrave the patterns on a blank silicon wafer, fabricating the blank wafer into a patterned wafer that contains multiple copies of the same analog IC dies. The analog IC patterned wafers are then sliced into individual dies, and each die is turned into an individual chip product after the packaging and testing process.
In the early years during the development of the IC industry, most IC companies operated with an IDM model, where they performed the whole process of design, manufacturing, packaging, testing and subsequent sales of the finished products. After the 1980s, with the continuous upgrade of IC products and differentiated sets of technology and skills required in each stage, a high degree of division of labor has gradually derived in the IC industry. Nowadays, according to Frost & Sullivan, a majority of IC design companies operate with a fabless model, where they focus on the design of IC products while cooperating with business partners for the manufacturing, packaging and testing processes. Moreover, considering the fragmented analog IC market and to ensure centralized management of sales requests and demands from downstream customers, it is common for analog IC design companies like us to collaborate with professional distributors for marketing and sales of products. Despite the substantial collaboration with upstream and downstream business partners, IC design companies can achieve higher profitability as the IC design stage is at the core of the entire value chain with high economic value and generates the most added value in a final product, according to Frost & Sullivan.
Based on our insights in the long-tail analog IC market as well as our full-stack design capabilities, we strategically focus on the design and provision of patterned wafers to meet the rapidly growing market demand for patterned wafers. Unlike traditional IC companies operating with a fabless model that relies on third-party EDA software and IP providers, according to Frost & Sullivan, we have developed the only full-stack design platform in China integrating the entire analog IC design chain, including EDA, IP and design, enabling our efficient product development and standardized high-performance patterned wafer delivery, as well as ensuring our competitive advantages in the industry. As one of the few IC design companies in China that focus on patterned wafer designs which require substantial collaboration with upstream and downstream business partners, according to Frost & Sullivan, we are dedicated to meeting the rapidly growing market demand for patterned wafers against the backdrop of the increasingly granular division of labor in the IC industry and have maintained a prominent position in the Chinese patterned wafer market.
We offer approximately 400 types of diversified industrial grade analog IC patterned wafer products across seven sub-categories, namely switching regulators, multi-channel ICs and PMICs, linear regulators, battery management ICs, monitoring and modulating ICs, driver ICs, and linear products, in the power management category and the signal chain category as of the Latest Practicable Date. Our general-purpose, standardized analog IC patterned wafers are adaptable to a variety of end products in different application scenarios. Our patterned wafers enable cost-efficient development and manufacturing of high-performance industrial grade IC chips for a wide range of downstream customers, including chip design companies, commercial distributors, brand-name manufacturers and ODMs. According to Frost & Sullivan, the vast majority of chips made from our analog IC patterned wafers can achieve performance metrics comparable to those of leading international manufacturers. In 2020, 2021 and 2022, we successfully launched eight, 45 and 157 analog IC patterned wafer products, respectively, representing a CAGR of 343.0%, which demonstrated the fastest expansion of analog IC product offerings in China, according to Frost & Sullivan. These new products had driven most of our revenue increase during the Track Record Period. Our products have empowered numerous downstream customers, including well-known brand-name manufacturers and industry-leading chip design companies, in various application fields, such as automotive electronics, healthcare, industrial automation, industrial Internet of Things, industrial lighting, instrumentation, communications, electric power, energy storage and consumer electronics. During the Track Record Period, we generated substantial amount of revenue from downstream customers (including direct sale customers and the ultimate end customers through distributors, but excluding distributors) engaging in industrial and automotive sectors. Our sales generated from downstream customers (including direct sale customers and the ultimate end customers through distributors, but excluding distributors) who have cooperated with us for at least three years accounted for over 50% of our total sales during such periods.
According to Frost & Sullivan, we have built the only full-stack analog IC design platform in China, which provides a one-stop solution of analog IC design, enabling our effective product development and standardized high-performance patterned wafer delivery. Most of the IC design companies in China use imported EDA software tools and commercial IP modules designed by third parties, or develop their own IP modules by using the imported third-party EDA software tools, according to the same source. Our platform has achieved technical breakthroughs in both EDA software and IP module design, empowering efficient standardized design of analog IC products.
Benefiting from our powerful platform and rich product offerings, our business scale has expanded rapidly without compromising profitability and operational efficiency, making us a prominent force in terms of growth and profitability in China’s analog IC industry. During the Track Record Period, our revenue increased from RMB88.7 million in 2020 to RMB212.7 million in 2021 and further to RMB352.5 million in 2022, representing a CAGR of 99.3%, and increased by 26.1% from RMB162.1 million for the six months ended June 30, 2022 to RMB204.4 million for the six months ended June 30, 2023. Despite the high growth of revenue, we consistently maintained high gross profit margin at 54.9%, 56.4%, 56.5%, 57.4% and 55.2% in 2020, 2021 and 2022 and for the six months ended June 30, 2022 and 2023, respectively. Contributed by the high gross profit margin and operational efficiency, our gross profit increased from RMB48.7 million in 2020 to RMB120.0 million in 2021 and further to RMB199.3 million in 2022, representing a CAGR of 102.2%, and increased by 21.3% from RMB93.1 million for the six months ended June 30, 2022 to RMB112.9 million for the six months ended June 30, 2023. Our net profit increased from RMB14.0 million in 2020 to RMB57.0 million in 2021 and further to RMB95.3 million in 2022, representing a CAGR of 160.9%, and increased by 7.3% from RMB42.8 million for the six months ended June 30, 2022 to RMB45.9 million for the six months ended June 30, 2023. Our adjusted net profit (Non-HKFRS measure) increased by 32.5% from RMB42.8 million for the six months ended June 30, 2022 to RMB56.6 million for the six months ended June 30, 2023.
Source: BaTeLab (02149) Prospectus (IPO Date : 2023/12/18) |