A 46-year-old doctor is starting a business in Longgang, Shenzhen, supplying semiconductors to Alibaba and Kuaishou and aiming for an IPO.
In the past two months, Shenzhen has witnessed several companies seeking to go public through an Initial Public Offering (IPO), including Beixin Life, Huike Group, Chengtai Technology, Huada Beidou, Chuangzhi Xinlian, Hans CNC, Ledong Robotics, and Jiben Semiconductor. Many of these are semiconductor companies.
Recently, another semiconductor company from Shenzhen has applied for a listing on the A-share market.
According to Gelonghui, Shenzhen Dapu Microelectronics Co., Ltd. (hereinafter referred to as "Dapu Microelectronics") recently submitted its prospectus to the ChiNext board, with Guotai Junan Securities Co., Ltd. serving as the sponsor.
Dapu Microelectronics is a provider of semiconductor storage products, focusing on the enterprise-level SSD (Solid State Drive) market for data centers.
The company's performance is significantly affected by the semiconductor cycle and it has not yet turned a profit. It is also the first unprofitable enterprise to be accepted for listing on the ChiNext board.
01 A Former Qualcomm Employee Starts a Business in Longgang, Shenzhen, Focusing on Enterprise-Level SSDs for Data Centers
Dapu Microelectronics was established in April 2016 and was restructured into a joint-stock company in September 2023. Its headquarters is located in Longcheng Street, Longgang District, Shenzhen.
The company's founder is Yang Yafei, who currently controls 66.74% of the company's voting rights through Dapu Haide and Dapu Haiju.
The main institutional investors of Dapu Microelectronics include Yingfu Taike, Longgang Fund, Zhongke Guokong, Zhaohua Zhaozheng, and Haitong Innovation. In December 2024, the company completed its last round of capital increase, with a valuation of 6.81 billion yuan at that time.
Yang Yafei, 46 years old, holds a doctoral degree and currently serves as the Chairman and General Manager of the company. Before starting his business, he worked at Qualcomm in the United States for many years, holding positions such as Senior Engineer, Chief Engineer, and Senior Chief Engineer.
Dapu Microelectronics is a provider of semiconductor storage products, focusing on enterprise-level SSDs for data centers.
The company has the full-stack self-research capabilities for enterprise-level SSDs in data centers, including "main control chip + firmware algorithm + module", and outsources the assembly and production of enterprise-level SSDs to EMS manufacturers.
Business segments involved by the company. Source: Prospectus
The company has developed four core technologies: main control chip design, firmware algorithm, module design, and verification testing. Its product generations cover PCIe 3.0 to 5.0, meeting the product needs of various types of customers.
In the past three years, the company's cumulative shipments of enterprise-level SSDs have exceeded 3,500 PB, with more than 70% of the shipments equipped with self-developed main control chips. According to IDC data, in the domestic enterprise-level SSD market in 2023, the company ranked fourth with a market share of 6.4%.
In 2024, more than 99% of the company's revenue came from the sales of enterprise-level SSD products for data centers.
Proportion of main business revenue. Source: Prospectus
02 Performance Declined in 2023, with a Cumulative Loss of Over 1.3 Billion Yuan in Three Years
Under the influence of factors such as the semiconductor cycle, the company's revenue has fluctuated in recent years.
During the reporting period from 2022 to 2024, the company's operating revenues were 557 million yuan, 519 million yuan, and 962 million yuan respectively, and the net profits attributable to the parent company were -534 million yuan, -617 million yuan, and -191 million yuan respectively. The cumulative loss in three years exceeded 1.3 billion yuan.
Key financial data. Source: Prospectus
In 2023, Dapu Microelectronics' revenue decreased. The main reason is that in 2022, under the combined influence of the macroeconomic environment and geopolitical factors, the terminal market demand decreased significantly, which greatly suppressed the demand for semiconductor storage products.
Therefore, from the second half of 2022 to the first half of 2023, the semiconductor storage industry experienced a downward cycle, and the market price of storage products dropped significantly. The unit price of Dapu Microelectronics' enterprise-level SSDs decreased from 826.46 yuan/TB in 2022 to 341.62 yuan/TB in 2023, a decrease of up to 58.66%, which also had a negative impact on the company's revenue.
Subsequently, global storage giants successively implemented production cut measures, while the development of emerging fields such as AI, cloud computing, and big data drove the increase in server demand.
As a result, the industry turned around in 2024, and the market price of global storage products gradually recovered. The unit price of Dapu Microelectronics' enterprise-level SSDs also rebounded to 565.69 yuan/TB in 2024.
Average price of the company's enterprise-level SSD products. Source: Prospectus
Against the background of significant fluctuations in product prices, the gross profit margins of Dapu Microelectronics' main business during the reporting period were 0.46%, -26.36%, and 27.26% respectively. However, since the company is still in its early stage, the gross profit margin is not yet stable and is lower than the industry average.
Comparison of gross profit margins with the industry. Source: Prospectus
In addition, the reason for Dapu Microelectronics' losses also lies in its high R & D investment.
The enterprise-level SSD industry in which the company operates has high R & D difficulty, long development cycles, and rapid technological iterations, covering multiple aspects such as complex main control chip and firmware algorithm R & D, product testing, and market adaptability.
In the past three years, Dapu Microelectronics' cumulative R & D expenses were 737 million yuan, accounting for 36.15% of the cumulative operating revenue. The scale of R & D investment is relatively large.
The company's downstream customers are divided into terminal customers and non-terminal customers. The downstream customers and end-users covered by the company include well - known domestic and international Internet companies such as Google, ByteDance, Tencent, Alibaba, JD.com, Baidu, Meituan, and Kuaishou; leading domestic server manufacturers such as H3C, Inspur, ZTE, Huakun Zhenyu, and Lenovo; the three major telecommunications operators in China, namely China Telecom, China Mobile, and China Unicom; and well - known enterprises in the finance, power, and other industries.
During the reporting period, the revenue from the company's top five customers accounted for 77.90%, 53.97%, and 57.22% of the operating revenue respectively.
The company's main raw material purchases include NAND Flash, main control chips, and DRAM. Other raw materials include voltage regulation chips, SSD casings, PCB circuit boards, capacitors, etc.
The company's main NAND Flash suppliers include Kioxia, Company A, etc. The supplier of the main control chips (outsourced part) is Marvell, the OEM service provider for self - developed main control chips is Aojie Technology, and the main DRAM suppliers include Nanya Technology, SK Hynix, Company B, etc.
During the reporting period, the purchase amount from the company's top five suppliers accounted for 98.13%, 96.30%, and 97.31% of the total purchase amount in the current period respectively.
It is worth noting that at the end of 2024, the book value of Dapu Microelectronics' inventory reached 1.062 billion yuan, while the inventory at the end of 2023 was only 234 million yuan, mainly consisting of raw materials and work - in - progress. In the future, if the company cannot balance inventory and sales during industry cycle fluctuations, it will face a certain risk of inventory write - down losses.
In addition, since Dapu Microelectronics is in the early stage of development, its bargaining power in the upstream and downstream industrial chains is limited, which will pose challenges to the company's operations.
03 The Industry is Still Dominated by Overseas Giants, with Dapu Microelectronics Holding a 6.4% Market Share in the Domestic Market
Dapu Microelectronics belongs to the semiconductor storage industry.
Semiconductor storage is an important carrier of data. As one of the three major components of IT infrastructure, it accounts for the second - largest proportion in the integrated circuit industry and is the underlying infrastructure of digital information infrastructure.
The China Electronics Society has conducted statistics and forecasts on the global data storage capacity. The total amount of data follows the "New Moore's Law", that is, the global total data volume doubles every 18 months.
Enterprise - level SSDs are the core products of semiconductor storage. They are mainly used in data center applications such as AI, cloud computing, and big data. In contrast, consumer - level SSDs are widely used in consumer electronics such as computers, mobile phones, and external hard drives.
Enterprise - level SSDs are made of solid - state electronic storage chip arrays. The core components include main control chips, firmware, and storage media (NAND Flash, DRAM). Among them, the main control chips and firmware directly determine the performance and reliability of enterprise - level SSDs.
Schematic diagram of the core components of enterprise - level SSDs. Source: Prospectus
Enterprise - level SSDs are the connecting bridge in the semiconductor storage industry and are located in the middle of the industrial chain. Their upstream mainly consists of storage media manufacturers and main control chip design companies, and their downstream mainly includes data centers for AI, cloud computing, big data, etc.
Industrial chain of enterprise - level SSDs. Source: Prospectus
According to relevant statistics, in 2022, the global enterprise - level SSD market size was 20.454 billion US dollars and is expected to continue to grow with the increasing demand in the storage industry. It is estimated that the market size will reach 51.418 billion US dollars in 2027, with a compound annual growth rate of 20.25%.
Global enterprise - level SSD market size from 2022 - 2027. Source: Prospectus
It is worth noting that the enterprise - level SSD industry in which Dapu Microelectronics operates is a global industry, and the semiconductor storage industry it belongs to is strongly correlated with the overall cycle of the integrated circuit industry.
Currently, the global enterprise - level SSD market is highly concentrated. Five leading companies, Samsung, SK Hynix, Western Digital, Micron, and Kioxia, account for more than 90% of the global market share.
A few international leading manufacturers have strong influence in terms of product output and pricing and tend to act in unison. As a result, when the semiconductor cycle is on the rise or decline, the price fluctuations of semiconductor storage products are more obvious.
In recent years, the market share of domestic manufacturers has been growing rapidly, and market competition has become increasingly fierce. According to IDC data, in the domestic enterprise - level SSD market in 2023, Dapu Microelectronics ranked fourth in terms of shipments, with a market share of 6.4%, behind Samsung, Solidigm, and Yilian.
The company plans to raise 1.878 billion yuan in this IPO, which will be mainly used for the R & D and industrialization of next - generation main control chips and enterprise - level SSDs, and the construction of an enterprise - level SSD module mass - production testing base. In addition, 700 million yuan is planned to be used to supplement working capital.
Overall, the enterprise - level SSD industry in which Dapu Microelectronics operates is significantly affected by the semiconductor cycle. The company is in the development stage, with an unstable gross profit margin and has not yet achieved profitability. In the future, Gelonghui will continue to monitor whether the company can continuously iterate its products in the wave of AI and maintain stable operations during cycle fluctuations.