Automotive chip giant is sprinting for IPO
The capital market is no stranger to myths, and now an academician has stepped in to break the long-standing monopoly!
According to the Investor Network, a hard technology company in Wuhan that has remained unknown for 15 years has finally taken a key step toward the A-share market. In August, Fine MEMS officially launched its listing counseling. This hidden champion in the field of automotive-grade MEMS sensors is about to face the scrutiny of the capital market.
In the track of core automotive safety sensors, three overseas giants Bosch, Honeywell and Infineon have long held absolute dominance. The domestic localization rate of high-end automotive-grade MEMS sensors is extremely low, which is a widely recognized "stuck neck" blind spot in the industry.
Fine MEMS has taken root right in this blind spot.
After 15 years of silent dedication in Wuhan Optics Valley, it has equipped more than 30 million self-developed automotive-grade sensors in vehicles, becoming one of the very few local enterprises in China that have realized large-scale front-end installation and implementation of core automotive safety sensors. From papers in university laboratories to safety components of domestic automobiles, it has successfully walked through this entire path.
Different from most startup stories, Fine MEMS did not start in a garage or a rented apartment, but in a university laboratory. Its leader, Liu Sheng, is an academician of the Chinese Academy of Sciences, PhD from Stanford University, and tenured professor at Wayne State University in the United States. As a person standing at the peak of the academic pyramid, he chose the hardest path: turning the technology in academic papers into sensors installed in automotive brake systems.
Over the 15 years, tens of millions of sensors have been installed in vehicles. But what he faced was far more than technical difficulties. Papers do not discuss yield rates, and research projects do not focus on delivery. Starting a business as an academician is never a smooth road paved with auras.
I
Liu Sheng's resume is a standard example of "the child of other people's family" that everyone envies. He holds a PhD from Stanford University, is a tenured professor in the US, winner of the first prize of the National Science and Technology Progress Award and the second prize of the National Technology Invention Award, and later served as the dean of the School of Integrated Circuits of Wuhan University and an academician of the Chinese Academy of Sciences.
But he noticed a problem in the industry: China's basic research is not weak, and a large number of papers have been published, but the most critical MEMS pressure sensors for automobiles have long been controlled by Bosch, Honeywell and Infineon.
The sensor the size of a fingernail in a set of ESC braking systems has a pitifully low domestic localization rate.
In 2011, Liu Sheng founded Fine MEMS in Wuhan. His original intention was so simple that it hardly sounded like something an academician would say: to turn the technology he had cultivated for years in the field of packaging reliability into products that could be installed in vehicles.
But starting a business as an academician has an unavoidable hurdle: the automotive industry does not recognize titles, it only recognizes test reports.
The verification of consumer electronic components can be completed in just a few months, but the certification cycle for automotive active safety sensors generally takes two to three years. Tests of high and low temperature, vibration, oil corrosion and aging have to be passed one by one. The failure of one sensor is directly related to whether the brake works properly. Automobile manufacturers and Tier 1 suppliers are inherently cautious, and no one is willing to joke about safety.
In the first few years of starting the business, Fine MEMS ran around with samples, but did not get a single designated order.
The dilemma Liu Sheng faced is the same wall that all university researchers will hit when starting a business: in universities, evaluations focus on papers, research projects and theoretical breakthroughs; the automotive industry only recognizes yield rate, delivery stability and cost.
There is a "Valley of Death" between the two evaluation systems.
He led the team to overcome engineering difficulties in MEMS chip packaging and signal calibration, and at the same time learned enterprise management, supply chain construction and business negotiation from scratch. The identity of academician did not help at this time, customers do not care who you are, they only care whether your product can work normally at minus 40 degrees Celsius.
The bigger challenge comes from the identity itself.
As a full-time professor of Wuhan University, Liu Sheng must draw a clear line: which are the service inventions of the university, and which are the independent patents of the enterprise. If this line is not clearly drawn, there will be a hidden danger in the future IPO review.
When academicians start businesses, they naturally have to face an extra set of compliance examinations than ordinary enterprises, and the boundary between teaching and research and enterprise operation must be clearly defined for every item.
Over the 15 years, industry trends have shifted again and again, but Fine MEMS has always stayed in the most challenging track — ESC brake system pressure sensors, the core component of automotive active safety. It did not follow the trend to produce consumer electronic sensors with lower thresholds, the team focused on polishing processes, and gradually improved the supply chain.
Its products have successively entered the international Tier 1 supply chains of Knorr-Bremse, BorgWarner and other enterprises, and also supplied independent brand automakers such as BYD and Geely. The total number of sensors installed in vehicles has exceeded 30 million, and it has secured a position in the first echelon of domestic active safety pressure sensor track.
After the automotive business stabilized, Liu Sheng began to explore new directions.
Based on MEMS sensing and packaging technology, the team started to develop the foot-end sensing assembly for humanoid robots. The technical foundation remains the same, but the customer system and product standards are completely restructured. It is still uncertain whether this path from brake systems to robot feet can be successfully realized.
II
Fine MEMS follows a typical B2B industrial product path: it does not face end consumers, but faces international Tier 1 enterprises such as BorgWarner and Knorr-Bremse, as well as automakers including BYD and Geely.
At the upstream stage, it designs MEMS sensing chips and develops packaging processes on its own; at the midstream stage, it has built its own production lines in Wuhan, Nanjing and Xiaogan, responsible for sensor module manufacturing, calibration and reliability testing; at the downstream stage, it supplies products to Tier 1 suppliers for brake assembly integration, and then delivers the finished products to automakers.
The majority of its revenue comes from automotive MEMS pressure sensors, which are mainly used in vehicle stability control systems and hydraulic brake systems. The robot foot-end sensing components are still in the customer verification stage, and no considerable revenue has been generated so far.
Automotive-grade components have one advantage: once a designated order is obtained, the supply cycle often lasts for many years, and customer stickiness is much stronger than that of ordinary consumer goods. The profit logic of Fine MEMS is to dilute costs through large-scale production, and maintain rolling cash flow by continuously obtaining new projects.
The global automotive MEMS pressure sensor market has long been dominated by overseas giants. Especially for safety-level sensors such as ESC brake pressure sensors, the domestic localization rate has never increased significantly.
Most domestic peers choose to produce non-safety-level sensors such as tire pressure monitoring sensors and in-vehicle air conditioning sensors first, which have low access thresholds but low added value.
Fine MEMS chose the hardest path, and has become one of the few local players in China that have realized large-scale front-end installation and implementation.
To gain a firm foothold in this track, Fine MEMS has four layers of advantages that are difficult to replicate.
The first layer is packaging reliability technology. Liu Sheng's team has accumulated experience in this field for more than ten years, and has solved the problem of long-term stable operation of sensors under the complex working conditions of automobiles. This is exactly the core moat that overseas giants rely on to maintain their monopoly.
The second layer is certification and market access. Multiple products have passed the AEC-Q100 automotive-grade standard, and have successfully entered the international Tier 1 supply chain. The certification process takes several years to complete, and new entrants will face huge time costs if they want to catch up.
The third layer is manufacturing capacity. It has full mastery of all processes including packaging and calibration, and builds its own production lines. Automakers are most afraid of supply disruptions from suppliers, and the biggest value of integrated manufacturing is controllable delivery.
The fourth layer is transferable technology. MEMS pressure sensing and packaging calibration processes can be reused in the force sensing field of humanoid robots. It is still unknown whether this business can succeed, but the technical foundation is solid.
III
Fine MEMS chose to launch its A-share listing at this point in time, which is not an impulsive decision, but a natural result of its development stage.
The primary reason is the fundraising demand. The new production line in Xiaogan needs to be constructed, and investment needs to be made in the new robot sensing track, which cannot be supported by self-owned capital alone. Listing can ease the pressure of capital expenditure, and provide sufficient funds for R&D investment.
Another practical consideration is the demand from customers. Most of Fine MEMS's core partners are independent automakers and local industry chain partners, and A-share listing is a plus for domestic component brands. A supplier that is a listed company has far greater weight in the eyes of automakers than a non-listed supplier.
The equity structure also determines that the A-share market is a more suitable choice. Fine MEMS has a purely domestic capital structure, and its investors are mainly RMB funds. The A-share market is the most mainstream exit channel for RMB venture capital. In addition, the enterprise has achieved stable profitability, and it meets the financial threshold of the Sci-Tech Innovation Board.
Listing also has a hidden value: forcing the upgrading of the governance structure. Related party transactions with universities, internal control management, and information disclosure must all be standardized during the listing preparation period. The compliance problems brought by academician-led startups are better solved earlier than later.
But on the automotive-grade MEMS track, high barriers also mean high entry thresholds.
Long certification cycles, difficult accumulation of process know-how, shortage of interdisciplinary talents, and closed supplier systems — all these factors form high walls that block new entrants, and also restrict the expansion speed of Fine MEMS itself.
The greater challenge comes from the financial statements.
The entire automotive industry is waging a price war, and automakers are increasingly pressing down on product prices. The gross profit margin of upstream sensor manufacturers is being continuously squeezed. If the demand of the automotive market weakens, the already obtained designated orders also face the risk of reduction.
There is also the competition pattern to consider. Overseas giants such as Bosch have begun to cut prices to defend their market share, and domestic MEMS peers are also deploying in the automotive-grade track. Previously, Fine MEMS was running alone in a no-man's land, but now it can hear the footsteps of followers behind it.
In addition, it should be noted that Fine MEMS has no actual controller. The A-share market has very strict inquiries on the stability of the board of directors and major decision-making mechanisms of enterprises without actual controllers. After listing, if shareholders have divergent opinions, the decision-making efficiency may be affected.
The uncertainty of new business cannot be ignored either. The humanoid robot industry is still in the early stage, and its commercialization timeline is unclear, so the related business can hardly contribute to revenue in the short term. If the return cycle of continuous investment is too long, the overall profitability will be dragged down.
After 15 years, Liu Sheng has completed the journey from the laboratory to the 10-million-level vehicle installation volume. Fine MEMS's launch of A-share listing counseling means that this long experiment of industry-university-research transformation is about to face the most direct scrutiny from the capital market.
This is not a story about the "aura of academician".
On the contrary, it tells how a top academic figure put down his aura to adapt to a completely different set of rules. The automotive industry does not believe in papers, it only believes in test reports.
Engineers do not use "impact factor" as an indicator, they only focus on yield rate and delivery performance. He jumped out of the evaluation system centered on "publication" in universities, and entered a discourse system measured by "vehicle installation volume".
Fine MEMS has installed 30 million sensors in the brake systems of domestic automobiles, but overseas giants such as Bosch still occupy most of the market share.
The road of domestic substitution is far from over.
The industrialization of hard core technology is never a simple amplification of laboratory achievements. Long-term process polishing, strict industry certification, and market-oriented operation capabilities are all indispensable.
A large number of scientific research achievements in universities are still lying dormant in academic papers. How to cross that "Valley of Death", the 15-year long-distance running experience of Fine MEMS provides a valuable reference answer.
This article is from WeChat official account "Investor Network", author: Li Meng, authorized by 36Kr for release.