On December 23, 2024, the HKEX’s disclosure website showed that Tianyu Semiconductor, China’s first professional silicon carbide epitaxial wafer supplier, submitted a listing application to the Hong Kong Stock Exchange. CITIC Securities is the sole sponsor. In 2023, Tianyu Semiconductor’s market share in China’s silicon carbide epitaxial wafer market reached 38.8% (in terms of revenue) and 38.6% (in terms of sales volume), ranking first in China. Its global market share is about 15%, ranking among the top three in the world. Previously, Tianyu Semiconductor had submitted a listing application to the Shenzhen Stock Exchange but later terminated the tutoring institution agreement. This time, going public in Hong Kong is its accelerated impact after a lapse of four months.
Tianyu Semiconductor was founded in Dongguan, Guangdong in 2009 by two Dongguan businessmen, Li Xiguang and Ouyang Zhong, through cross-border entrepreneurship. It mainly focuses on the research and development, mass production and sales of silicon carbide epitaxial wafers, which are used in end application scenarios such as new energy and rail transit. It is the first silicon carbide epitaxial wafer enterprise to fill the gap in the domestic industrial chain. As a core supplier of third-generation silicon carbide semiconductor materials, Tianyu Semiconductor has made breakthroughs in core technology fields such as 8-inch silicon carbide epitaxial technology. It is one of the first companies in China to achieve mass production of 4-inch and 6-inch silicon carbide epitaxial wafers and has the ability to mass produce 8-inch silicon carbide epitaxial wafers. As of October 31, 2024, the company’s annual production capacity of 6-inch and 8-inch epitaxial wafers is about 420,000 pieces, making it one of the largest companies in China with this capacity.
Benefiting from the increase in production capacity and downstream market demand, Tianyu Semiconductor’s sales volume has grown rapidly, with a compound annual growth rate of 178.7%. Its revenue also increased from 154.6 million yuan in 2021 to 1.1712 billion yuan in 2023, with a compound annual growth rate of 175.2%. It turned a profit in 2022. The net profit turned from a loss of 180.3 million yuan in 2021 to 2.8 million yuan in 2022 and further increased to 95.9 million yuan in 2023. However, in the first half of 2024, due to strategic price reductions to increase market penetration, the price of silicon carbide epitaxial wafers fell, and the total revenue decreased from 423.8 million yuan in the same period of last year to 361.1 million yuan. Tianyu Semiconductor believes that the silicon carbide epitaxial wafer industry has broad prospects, and the demand will shift from 4-inch and 6-inch to 8-inch epitaxial wafers. The business performance and financial situation will improve in the future.
Under the booming performance, capital is active. Huawei and BYD are eye-catching as early investors. In July 2021, Hubble Technology, a subsidiary of Huawei, subscribed for about 7.61% of Tianyu Semiconductor’s equity with 70 million yuan. In June 2022, BYD obtained 1.7238% of Tianyu Semiconductor’s equity through a 25 million yuan transfer and a 24.5 million yuan subscription. Since then, Tianyu Semiconductor has become a hot commodity in the primary market. From 2021 to 2024, it completed five capital increases and two equity transfers, raising a total of 1.464 billion yuan. The cost per share increased from 2.93 yuan in July 2021 to 41.96 yuan in November 2024, an increase of 13.32 times. As of the last round of equity transfer before the IPO, the value of Huawei’s holdings increased by 13.32 times. Jiang Dacai of Huawei also serves as a non-executive director on Tianyu Semiconductor’s board of directors, showing a strong investment color from Huawei. Before the IPO, the company’s founders and others are regarded as controlling shareholders, holding a total of 58.36%; Huawei Hubble Technology holds 6.56% and is the largest institutional shareholder. BYD holds 1.5%.
