Good News on Listing | Frost & Sullivan Assists Innoventec (Suzhou) Technology Co., Ltd. to Successfully List on the Hong Kong Stock Exchange (2577.HK)

InnoSemi (Suzhou) Technology Co., Ltd. (hereinafter referred to as "InnoSemi") successfully listed on December 30, 2024, issuing 45,364,000 shares at an issue range of HK$30.86 to HK$33.66, raising a maximum of HK$1.527 billion.

During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the writing of relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the issuer in completing various feedbacks from the Hong Kong Stock Exchange regarding industry issues.

• The company continues to drive innovation in the global power semiconductor industry;

• The company's IDM model caters to industry needs and has a high threshold;

• The company has a mature technological leadership position;

• The company has mature commercialization capabilities;

• The company has a strong leadership team and R&D team.

According to a Frost & Sullivan report, in terms of gallium nitride power semiconductor revenue in 2023, the company:

ranked first among global gallium nitride power semiconductor companies, with a market share of 33.7%.

Power is the foundation of all modern industrial fields, and power semiconductors are the core components of power supplies. With the rapid growth of electronic and artificial intelligence-driven applications driven by the Fourth Industrial Revolution, the demand for more efficient and economical power supply equipment in various industries is rising. Traditional silicon semiconductor devices cannot meet the needs of such applications due to their inherent limitations. On the other hand, as the latest generation of semiconductor materials, gallium nitride semiconductor devices have been widely used in various industries in recent years and are expected to play a key role in the continuous transformation of the power semiconductor industry.

Compared with silicon and other semiconductor materials, gallium nitride has significant advantages such as high frequency, high electron mobility, strong radiation resistance, low on-resistance, and no reverse recovery loss. Gallium nitride power semiconductor chips can effectively reduce energy loss, improve energy conversion efficiency, reduce system costs, and achieve smaller device sizes.

Power semiconductors are the core of power conversion and circuit control in electronic devices, mainly used for voltage conversion, frequency conversion, and DC to AC in electronic devices. Driven by the development of electric vehicles, data centers, new energy power generation, and downstream markets of the power grid, the global power semiconductor market size increased from RMB 320.6 billion in 2019 to RMB 335.7 billion in 2023, with a compound annual growth rate of 1.2%, and is expected to further increase from RMB 368 billion in 2024 to RMB 496.8 billion in 2028, with a compound annual growth rate of 7.8%.

The Chinese power semiconductor market has developed rapidly in recent years and has become the world's largest power semiconductor consumer market. In terms of sales volume, the Chinese power semiconductor market size reached RMB 130.9 billion in 2023. This growth is mainly due to the continuous improvement of intelligent and digital needs in the fields of automobiles, industrial automation, and consumer electronics. In addition, new growth opportunities have also emerged in multiple fields such as new energy vehicles, renewable energy power generation, and frequency conversion household appliances.

In 2023, the global gallium nitride power semiconductor market accounted for 0.5% of the overall power semiconductor market and 1.4% of the global power semiconductor discrete device market. Gallium nitride has characteristics such as high frequency, high voltage resistance, strong radiation resistance, and low on-resistance, and is widely used in both low-voltage and high-voltage fields. It is expected to accelerate its penetration into the power semiconductor market and will account for 10.1% of the global power semiconductor market and 24.9% of the global power semiconductor discrete device market in 2028.

Gallium nitride power semiconductor products are characterized by high frequency, low loss, and high cost-effectiveness and are widely used in various application scenarios such as fast charging of smart devices, automotive-grade charging applications, and data centers.

The global gallium nitride power semiconductor market size rapidly increased from RMB 1.394 billion in 2019 to RMB 17.595 billion in 2023, with a compound annual growth rate of 88.5%. It is expected that the gallium nitride power semiconductor market will record exponential growth, increasing from RMB 322.77 billion in 2024 to RMB 501.419 billion in 2028, with a compound annual growth rate of 98.5%. In the gallium nitride power semiconductor market, consumer electronics and electric vehicles are expected to become the two major application scenarios during the forecast period.

bull; Expansion of downstream applications. Gallium nitride power devices have great potential in the wide application of consumer electronics products and are gradually penetrating into emerging fields including electric vehicles, data centers, artificial intelligence, energy storage, and photovoltaics. For example, in the automotive vehicle charging application, gallium nitride power devices can significantly reduce the size while improving charging efficiency with an excellent heat dissipation structure. In electric vehicle converters, gallium nitride has a higher power density than silicon-based power devices, which can save energy and extend battery life. In addition, in solving power supply problems in data centers (such as solving the power bottleneck of large dedicated integrated circuit chips or reducing system space when achieving high power density power supply), gallium nitride is more efficient than traditional silicon-based solutions.

bull; IDM as the main business model. The market for gallium nitride is expected to face more intense market and technological competition. To improve competitiveness and ensure stable supply, gallium nitride power semiconductor enterprises usually combine resource and technological advantages to establish a complete industrial chain system covering gallium nitride power semiconductor design and production. In terms of supply, the IDM model is expected to become the dominant business model in the gallium nitride semiconductor industry, achieving synergy through design and process integration, providing customized solutions for customers, and ensuring production capacity and supply after scale expansion. Therefore, leading IDM power semiconductor companies have acquired participants in the gallium nitride power semiconductor industry on multiple occasions in recent years to establish their own position. Therefore, the IDM model is expected to become the dominant business model in the future gallium nitride industry, and enterprises that layout IDM early can gain a first-mover advantage and long-term competitiveness.

bull; Transition from 6 inches to 8 inchesProduction of gallium nitride power semiconductors can utilize silicon semiconductor equipment. Currently, 8-inch silicon equipment and processes are more mature and efficient than 6-inch silicon. Therefore, compared with 6-inch gallium nitride, the production of 8-inch gallium nitride has more competitive advantages due to its better equipment compatibility and maturity, making 8 inches the development direction of gallium nitride power semiconductors during the forecast period. In addition, just as the development process of silicon-based semiconductors, the industrial development trend from 6 inches to 8 inches helps reduce costs and improve yield. Therefore, the technology, process, and capacity conversion from 6 inches to 8 inches will provide important first-mover advantages for leading participants. In terms of revenue, in the global gallium nitride power semiconductor market in 2023, the market shares of 6-inch and 8-inch gallium nitride were 66.3% and 33.7%, respectively.

In 2023, InnoSemi's revenue from the gallium nitride power semiconductor business was RMB 5.927 billion, ranking first among all global gallium nitride power semiconductor companies, with a market share of 33.7%. In 2023, the combined market share of the top five companies reached 92.8%. In addition to InnoSemi, other gallium nitride power semiconductor companies mainly provide 6-inch products.