Fuhuan Micro Pursues Dual Listing in Hong Kong as Leading Vision Chipmaker Faces Profitability Challenges

ZC Asia has learnt that Shanghai Fuhuan Microelectronics Co., Ltd. (300613.SZ), a pioneer in China's visual chip industry, is poised to complete its dual listing strategy on the Main Board of the Hong Kong Stock Exchange. According to its prospectus, this fabless semiconductor company ranks first globally in revenue within the intelligent vision processing chip market, while also leading worldwide in shipments across two critical segments: edge-side intelligent vision processing chips and automotive-grade ISP chips.

Significant Revenue Decline and Profitability Pressure

In stark contrast to its industry leadership, Fuhuan Micro's recent financial performance shows a pronounced downward trajectory. Data indicates total revenue fell from RMB 2.11 billion in 2022 to RMB 1.79 billion in 2024, with a further 14.1% year-on-year decline in the first half of 2025. The profit picture is even more severe: net profit declined from RMB 378 million in 2022 to RMB 232 million in 2024. In the first half of 2025, net profit plummeted from RMB 83 million in the same period last year to a mere RMB 1.8 million, representing a decline exceeding 97%.

The prospectus attributes this performance decline to reduced procurement volumes from its largest client and intense industry price competition. This impact is directly reflected in average selling prices: the average price for smart video segment products fell from RMB 15.4 in 2022 to RMB 11.1 in the first half of 2025; while the average selling price for smart IoT segment products plunged from ¥15.5 to ¥8.6. Concurrently, the company's overall gross profit margin declined from 37.6% in 2022 to 35.0% in the first half of 2025, with the gross profit margin for smart IoT products falling by 10.1 percentage points year-on-year.

Another significant challenge facing Fuhuan Micro is its high dependence on a single client. In 2024, the top five clients contributed 88.4% of revenue, with the largest client accounting for 66.7%. During the first half of 2025, reduced procurement from this primary client directly caused revenue decline and profit plunge. Although its sales share decreased to 55.0%, dependency risks have become evident.

Concurrently with the revenue decline, the company's R&D expenditure continued to rise. In the first half of 2025, R&D expenses as a percentage of revenue climbed from 20.7% in the same period last year to 24.8%. This escalating R&D spending, coupled with shrinking revenues, created a negative operating leverage effect, further compressing profit margins.

AI Strategy and Fundraising Plans

In response to these challenges, Fuhuan Micro has proposed its core ‘Universal AI’ strategy, aiming to deliver high-performance, energy-efficient, and cost-effective AI vision chips to the market through technological innovation. According to the prospectus, proceeds from this listing will primarily fund expanding the R&D team, broadening the AI product portfolio, and developing new application scenarios. Industry forecasts indicate the global AI SoC market for smart devices will grow from US$43.8 billion in 2025 to US$109 billion by 2029, representing a compound annual growth rate (CAGR) of 25.6%, presenting potential opportunities for the company's transformation.

Operating under a fabless model, Fuhuan Micro also exhibits high supply chain concentration. In 2024, procurement from its top five suppliers accounted for 80.6% of total purchases. Production disruptions from any key supplier or geopolitical factors could significantly impact manufacturing and delivery capabilities.

Fuhuan Micro's Hong Kong listing comes amid multiple challenges: declining profitability, high customer concentration, and intense market price competition. Against the backdrop of opportunities presented by artificial intelligence and the Internet of Everything, whether the company can leverage capital markets to overcome its profitability challenges and translate its technological advantages into sustainable profitability will be a key focus for the market.

Disclaimer: The content herein is for reference only and does not constitute any form of investment advice. Should any information contained herein prove inaccurate, incomplete, or potentially misleading, please refer to the company's official announcements. Market risks exist; investment requires caution.