Following Tianyu Semiconductor, another company making silicon carbide epitaxial wafers went public in Hong Kong.

Gelonghui learned that Hantian Tiancheng Electronic Technology (Xiamen) Co., Ltd. (hereinafter referred to as "Hantian Tiancheng") submitted a prospectus to the Hong Kong Stock Exchange, and its sponsor is CICC.

However, this is not the first time that Hantian Tiancheng has hit the market. In December 2023, the company submitted an A-share listing application to the Shanghai Stock Exchange, planning to raise 3.5 billion, but the application was terminated in June 2024.

In view of the fact that the Hong Kong Stock Exchange can provide an international platform, enhance the company's global market awareness, and help obtain international capital, Hantian Tiancheng turned to the Hong Kong stock market.

Hantian Tiancheng is mainly engaged in the research and development, mass production and sales of silicon carbide epitaxial chips. Compared with traditional silicon chips, silicon carbide epitaxial chips have a number of advantages.

However, due to factors such as intensified competition in the industry, the price of silicon carbide epitaxial wafers is on a downward trend, and Hantian Tiancheng's revenue will decrease by 14.79% year-on-year in 2024, and the gross profit margin has also declined year by year in recent years.

So, what is the current situation of Hantian Tiancheng? What is the prospect of silicon carbide epitaxial wafer industry? Next, let's find out through the prospectus.

　　01

Xiamen University's post-60s students started their own business, with the help of Huawei and Xiamen state-owned assets

Hantian Tiancheng was established on March 31, 2011, completed the share reform on May 25, 2023, and is headquartered in Xiamen, Fujian Province.

The actual controller of the company is Dr. Zhao Jianhui, who holds 29.44% of the shares as of March 30, 2025.

Dr. Zhao, 65, has been focusing on silicon carbide technology development, research and development for more than 35 years. He has served as a director of the company since founding Hantian Tiancheng in 2011 and has served as the company's chairman since 2014.

Dr. Zhao received a bachelor's degree in physics from Xiamen University in the PRC in July 1982 and a doctorate degree in electrical and computer engineering from Carnegie Mellon University in May 1988. After 1988, Dr. Zhao worked for an educational institution in the United States for many years. Since December 2021, he has been a chair professor at Xiamen University in the PRC.

In the process of development, the company has attracted the participation of many well-known investment institutions, including Huawei Hubble, China Resources Microelectronics (688396. SH), Xiamen High-tech Investment, ICBC Investment, etc.; Among them, behind Xiamen High-tech Investment is Xiamen State-owned Assets Supervision and Administration Commission.

At the end of December 2024, Hantian Tiancheng completed a financing of up to 1 billion yuan, with a post-investment valuation of about 26 billion yuan.

Hantian Tiancheng is mainly engaged in the research and development, mass production and sales of silicon carbide epitaxial chips.

According to relevant information, Hantian Tiancheng is the first manufacturer in the world to realize the large-scale supply of 8-inch silicon carbide epitaxial chips, and the first manufacturer in China to realize the mass supply of 3-inch, 4-inch, 6-inch and 8-inch silicon carbide epitaxial chips.

Silicon carbide epitaxial chip sample, source: prospectus

In 2022, 2023 and 2024 (the reporting period), Hantian Tiancheng sold 85,400 pieces, 200,600 pieces and 164,400 pieces of silicon carbide epitaxial wafers on a year-by-year basis through its self-production and OEM business models, with a cumulative sales volume of more than 450,000 pieces during the performance period. Among them, 6-inch silicon carbide epitaxial chips account for the vast majority of sales.

According to the CIC report, since 2023, Hantian Tiancheng has been the world's largest supplier of silicon carbide epitaxy in terms of annual sales of pieces, with a market share of more than 30% in 2024.

Cumulative sales breakdown by size of silicon carbide epitaxial chips, source: prospectus

From the perspective of business model, Hantian Tiancheng obtains revenue through epitaxial wafer sales and epitaxial wafer foundry model.

From 2022 to 2024, the proportion of revenue from epitaxial wafer sales in the company's total revenue will increase from 63% to 86.2%; The proportion of revenue brought by epitaxial wafer foundry decreased from 35.5% to 12.4%.

The main difference between the two models lies in the source of the substrate: in the epitaxial wafer sales model, the company purchases the substrate; In the epitaxial wafer foundry model, the company's customers supply substrates.

　　02

In 2024, revenue will decline, and gross profit margin will decline year by year

Affected by downstream demand and price changes, Hantian Tiancheng's revenue also fluctuated during the reporting period.

In 2022, 2023 and 2024, the company's revenue will be 441 million yuan, 1.143 billion yuan and 974 million yuan respectively, and the net profit will be 143 million yuan, 122 million yuan and 166 million yuan respectively, and the adjusted net profit will be 172 million yuan, 378 million yuan and 321 million yuan respectively.

It is worth noting that Hantian Tiancheng's revenue in 2024 has declined. By service type, the sales volume of epitaxial wafer sales services increased, but due to the decline in the price of major raw materials (including substrates), the company also lowered the price of products, resulting in a slight decrease in revenue in this segment.

Epitaxial wafer foundry service revenue also declined, mainly due to the significant decline in sales volume due to the reduction in demand from some customers due to the large purchase volume in the previous year.

It is worth noting that the number of employees in the company has changed greatly in recent years; At the end of each reporting period, the number of employees of Hantian Tiancheng was 402, 833 and 592 respectively, a decrease of nearly 30% in 2024.

Key financial data, source: prospectus

During the reporting period, the gross profit margin of Hantian Tiancheng was 44.7%, 39.0% and 34.1% respectively.

The decrease in gross profit margin in 2023 was mainly due to the increase in equity incentive expenses for core personnel in 2023.

The decline will continue in 2024, mainly due to the increase in the proportion of revenue from epitaxial wafer sales (high proportion of substrate cost) from 74.2% to 86.2% with relatively low gross profit margin.

During the Reporting Period, the R&D expenditure of Hantian Tiancheng was RMB43.8 million, RMB102 million and RMB80 million respectively, accounting for 9.9%, 8.9% and 8.2% of revenue, respectively.

On the procurement side, the total procurement value from the top five suppliers accounted for 65.4%, 72.1% and 83.3% respectively during the reporting period. Among them, the procurement from the largest supplier accounted for about 3%.

On the sales side, Hantian Tiancheng provides silicon carbide epitaxial chips to power device companies, which then make the chips into devices. The company has served more than 110 customers, and 4 of the world's top 5 silicon carbide power device giants are the company's customers in terms of output, and 7 of the world's top 10 power device giants are the company's customers.

During the reporting period, the total revenue from the top five customers accounted for 86.5%, 82.1% and 81.2% respectively, with a high customer concentration. Among them, the largest customers contribute more than 4% of revenue.

From a regional perspective, the proportion of revenue from Greater China is gradually decreasing, from 38.1% in 2022 to 21.3% in 2024.

Revenue from outside Greater China increased from 61.9% to 78.7%, mainly in Europe and other Asian countries.

Breakdown of revenue by region, source: Prospectus

In addition, Hantian Tiancheng's inventory turnover rate has also decreased. At the end of each reporting period, the company's inventory was 91.4 million yuan, 351 million yuan and 248 million yuan respectively, and the inventory turnover days were 106 days, 116 days and 170 days respectively.

　　03

Affected by multiple factors, the global price of silicon carbide epitaxial chips is on a downward trend

Power semiconductors are the core components of electrical energy conversion and circuit control in electronic devices.

Depending on the materials used, power semiconductors can be divided into two broad categories, namely traditional silicon-based semiconductors and wide bandgap semiconductors. The former includes semiconductors made up of elements such as silicon (Si), while the latter includes compounds such as silicon carbide and gallium nitride.

Silicon carbide offers a variety of benefits for efficient, high-speed, and stable power control and processing over a wide temperature range; As a result, silicon carbide is replacing silicon (Si) as the mainstream material for power semiconductor devices, and is also known as the "smart heart" that supports the use of electricity in various power systems.

Hantian Tiancheng is located in the upstream of the silicon carbide power semiconductor device industry chain.

The upstream segment of the silicon carbide power semiconductor device industry chain involves the preparation of silicon carbide substrates and silicon carbide epitaxial chips. As a key material in the industrial chain, the quality of silicon carbide epitaxial chips is crucial, and the value of epitaxial layer manufacturing accounts for about 25% of the entire silicon carbide power device value chain.

The Midstream segment includes the design, manufacture, packaging and testing of silicon carbide power semiconductor devices.

The Downstream segment involves applications such as electric vehicles, charging infrastructure, renewable energy, and energy storage systems, as well as emerging industries such as home appliances, artificial intelligence computing power and data centers, smart grids, and eVTOLs.

The industrial chain of the silicon carbide power semiconductor device industry, source: prospectus

In recent years, the global silicon carbide power semiconductor device market has shown a growing trend. The global silicon carbide power semiconductor device industry is expected to reach $13.6 billion in sales by 2029, with a compound annual growth rate of 39.9% from 2024 to 2029.

Silicon carbide power semiconductor devices are widely used in electric vehicles, charging infrastructure, renewable energy, energy storage systems, and emerging industries. Among them, the field of electric vehicles is the most widely used. In 2024, the SiC power semiconductor devices used in electric vehicles accounted for 74.4% of the global market.

Silicon carbide epitaxial chips are single-crystal silicon carbide films grown on the surface of substrates, and their doping type, doping concentration and thickness can be precisely controlled to meet the design requirements of the device.

The global silicon carbide epitaxial chip market sales increased from US$400 million in 2020 to US$1.2 billion in 2024, with a compound annual growth rate of 34.7%.

In terms of competitive landscape, in terms of sales volume, Hantian Tiancheng will rank first in the world in the export market in 2024.

The market size of the global silicon carbide epitaxy industry, source: prospectus

However, due to the decline in raw material costs, cost optimization and production capacity improvement brought about by mature technology, the global price of silicon carbide epitaxial chips will decline from 2020 to 2024.

With the accelerated iteration of silicon carbide epitaxial chip products and the increase in demand brought about by the rapid development of downstream applications, it is expected that the price decline of silicon carbide epitaxial chips of the same size will gradually decrease.

Global silicon carbide epitaxial wafer price trend, source: prospectus

Although the price is falling, Hantian Tiancheng still plans to raise funds to expand the production capacity of silicon carbide epitaxial chips and the research and development of silicon carbide epitaxial chips; Crazy expansion seems to be the norm in the industry, and the same is true for Tianyu Semiconductor, as detailed in our previous article "Huawei Bets!" Dongguan semiconductor unicorn sprints IPO.

Overall, Hantian Tiancheng has a relatively high sales volume in the global silicon carbide epitaxial wafer market, but due to factors such as intensified market competition and declining raw material prices, product prices continue to decline, resulting in a year-on-year decline in the company's revenue in 2024.

In the future, whether Hantian Tiancheng can achieve a balance between volume and price in the competition and achieve steady growth in operating performance, Gelonghui will maintain its attention.