Shanghai Xihe Technology Co., Ltd. (hereinafter referred to as "Xihe Technology") responded to the Shanghai Stock Exchange's first round of inquiries on August 21. Over five years, the company's registered capital expanded from RMB 2 million to nearly RMB 100 million, with a valuation approaching RMB 10 billion. Xihe Technology has knocked on the door of the STAR Market with a striking financial report card: revenue growing 760% over three years and net profit swinging to a positive RMB 176 million.

At the governance level, actual controller Wu Aimin, a serving researcher at the Chinese Academy of Sciences (CAS), has since 2021 been simultaneously fulfilling national scientific research duties while holding decision-making power over a private enterprise's operations—an asymmetric arrangement that persisted until he stepped down as researcher in January 2026. Meanwhile, three founding team members hold U.S. citizenship, are deeply involved in R&D, and draw substantial salaries. Notably, financial investor Fang Jinhai's shareholding restoration bypassed him personally, with shares transferred via a newly established platform to his son's name. Founding members Wang Yiqiong and Liang Hong resigned as directors on the eve of the IPO.

On the financial front, the company reported net profit attributable to parent of RMB 176 million in 2025, yet net cash flow from operating activities was a mere RMB 2.6971 million—a gap of roughly 65 times. This divergence stems from asset build-up: accounts receivable surged from RMB 4.0578 million to RMB 133 million, inventory ballooned from RMB 371,400 to RMB 72.0041 million, and prepayments skyrocketed from RMB 2.1081 million to RMB 134 million. Additionally, 92.47% of revenue is bet on a single 400G product, 60% of revenue hinges on Customer A alone, and 86.56% of procurement is tied to a single supplier.

Where the story begins

Xihe Technology was established in May 2021 with an initial registered capital of just RMB 2 million, held 86% by Shanghai Xijing Management Consulting Partnership (Limited Partnership) and 14% by Shanghai Hanrui Management Consulting Partnership (Limited Partnership). Shanghai Xijing is wholly owned by four founding team members—Wu Aimin, Feng Dazeng, Wang Yiqiong, and Liang Hong—while Shanghai Hanrui serves as the employee equity incentive platform. Just four months after inception, the company closed its angel round, bringing in institutions including Yuanhe Origin, Yuanhe Holdings, Linyi Capital, Data Capital, and an industry fund under Sunny Optical. A Pre-A round followed in September 2022, and from March 2023 onward, the company executed seven capital increases, five equity transfers, and one capital reserve conversion in rapid succession.

By the time of filing, the company had 59 direct shareholders, 36 of whom were new additions within 12 months before the IPO. Registered capital stood at RMB 97.6423 million pre-filing. The company plans to raise RMB 2.43 billion in this IPO, placing its listing valuation near RMB 10 billion. Pre-IPO, Wu Aimin controlled 34.1662% of voting rights through Shanghai Xijing, 6.0118% through Shanghai Hanrui, 4.9784% through Shanghai Hangui, and 0.2380% through Shanghai Yaocong. In total, Wu controls 45.3944% of voting rights, making him the actual controller of Xihe Technology.

Wu Aimin, born in 1980 and hailing from Shandong, holds a PhD in Microelectronics and Solid-State Electronics from the Shanghai Institute of Microsystem and Information Technology, CAS. From 2008 to January 2026, he served as assistant researcher, associate researcher, and researcher at the institute, with a stint as visiting scholar at UC Berkeley from 2013 to 2014. Notably, Wu remained a CAS researcher until January 2026 while simultaneously serving as the company's chairman and general manager since 2021, effectively controlling the firm.

The backgrounds of three U.S.-citizen founding members also draw scrutiny. Feng Dazeng (born 1966, U.S. citizen, PhD in Optics from Fudan University), Wang Yiqiong (born 1965, U.S. citizen, PhD from University of North Carolina), and Liang Hong (born 1962, U.S. citizen, bachelor's from Shandong University) all previously held long-term roles at overseas silicon photonics firms such as Kotura and Mellanox. In 2025, the four received compensation of RMB 1.135 million, RMB 1.97 million, RMB 1.3479 million, and RMB 1.446 million respectively, with Feng topping the list.

Adding to the intrigue, financial investor Fang Jinhai's shareholding restoration took an unusually convoluted path. Initially held on his behalf by the four founding members, the restoration did not return shares directly to Fang. Instead, a new platform, "Shanghai Yaocong," was created, and the shares were transferred to Fang's son, Lang Fang. The first-round inquiry response explained this as "Fang Jinhai's consideration based on property distribution" and "external investors are not suitable for direct restoration at the Shanghai Xijing level." Furthermore, founding members Wang Yiqiong and Liang Hong resigned as directors in December 2024 and December 2025, respectively. The responses cite "optimization of corporate governance and duty allocation" and "personal career planning."

Betting on a single product, tied to a 60% single client

During the reporting period (2023-2025), Xihe Technology's revenue was RMB 6.227 million, RMB 70.9501 million, and RMB 461 million, with 2025 growing 549.63% year-over-year and a three-year compound growth rate of 760.34%. Net profit swung from a loss of RMB 28.3405 million to a positive RMB 176 million. In 2025, the 400G product contributed 92.47% of revenue (approximately RMB 426 million), while 800G and 1.6T products combined accounted for less than 8%. This means the company's entire performance hinges on a single product generation.

Looking at volume and pricing, 2025 sales volume surged from 630,400 units to 4.7543 million units, but the average unit price fell 13.86% from RMB 112.55 to RMB 96.95 per unit. Gross margin on main business was 80.78%, 50.75%, and 62.82% across the period, swinging by as much as 30 percentage points. The 2023 sample shipment prices were abnormally high, mass production discounts in 2024 caused a sharp margin drop, and 2025 economies of scale drove recovery. Compared to peers, Xihe Technology's 2025 gross margin of 62.82% significantly exceeds the average of comparable companies: Youxu shares at 43.37%, Yuanjie Technology at 58.15%, and Changguang Huaxin at 32.44%.

During the reporting period, the top five customers accounted for 100.00%, 98.41%, and 96.40% of sales. In 2025, the largest customer, "Customer A," alone contributed RMB 278 million, or 60.40% of revenue. Overseas revenue jumped from 1.14% in 2023 to 47.51% in 2025, with "overseas revenue mainly derived from Customer A." On the procurement side, "Supplier A" accounted for 54.54%, 83.75%, and 86.56% of total purchases during the period, with 2025 procurement reaching RMB 214 million. The company also prepaid RMB 129 million to lock in capacity.

Notably, in 2025, the company posted net profit attributable to parent of RMB 176 million, but net cash flow from operating activities was only RMB 2.6971 million—a gap of roughly 65 times. In the prior two years, operating cash flow was negative at RMB 32.9374 million and RMB 117 million, remaining persistently negative. Furthermore, accounts receivable grew from RMB 4.0578 million at end-2023 to RMB 133 million at end-2025; inventory expanded from RMB 371,400 to RMB 72.0041 million; and prepayments surged from RMB 2.1081 million to RMB 134 million. At end-2025, total assets stood at RMB 1.043 billion, with net assets of approximately RMB 1.005 billion. The proposed raise of RMB 2.43 billion is equivalent to 2.42 times net assets and 2.33 times total assets. Of the raised funds, RMB 600 million is allocated to supplement working capital, representing 24.7% of the total.