Among the hard-tech IPOs hitting the Hong Kong stock market recently, the share offering from Xici Technology carries a somewhat hard-to-grasp quality, as most investors have little concept of the niche magnetic sensor track, let alone imagine how big a business a tiny chip can support.

But if you take apart the hinge of a foldable phone, the motor of a new energy vehicle, or the joint of an industrial robot, you will find that this component, often called the nerve ending of equipment, is almost everywhere. Understanding its business logic means understanding Xici Technology's long-term value.

Simply put, a magnetic sensor converts changes in a magnetic field into readable electrical signals, precisely measuring physical quantities such as position, angle, speed, and current. From the early Hall effect to today's most advanced TMR tunnel magnetoresistance technology, the industry has gone through four generations of iteration, with increasingly higher precision and sensitivity, lower power consumption, and application scenarios extending step by step from home appliances and industrial foundations into high-end frontier fields.

In traditional scenarios it is already standard equipment, as current detection in the three-electric system of new energy vehicles, overcurrent protection in photovoltaic inverters, and position feedback in factory motors all rely on it to hold the bottom line of safety and stability. As technology upgrades, four high-value new tracks are opening up entirely new growth space: the AI computing power explosion is driving a comprehensive upgrade of data center power supplies, and TMR current sensors, with their high precision and fast response, have become a matching necessity for third-generation SiC power devices; under the humanoid robot wave, every joint needs a magnetic encoder to feed back angle and speed in real time, with a single robot using dozens of them, and magnetic solutions are gradually replacing traditional photoelectric encoders thanks to their resistance to oil contamination and vibration; in the aerospace field, the harsh environments of extreme temperature swings, vacuum, and strong radiation are precisely the home turf of magnetoresistive sensors; even high-end medical MRI imaging calibration, artificial joint implant monitoring, and implantable pacemaker power supply all depend on high-precision magnetic sensing technology.

Within the components track, magnetic sensors count as a good business that is slow to heat up but enjoys lasting prosperity, with three unique track logics behind it. First, the technical barriers keep rising. Its technological iteration is gradual upgrading rather than disruptive replacement, and each generation of technology requires enduring work on materials, polishing processes, and accumulating design experience, with head manufacturers' technical know-how and patent accumulation layering up, making it hard for new players to overtake on a curve through a single breakthrough. At present, TMR, as the next-generation mainstream technology, has become a must-win battleground for global giants, as Allegro spent US$420 million to acquire a TMR wafer company to fill its gaps, TDK teamed up with LEM to develop TMR current sensors, and Infineon included it in its core R&D roadmap, with the track's value long verified by global industry. Second, customer stickiness is extremely strong. As a core component tightly bound to safety and performance, its customer verification cycle often lasts years, with automotive-grade certification taking 2-3 years and aerospace and medical fields taking even longer. But once it passes certification and enters the supply chain, as long as product quality remains stable, customers will hardly switch suppliers easily, and cooperation cycles often run five to ten years, making it a typical long-slope, thick-snow track. Finally, growth certainty is ample. The global magnetic sensor market has long maintained double-digit growth, and industry data show the market size is expected to exceed 35 billion yuan by 2030, with a compound annual growth rate of 19.7%; among this, high-end xMR sensors such as TMR are growing significantly faster than the industry average and are the core engine driving market growth.

Xici Technology's ability to rank in the global first tier stems precisely from stepping on the core of this business, having paved the way for a full-stack IDM model. It is one of the few domestic manufacturers that simultaneously masters the full series of Hall, AMR, GMR, and TMR technologies and also owns a wafer fab in Mainz, Germany, and a domestic module base, with full-process independent control from material research and development, chip design, wafer manufacturing to packaging and calibration. This model can both stabilize product consistency and delivery rhythm and quickly respond to customers' customized needs, which is precisely the key to winning high-end scenario customers.

Relying on this capability, Xici has fully positioned itself across the four high-value new tracks. In the robotics field, it has built a full-series magnetic encoder matrix from AMR to TMR, possesses top domestic high-precision mass production capability, covers the different tiered needs of industrial, collaborative, and humanoid robots, and its products have entered the supply chains of leading manufacturers; in the data center field, its TMR current sensors fully adapt to third-generation SiC power devices, support high-frequency and high-current detection and fault protection, and match the power upgrade needs of computing infrastructure. The 2021 acquisition of Germany's established leader Sensitec also helped Xici open up the high-end circles of aerospace and medical care in one stroke. Sensitec's products were once carried on NASA's Curiosity Mars rover and operated stably in an extreme environment of -133 degrees Celsius; in 2024 the special sensors launched through the two sides' technology integration were successfully delivered to a European Space Agency project. In the medical field, its magnetoresistive sensors can be used for MRI magnetic field calibration and artificial joint implant monitoring, and low-power TMR technology can also adapt to implantable medical devices. It is worth mentioning that the XMR symposium hosted by Sensitec is the world's only top industry conference focused on xMR technology, and even giants such as Allegro, Infineon, and TDK attend, fully demonstrating its industry influence.

On its traditional base, Xici also ranks among the domestic leaders in current sensors for new energy vehicle three-electric systems and sensors for photovoltaic energy storage, shoring up the base for its performance. Based on 2025 revenue, the company ranks among the global top ten magnetic sensor manufacturers, sixth among global IDM manufacturers, and first among domestic manufacturers; in the TMR sensor sub-sector it ranks second globally, firmly in the first tier.

After passing through the early stage of heavy asset investment, Xici has now begun to enjoy the scale dividends of the IDM model. The company achieved operational turnaround in 2024, with 2025 revenue rising 20.2% year on year to 845 million yuan and net profit surging to 52.58 million yuan; in the first five months of 2026 the growth momentum did not slow, with revenue of 419 million yuan, up 18.8% year on year, and net profit of 47.93 million yuan, up 169.1% year on year. Profitability is also climbing in tandem, with gross margin rising from 23.5% in 2025 to 28% in the first five months of 2026; capacity utilization at the Bengbu base rose from 39.5% in 2024 to 71.6%, and as capacity climbs higher and fixed costs are spread thinner, the subsequent profit elasticity remains ample.

For Hong Kong stock investors, Xici Technology has never been as simple as the label of yet another domestic substitution chip company. It is a rare target that simultaneously captures the triple dividends of technological upgrading, scenario expansion, and domestic substitution, with deep enough technical barriers, large enough scenario space, and a stable enough business model. As TMR technology continues to penetrate downward and emerging scenarios gradually scale up, its subsequent performance elasticity and valuation space are worth continued tracking.