On September 24, Yuexin Semiconductor launched its ChiNext IPO subscription. Based on the initial offering size and issue price, total funds raised are expected to reach approximately 6.157 billion yuan.

Increased funding has expanded the company's operational flexibility, but fundraising scale cannot substitute for profitability. The key variable lies in gross margin. In the first half of 2026, Yuexin's revenue reached 1.777 billion yuan, up 68.76% year-on-year, while gross margin improved from negative 54.70% in the same period last year to negative 24.46%.

This means that for every 1.00 yuan of revenue generated, approximately 1.24 yuan in operating costs is still incurred, before accounting for R&D, administrative, and financing expenses. The magnitude of improvement cannot be overlooked, yet the absolute shortfall remains substantial. Based on disclosed revenue and gross margin figures, gross loss for the first half is estimated at approximately 435 million yuan, compared with roughly 576 million yuan in the same period last year. Revenue increased by about 724 million yuan, while gross loss narrowed by approximately 141 million yuan. New sales brought cost absorption effects, but these are not yet sufficient to fill the existing loss gap.

This is also why capacity utilization needs to be reinterpreted. The company's capacity utilization rate was 55.23% in 2023 and has risen to 96.38% in 2025. This set of historical data demonstrates that the path of increasing operating rates has achieved notable results. It cannot represent the operating status of all production lines in 2026, but it suggests that continued reliance on existing lines moving from low load to full load offers improvement potential that differs from two years ago.

Therefore, Yuexin's subsequent operational focus should shift further from increasing output toward improving profitability per unit of output. For existing high-utilization production lines, merely accepting more orders can hardly replicate the previous magnitude of cost dilution. Higher-value processes, product mix adjustments, and improvements in yield and material costs will more directly determine whether gross margin can turn positive.

The company's explanation for first-half gross margin improvement also points in this direction: increased sales of higher-priced process products, cost dilution from expanded production and sales scale, and cost reduction from domestic substitution of raw materials. These factors support the judgment that operations are improving, but their duration of impact varies. Utilization rate improvement has a ceiling, while product upgrades require customers to continuously pay a premium. Only when incremental gross profit from high-value products can cover additional R&D and production line investment will technological upgrading translate into shareholder returns.

Book losses do not mean orders generate no cash contribution. Depreciation is included in operating costs but does not require another payment in the current period. Therefore, production lines can still generate operating cash even when gross margin is negative. However, equipment ultimately needs replacement, and R&D cannot be halted indefinitely. Short-term cash contribution excluding depreciation can explain why production continues, but it is insufficient to prove that long-term investment can be recovered.

The issuance valuation already incorporates expectations for profitability improvement. Based on post-issuance share capital before the over-allotment option, the issue price corresponds to a 2025 price-to-sales ratio of 13.39 times. Using the price-to-sales ratio allows evaluation of loss-making enterprises, but it cannot omit the process through which revenue ultimately converts into profit. With the same sales scale, whether returns are sustained primarily through continuous capacity expansion or through process premiums makes fundamentally different demands on future capital investment.

Yuexin currently resembles a manufacturing enterprise in the midst of cost repair. High utilization, revenue growth, and gross margin improvement constitute positive evidence, while negative gross margin indicates that commercial returns have not yet closed. The value of this fundraising lies in buying time for process upgrading and cost repair; what truly determines long-term value is whether the company can continue to increase the profit left behind per wafer after existing capacity has been fully utilized.