Power devices are a critical segment of the semiconductor industry, designed for reliable operation under high voltage and current conditions. These components, which can function independently or be modularly integrated into complex systems, are widely used in renewable energy, new energy vehicles, industrial control, and smart grids, serving as core elements for efficient power conversion and energy-saving control. Sunking Semiconductor, a 14-year veteran in power devices, has recently taken steps toward a Hong Kong IPO. On December 2, the company submitted its second listing application to the Hong Kong Stock Exchange's main board, with Goldlink Capital as its sole sponsor, following its initial filing on April 3.

Despite its industry tenure, Sunking remains relatively small, with annual revenue hovering around RMB 100 million and notable earnings volatility. According to its prospectus, revenue for 2022–2024 stood at RMB 167 million, RMB 113 million, and RMB 122 million, respectively, while net profits were RMB 53.6 million, RMB 31.0 million, and RMB 35.1 million. After a significant dip in 2023, performance rebounded slightly in 2024. Growth accelerated further in the first three quarters of 2025, with revenue reaching RMB 105 million (up 29.09% YoY) and net profit at RMB 30.3 million (up 27.17% YoY). A key question now is whether this growth momentum can sustain—a factor pivotal to its IPO valuation and post-listing stock performance.

**Volume-Driven Growth via Price Cuts** As a fabless power semiconductor supplier, Sunking specializes in developing and supplying customized power devices. Its products, primarily MOSFETs (99.8% of 2024 revenue), are tailored for specific performance optimization in end-user electrical equipment. IGBTs, GaN MOSFETs, and SiC MOSFETs contribute negligibly. Designed by Sunking’s technical experts, these non-standardized products serve applications like power converters and battery management systems across consumer electronics, industrial control, automotive electronics, and renewable energy/storage. In 2024, consumer electronics and industrial control accounted for 56.1% and 33.6% of revenue, respectively, while emerging sectors like automotive electronics and energy storage made up smaller shares (3.2% and 7.1%).

Sunking’s diversified client base spans over 500 customers in smart appliances, consumer electronics, and industrial drives, with retention rates rising from 68.3% in 2022 to 71.5% in 2024, reflecting strong customer stickiness. Geographically, over 96% of sales are domestic, with minimal overseas presence in Southeast Asia and South Asia.

The 2023 revenue slump (-32.34% YoY) and profit decline (-42.14% YoY) stemmed from industry cyclicality and structural weaknesses: a post-pandemic supply-demand mismatch cratered MOSFET prices (cumulative 30% drop over three years), and overreliance on sluggish consumer electronics exacerbated the downturn. Recovery in 2024 was driven by industrial control demand and nascent expansion into automotive/energy storage, alongside overseas progress. The 2025 acceleration reflects a "price-for-volume" strategy—strategic price cuts boosted penetration across applications, lifting sales while maintaining a 57.1% gross margin (+0.4 ppts YoY) via scale effects.

**Valuation Headwinds from Multiple Factors** Sunking’s pricing strategy aligns with industry shifts. Ipsos data shows China’s MOSFET market grew at a 12.2% CAGR from 2019’s $3.3 billion to 2024’s $5.9 billion but is now maturing, with slowing growth (projected 5% CAGR to $7.5 billion by 2029). The fragmented market—top five players hold 49.3% share, while Sunking claims just 0.3%—intensifies competition, making volume-driven growth unsustainable long-term.

Concerns arise from Sunking’s short-term focus: despite a 32.4% revenue drop in 2023, it distributed dividends totaling RMB 83.8 million (70% of net profits), including a 2024 payout (RMB 51.3 million) exceeding net income (RMB 35.1 million). R&D spending fell annually from RMB 9.5 million (5.7% of revenue) in 2022 to RMB 5.8 million (4.8%) in 2024, well below the industry’s 8–10% average, potentially eroding long-term competitiveness.

Product concentration is another risk. Over 99% reliance on slow-growth MOSFETs contrasts with the >20% growth in third-gen semiconductors (IGBTs, SiC/GaN), limiting Sunking’s ability to capitalize on high-growth sectors like EVs and renewables. This mono-product exposure also heightens sensitivity to MOSFET market swings.

In summary, while Sunking’s price cuts have spurred near-term growth, excessive dividends, dwindling R&D, and lack of diversification may weigh on its valuation and sustainability.