The global mobile network is undergoing profound transformation, particularly with the rapid advancement of physical AI in recent years, positioning cellular communication chips as essential infrastructure for intelligent systems. According to data, global cellular communication chip shipments reached 703 million units in 2025, with the market size valued at approximately RMB 16.25 billion by revenue. Downstream cellular IoT connections are expanding in tandem, with China alone recording 2.9 billion cellular IoT connections in 2025. The continuous penetration of connected devices provides a foundation of certain growth for upstream chip design companies.
Shanghai Yixin Communication Technology Co., Ltd. (hereinafter referred to as "Yixin Communication") has recently resubmitted its listing application to the Hong Kong Stock Exchange. According to Frost & Sullivan's report, Yixin Communication ranks third globally in the cellular communication chip market by revenue with a 3.9% market share. In terms of shipment volume, the company shipped 144 million cellular communication chips during the same period, accounting for 20.4% of global shipments. While the company's market influence is remarkable, whether Yixin Communication can convert this scale advantage into sustained profitability remains uncertain.
From a financial performance perspective, the company has seen steady revenue growth in recent years, yet its profit side has failed to keep pace, showing considerable volatility instead. This contradiction between rising revenue and stagnant profits may influence how the capital market evaluates its value post-listing.
Looking at the business structure, Yixin Communication is a typical fabless chip design company, outsourcing wafer manufacturing, packaging, and testing to third-party partners while focusing on chip design, development, and sales. Its product portfolio covers multiple cellular communication standards including NB-IoT, Cat.1bis, and LTE Cat.4, with downstream applications spanning smart metering, mobile payments, wearable devices, and AI-enabled equipment. Beyond chip sales, the company also generates revenue by providing IP licensing and chip design services to a global semiconductor industry leader.
Reviewing Yixin Communication's historical performance, revenue shows an overall expansion trend: total revenue reached RMB 533 million in 2023, grew modestly by 3.6% to RMB 552 million in 2024, surged 24.8% year-over-year to RMB 689 million in 2025, and reached RMB 416 million in the first half of 2026, up 23.3% year-over-year. However, the company's net profit tells a different story: it recorded a net loss of RMB 159 million in 2023, turned profitable with net profit of RMB 12 million in 2024, swung back to a loss in 2025 with net profit of -RMB 16 million, and by the first half of 2026, the loss further expanded to RMB 39 million.
Fluctuations in gross margin are the direct driver behind profit volatility. Yixin Communication's overall gross margin was merely 8.9% in 2023, climbed sharply to 22.3% in 2024, fell back to 18.3% in 2025, and plummeted to 7.8% in the first half of 2026. A significant reason for this roller-coaster pattern lies in the continued decline in average selling prices of its two core products, NB-IoT chips and Cat.1bis chips. From 2023 to 2025, the average price of NB-IoT chips dropped from RMB 5.0 to RMB 4.1, a decline of approximately 18%, while Cat.1bis chip prices fell from RMB 7.7 to RMB 4.5, a drop exceeding 40%. Both product prices declined further in the first half of 2026.
The continuous compression of selling prices directly eroded gross margins, causing the chip sales gross margin to plunge from 11.4% in the same period of 2025 to 4.2% in the first half of 2026. However, the lower prices have driven a surge in shipment volumes. Cat.1bis chip sales increased from 44.11 million units to 105 million units between 2023 and 2025. This strategy of compensating for lower prices with higher volumes has kept revenue growing, but at the cost of deteriorating earnings quality.
In stark contrast to the chip business is the company's licensing and services segment. This segment maintains a gross margin above 97% year-round, yet its revenue is highly dependent on a single customer, "Customer Q," and features a project-based, non-recurring nature. In the first half of 2026, revenue from this segment fell from RMB 45 million in the same period of 2025 to RMB 16 million.
The coexistence of revenue growth and earnings volatility represents the core contradiction revealed in Yixin Communication's prospectus. Whether this chip company, ranked second globally in shipment volume, can find a stable foundation for profits atop its scale advantage remains a critical question facing the company.
For Yixin Communication, which aspires to enter the capital market, its market position in niche segments needs no further elaboration. However, the secondary market never prices solely on scale; more often than not, investors care about whether scale can translate into sustainable profitability. Two key variables will determine Yixin Communication's long-term value: first, whether the company's product structure can complete the upgrade from low-speed and mid-speed to high-speed products; second, and more importantly, when exactly the profit inflection point will arrive.
The upgrade to high-speed products is a notable strategic direction worth watching for Yixin Communication. As mentioned earlier, the company's revenue is highly concentrated in NB-IoT and Cat.1bis, both low-to-mid-speed products, which is the structural root cause of persistent gross margin pressure. Currently, the mid-to-low-speed chip market has entered a mature phase characterized by intense competition, high standardization, and an ongoing downward trend in average selling prices.
In its prospectus, Yixin Communication outlines its breakout path as extending into higher-speed products such as LTE Cat.4 and 5G RedCap. Without question, high-speed products offer significantly greater average selling price and gross margin potential than existing categories, but ramping up new products takes time while prices of legacy products continue to decline. In other words, Yixin Communication is in a transitional period where the old has not yet been fully replaced by the new, and the duration of this phase will directly determine when the profit inflection point arrives.
The competitive landscape also merits attention. Yixin Communication ranks second globally in both the NB-IoT and Cat.1bis niche markets, demonstrating its competitiveness in specific segments. However, the mid-to-low-speed chip market has relatively limited technical barriers, with unified standards and low customer switching costs, making price competition the norm. The company also acknowledges in its prospectus its limited bargaining power on key terms such as wafer procurement pricing. In emerging areas like 5G RedCap, international giants and domestic competitors are accelerating their deployments, and whether Yixin Communication can defend its market share and achieve profit improvement in this new round of competition remains to be seen.
Additionally, the licensing and services segment is a double-edged sword. While this segment boasts extremely high gross margins, its revenue comes almost entirely from a single overseas customer and is characterized by a project-based, non-recurring nature, making it difficult to serve as a stable profit source.
In summary, Yixin Communication operates in a sector with certain growth, possessing the world's second-largest shipment scale and solid technical accumulation, which are undeniable advantages. However, the capital market's scrutiny will center on one core question: whether high-speed products can be commercialized as planned and whether they can genuinely improve the profit structure. Until gross margins bottom out and recover, the valuation of Yixin Communication may remain suspended between being a "scale champion" and "profitability pending," and winning over investor confidence will not be an easy task without significant improvement in its earnings position.