The mainland's third-largest wafer foundry is moving closer to a dual "A+H" share listing structure.

On the evening of May 22, Nexchip (688249.SH) announced that its application for a Hong Kong listing has received filing approval from the China Securities Regulatory Commission. The company plans to issue no more than 248.592 million overseas-listed ordinary shares and list on The Stock Exchange of Hong Kong.

After going public on the Shanghai Stock Exchange's STAR Market in May 2023, Nexchip initiated its Hong Kong listing plan in August 2025, submitting its application and publishing related materials the following month. As the application lapsed after six months, the company resubmitted and published the application materials in March 2026. This latest filing approval signals the imminent formation of the company's dual capital platform spanning the A-share and Hong Kong markets.

The wafer foundry industry is highly concentrated. In 2025, the top ten global foundries collectively held 96.9% of the market share. SMIC, Hua Hong Group, and Nexchip, as three consistent Chinese players on the list, are collectively referred to as the "iron triangle" of China's wafer foundry industry.

Based on foundry revenue, Nexchip was the world's ninth-largest and mainland China's third-largest wafer foundry in 2025, with market shares of 0.9% and 8.7%, respectively.

However, Nexchip's path differs significantly from that of SMIC and Hua Hong. In terms of capacity, unlike the "8-inch + 12-inch" dual-line layout of its peers, the company has focused on the mainstream 12-inch wafer production since its founding in 2015. Regarding products, instead of SMIC's broad coverage or Hua Hong's specialization in specific areas, Nexchip has anchored itself in display driver integrated circuits (DDIC) and CMOS image sensors (CIS), carving out a differentiated path deeply integrated into the regional industrial ecosystem.

On May 25, Nexchip's stock price surged over 10%, closing at 42.91 yuan per share, bringing its latest market capitalization to 86.1 billion yuan.

**Leading in Two Key Chip Segments Globally**

Nexchip's origin traces back to 2008, following Hefei's successful attraction of the BOE project. Its establishment was part of a strategic layout to address the supply chain vulnerability in display driver chips (DDIC).

In 2015, Hefei Construction Investment and Powerchip Technology jointly established Nexchip, opening the door to Hefei's wafer foundry industry.

After commencing production in 2017, Nexchip began mass production of 110nm DDIC that same year. The following year, it started mass production of large-panel DDIC and completed trial production of its first touch and display driver integration chip.

A high-quality screen requires not only driver chips to illuminate it but also image sensor chips to "see" and perceive. In 2022, Nexchip began mass-producing 55nm DDIC and gradually entered the CMOS image sensor (CIS) and power management integrated circuit (PMIC) fields.

The technological maturity of wafer foundries is typically reflected in process technology nodes. Cutting-edge nodes of 7nm or below are primarily used in areas demanding extremely high performance, power efficiency, and integration, such as high-performance processors, AI accelerators, flagship smartphone SoCs, and advanced networking chips. Advanced nodes from 10nm to 22nm suit applications requiring a balance of performance, power consumption, and cost, like mid-range consumer SoCs, high-end MCUs, CIS, and PMIC designs. Mature nodes of 28nm and above are widely used in fields with high demands for cost, reliability, and long-term supply, such as industrial control, IoT, display, and power devices.

Since DDICs and PMICs are primarily manufactured using mature nodes, Nexchip also focuses on these nodes. It has achieved R&D iteration from 110nm to 40nm processes, completed the development of a 28nm logic chip platform which has entered trial production, and plans to extend its Logic IC technology to the 22nm process to capture the broad market opportunities of the 22nm technology platform.

Discussing the 28nm process, Nexchip Chairman Cai Guozhi recently stated at an earnings conference that the company's 28nm OLED customer products have successfully entered trial production and are undergoing further performance optimization. The 28nm logic platform development is complete, meaning the platform design files are finished and have passed reliability verification, ready for customer product design and tape-out for trial production. Currently, customer products are being taped out on this platform.

Focusing on DDIC and CIS businesses, Nexchip has established a leading global position in these two segments. In 2025, it was the world's largest DDIC wafer foundry, holding a 23.3% market share in the global DDIC foundry industry. It was also the third-largest in mainland China and the fifth-largest globally for CIS foundry services, with a 7.1% global market share.

**First-Quarter Net Profit Falls Over 60%**

In 2023, 2024, and 2025, Nexchip reported revenues of 7.1827 billion yuan, 9.1196 billion yuan, and 10.3883 billion yuan, respectively. Net profits were 119.2 million yuan, 482.2 million yuan, and 466.5 million yuan for those years.

Over the past three years, most of its revenue came from DDIC foundry services, accounting for 84.8%, 67.5%, and 58.1% of total revenue in 2023, 2024, and 2025, respectively.

The growth and profitability of a wafer fab depend on its ability to expand capacity efficiently. By the end of 2025, Nexchip achieved a designed capacity of 137,900 12-inch wafers per month and an actual output of 139,000 wafers per month, with a capacity utilization rate of 100.8%.

In its prospectus, Nexchip also revealed that it has entered into a land grant agreement to acquire land use rights and a construction-in-progress project in Hefei, aiming to further expand monthly capacity by approximately 50,000 12-inch wafers in the coming years.

In the first quarter of 2026, Nexchip achieved operating revenue of 2.912 billion yuan, a year-on-year increase of 13.41%. Net profit attributable to the parent company was 51 million yuan, a decrease of 62.61% compared to the same period last year.

The company attributed the year-on-year decline in Q1 2026 non-GAAP net profit primarily to intensified industry competition and a decrease in product selling prices, coupled with increased depreciation of fixed assets, leading to a short-term weakening of overall gross margin. Simultaneously, periodic fluctuations in the product mix, along with multiple factors, collectively resulted in temporary pressure on profitability.

Fortunately, positive changes have emerged in the industry: since the second half of 2025, wafer foundry prices have seen structural increases. Chairman Cai Guozhi stated at the earnings conference that the foundry prices for some of the company's products have already been raised.

He also noted that, in the long run, price increases will positively drive revenue and profit. However, due to the lead time from production to shipment, the benefits of these price adjustments will be reflected in financial statements with a delay.

**Hefei's Semiconductor Industry Chain Gains Prominence Again**

Unlike decentralized wafer foundries, Nexchip has established a large-scale integrated production base in Hefei focused on 12-inch wafer foundry services, concentrating its production facilities within a single manufacturing campus.

As of December 31, 2025, the total floor area of this production base was approximately 387,000 square meters, with an average monthly output of 139,000 12-inch wafers in 2025.

Not only is it rooted in Hefei for production, but Nexchip is also completing the localization puzzle through capital operations. For instance, the company spun off its photomask business independently and, together with related parties, established Anhui Jingmei to build a photomask production line focused on manufacturing semiconductor photomasks for 28nm and above process nodes.

This strategic move aims to address supply chain challenges: the photomask industry has high technical barriers and high concentration, with prices trending upward in the long term. As process complexity and precision requirements increase, the cost proportion of high-end photomasks will continue to rise, becoming a long-term pressure point in wafer foundry cost structures. By internalizing production, Nexchip aims to effectively alleviate this cost pressure.

Chairman Cai Guozhi pointed out at the earnings conference that the company makes strategic investments in upstream and downstream enterprises to leverage synergies across the entire industry chain, promote resource integration and information exchange, precisely optimize capacity and product planning, reduce operational decision-making risks, and solidify the foundation for sustainable development. Concurrently, the company continues to advance the procurement of domestic equipment and materials, accelerating the localization of key supply chains to ensure supply chain autonomy and control.

"Hefei, with its 'Chip, Screen, Auto, and AI' industrial strategy, has formed emerging industry clusters such as new displays, integrated circuits, new energy vehicles, and artificial intelligence, gathering numerous key enterprises across the integrated circuit industry chain. This has built a complete ecosystem covering design, manufacturing, and packaging & testing," Cai stated. As a core link in the integrated circuit industry chain, the company fully utilizes the advantages of proximity to and the scale of the local end-market. Relying on mature process manufacturing experience, it deeply integrates into Hefei's industrial chain layout, provides key chip supply, effectively promotes synergistic linkages within the chain, and jointly builds a stable and mutually beneficial industrial ecosystem.

Almost simultaneously with Nexchip's Hong Kong IPO filing approval, another memory chip giant, ChangXin Memory Technologies (CXMT), is scheduled for a listing review on the STAR Market on May 27. This spring, Hefei's two major "chip" forces have coincidentally pressed the fast-forward button on their capital market journeys.

The capital relay of these two giants is not only a sign of the maturity of Hefei's semiconductor industry chain but also a result of the city's chain reaction strategy of "betting on one track to foster an entire cluster."

This also resonates with Hefei's first-quarter economic data for 2026: Hefei's GDP reached 322.96 billion yuan, a year-on-year increase of 6.8% calculated at constant prices. Within this, the output of semiconductor discrete devices grew by 10.8%, and operating revenue from large-scale integrated circuit design enterprises surged by 167.7% year-on-year.