Key Takeaways:
- BaTeLab has been approved for a Hong Kong IPO, gaining momentum after selling 4.81% of its shares to BYD for 50 million yuan in June
- The maker of analog IC patterned wafers has been profitable for the last three years, though its heavy reliance on two distributors remains a big risk factor
By Fai Pui
China’s semiconductor companies are “strengthening” themselves, often with financial and other assistance from Beijing, as Washington increasingly restricts their access to key technology. At the same time, local demand for less sophisticated, but still vital, analog chips that are less affected by the restrictions continues to grow, with China emerging as the world’s top consumer of such chips last year.
The market is huge, but also intensely competitive. The top five Chinese providers of analog IC patterned wafers took up just 5% of the market last year, suggesting a high level of fragmentation, according to third-party data in the IPO prospectus from BaTeLab Co. Ltd., which is aiming to list in Hong Kong. The top Chinese provider of analog IC patterned wafers took an important step to completing that listing with its recent passing of a hearing at the Hong Kong Stock Exchange.
BaTeLab might be top dog among its peers in China, but even so, it commanded just 1.7% of the market by revenue last year. It’s hoping it can boost that figure using IPO funds, which it plans to use to strengthen its R&D and production capabilities, develop new product lines, and explore potential strategic investments and acquisitions, according to its prospectus.
So, why is BaTeLab so eager to list even as the Hong Kong stock market remains in the doldrums? A closer look at its performance of the last few years might provide some clues.
The company’s revenue has grown steadily, quadrupling from 88.7 million yuan ($12.4 million) in 2020 to 353 million yuan last year, or roughly doubling each year. But the growth slowed sharply this year, rising just 26.1% in the first half of the year to 204 million yuan, as ...