Despite consecutive years of losses, Innoscience’s stock price has surged dramatically—can its market capitalization realistically reach RMB 100 billion?

Another non-negligible factor is China’s dominant position in global gallium supply. China controls approximately 80% to 98% of the world’s primary gallium production, and gallium is an indispensable raw material for manufacturing GaN epitaxial wafers. In recent years, escalating geopolitical tensions have prompted China to impose export controls on critical minerals such as gallium—posing potential supply-chain security risks and cost pressures for non-Chinese GaN manufacturers, including TSMC. Notably, besides Innoscience, IDMs like Infineon are heavily investing in GaN technology and plan to transition their GaN production lines to more cost-efficient 300mm (12-inch) wafers—a move that will further consolidate their cost advantages. TSMC’s exit from the GaN space will undoubtedly accelerate customer migration toward IDMs such as Infineon, which offer stable capacity and clear technology roadmaps. Moving Beyond Low-Cost Strategies: A Dual-Phase Restructuring in the GaN Industry As the global GaN industry enters a new structural adjustment cycle, Innoscience’s growth trajectory offers a highly representative case study for observing this industrial transformation. Over the past few years, Innoscience has progressively established a closed technical loop—from design and fabrication to packaging—by pioneering mass production of 8-inch silicon-based GaN wafers, building a full-voltage-spectrum product portfolio (low- and high-voltage), and adopting an integrated device manufacturer (IDM) operational model. After establishing overwhelming dominance in the PD fast-charging market, the company did not rest on its consumer-electronics success but instead accelerated expansion of its GaN solutions into emerging high-growth segments—including servers, AI computing centers, industrial power supplies, and automotive electronics—continuously expanding its influence amid the global power semiconductor transition. Yet rapid expansion also reveals deeper industry-wide challenges. The global GaN market remains in an early developmental stage characterized by rapidly scaling volumes but unstable profitability. For instance, Innoscience’s early focus on the PD market enabled swift scale-up, yet intense price competition and high standardization kept margins persistently low. Coupled with heavy initial depreciation expenses and a fragmented customer base, the company has long operated at a loss. It was only in 2025—amid ramping demand from server and AI customers and rising revenue contribution from system-level solutions—that Innoscience achieved positive operating cash flow for the first time, laying the groundwork for future profitability and capital market initiatives. Notably, Innoscience’s success lies in its “platform-oriented strategy” spanning technology to markets. Rather than selling directly to end customers, the company supplies GaN wafers to numerous IC design houses, thereby cultivating a standardized, highly interoperable product ecosystem. This approach significantly reduces commercial operating costs while enhancing customer stickiness and ecosystem integration—key to securing over 50% market share in the PD segment. Today, this platform logic is being replicated in 400V and 800V power systems, as Innoscience collaborates with AI server providers, autonomous-driving SoC module developers, and EV manufacturers to lead the next frontier of power semiconductors. However, this path faces constraints rooted in geopolitics and globalization. The GaN industry is highly dependent on wafer fabrication, epitaxial materials, and equipment support. International clients are extremely sensitive to geopolitical considerations when placing large-volume orders; thus, Innoscience must continuously enhance its localized delivery capabilities and technical transparency to unlock further overseas growth.

International investment banks uniformly express strong optimism about Innoscience.

2. CLSA: Financially, the company has been operating at a loss over the past several years; however, with growing market demand and expanded production capacity, it is expected to achieve profitability in 2027. Revenue reached RMB 593 million in 2023 and is projected to grow to RMB 8.01 billion by 2028, representing a compound annual growth rate (CAGR) of 76%. Gross margin stood at -61.1% in 2023 but is forecast to improve to 48% by 2028. Operating expense ratios are also expected to decline gradually as economies of scale take effect. The company holds a leading position in the gallium nitride (GaN) power semiconductor market, and demand for GaN is surging rapidly amid growth in electric vehicles (EVs), AI servers, and renewable energy sectors. CLSA assigns the company an 'Outperform' rating. (Source: Reuters, cn.tradingview.com/news..., Date: April 28, 2025) 3. China Merchants Securities: Benefiting from rising GaN application penetration and market expansion, the company’s revenue grew from RMB 68 million in 2021 to RMB 828 million in 2024, and is projected to reach RMB 3.098 billion by 2027—a CAGR of 55.2% between 2024 and 2027. As business scale expands, Innoscience’s gross margin and net profit margin are expected to improve progressively: gross margin is forecast to turn positive in 2025, and net profit margin in 2027. Based on a 30x P/E multiple for 2030 (the peer group’s five-year average), with a weighted average cost of capital (WACC) of 12.0% and an RMB/HKD exchange rate of 1.07, China Merchants Securities assigns the company a 'Buy' rating. (Source: Reuters, cn.tradingview.com/news..., Date: April 28, 2025) II. Platinum Tech (300811): Trading Rationale: 1. Dongzi Securities: Within the past 10 days, four institutions have issued ratings on this stock—two 'Buy' and two 'Recommended'. The average target price set by institutions over the past 10 days is RMB 52, representing a 30% premium over the current share price. According to Dongzi Securities’ big-data analysis, the stock has seen three consecutive days of net institutional buying. (Date: April 28, 2025) 2. AVIC Securities: The company’s core magnetic powder core business is anchored in the new-energy sector. By strategically extending its footprint upstream into chip inductors for computing infrastructure—and forging business partnerships with globally leading GPU chipmakers—it has solidified its industry standing as an 'expert in metallic soft magnetic materials and applications.' Its second growth engine is now clearly underway, positioning it to fully capture the high-growth dividends of the AI era. We project the company’s revenue for 2025–2027 to be RMB 2.08 billion / RMB 2.54 billion / RMB 3.05 billion, representing year-on-year growth of 25.1% / 21.9% / 20.5%, respectively; and net attributable profits of RMB 451 million / RMB 558 million / RMB 684 million, representing year-on-year growth of 20.1% / 23.7% / 22.6%, respectively—corresponding to P/E ratios of 26x / 21x / 17x.

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