A RMB 10 million compensation award and a RMB 2.8 billion market gap! Behind Infineon’s defeat in court, China’s gallium nitride (GaN) industry has only just begun its comeback.

On June 12, the Supreme People’s Court issued a ruling banning all of Infineon’s related gallium nitride (GaN) products from sale, offer-for-sale, and import within mainland China. Many people’s first reaction was: A small Chinese company had defeated a German semiconductor giant—truly impressive. Yet the true weight of this litigation goes far beyond the word “impressive.” Because what Infineon left behind is not merely a piece of paper—it’s an immediate revenue gap of RMB 2.8–3.3 billion per year—precisely in the 650 V / 700 V high-voltage GaN devices most urgently needed for AI server power supplies. Who will fill this gap? Patent逆袭—yet only the opening act Side A of this story is a textbook case of “the weak defeating the strong.” In June 2024, Infineon struck first: it filed suit against Innoscience at the Munich Regional Court and obtained a preliminary injunction restricting Innoscience’s sales in Germany. Simultaneously, it initiated a Section 337 investigation at the U.S. International Trade Commission (ITC), attempting to block this Chinese rival’s overseas expansion from both ends. This strategy—leveraging patent rules as a “dimensional cut” when unable to compete on cost—has been deployed by Western and U.S. semiconductor giants for decades. But Innoscience refused to follow the script. In early 2025, it countersued Infineon at the Suzhou Intermediate People’s Court for infringement of two core GaN patents. On May 27, 2026, the Suzhou court ruled in Innoscience’s favor in the first instance: Infineon was ordered to pay RMB 10 million in damages and immediately cease infringement. On June 12, the Supreme People’s Court upheld the ruling. From defendant to plaintiff—from passive defense to actively banning a competitor’s sales—Innoscience accomplished the most brilliant reversal in the history of China’s semiconductor patent wars in under two years. But Side B of the story is where the real substance lies. The RMB 2.8 billion gap—generated instantly Who is Infineon? The world’s leading power semiconductor company, with annual revenue exceeding €15 billion; its GaN business line (CoolGaN series) is one of its fastest-growing segments. In the Chinese market alone, Infineon’s GaN revenue amounts to approximately RMB 2.8–3.3 billion annually. And this ban specifically covers its 650 V / 700 V high-voltage GaN products—the very voltage range most critical for AI server power supplies, industrial power systems, and onboard chargers (OBCs) for electric vehicles. In other words, what’s been removed from the Chinese market isn’t some peripheral product—it’s the most essential power device for China’s AI computing infrastructure. This isn’t a question of “whether something better exists.” It’s a question of “whether AI server power supplies can be delivered reliably.” Why? AI servers consume three to five times more power than conventional servers—each unit drawing 8–15 kW. Every 1-percentage-point improvement in power supply efficiency saves roughly 3,000 kWh per server annually. Global data center electricity consumption already accounts for 2–3% of total societal electricity use; energy efficiency is no longer optional—it’s mandatory. GaN is the only viable path to significantly boost power supply efficiency. Silicon-based MOSFETs achieve 90–93% efficiency; GaN pushes that to 96–98%. Moreover, GaN enables a 40% reduction in size and a 30% decrease in thermal management requirements. Infineon’s CoolGaN 650 V G5 series boasts a figure-of-merit (product of conduction loss and switching loss) 30–40% ahead of industry peers—making it the de facto “standard answer” for AI server power supplies. Now, that “standard answer” has been banned from sale. An immediate replacement opportunity worth RMB 1.7–2.3 billion annually has thus been thrust squarely onto domestic GaN manufacturers.

A company losing RMB 800 million yet valued at RMB 56 billion: Gallium nitride (GaN)—the 'hidden protagonist' ignited by AI power supplies.

Core assessment: There is no true 'Innoscience' among A-share listed companies—a pure IDMs (Integrated Device Manufacturer) firm shipping 800 million GaN devices annually, with scale effects already realized. San’an Optoelectronics comes closest to the IDM model, but its GaN business remains vastly smaller in scale than Innoscience’s. Zhongwei Company, as a GaN epitaxial equipment supplier (“the shovel seller”), is the only segment with clearly defined, expansion-driven upside. 06. Investment framework: A three-tier screening framework + observable indicators 6.1 Three-tier screening framework Highest certainty (✅ Already profitable) → Innoscience (02577.HK): World’s top GaN device shipment volume; gross margin turned positive; supplier to NVIDIA → Tradable via Hong Kong Stock Connect—already a viable option for A-share investors Highest leverage (⚠️ High volume, but high uncertainty) → A-share “shovel sellers”: Zhongwei Company (MOCVD equipment for GaN epitaxy) → San’an Optoelectronics (IDM-integrated model closest to Innoscience’s) Largest potential—but also highest risk (❄️ Concept-driven only) → Pure epitaxial layer / pure substrate / pure fabless design companies → Companies riding the GaN concept without substantive orders 6.2 Observable leading indicators (verifiable within 6–18 months) 07. Risk warnings: Five critical points requiring sober assessment ⚠️ Risk #1: U.S. ITC exclusion order—Innoscience’s overseas channel blocked On May 7, 2026, the ITC issued a final determination finding Innoscience guilty of infringing Infineon’s U.S. Patent No. 9,899,481 (claims 4 and 17), and imposed a limited exclusion order and cease-and-desist order. This means Innoscience’s infringing products are barred from entering the U.S. market. This risk has been markedly underestimated by the market—NVIDIA is one of Innoscience’s largest customers, and much of NVIDIA’s data center infrastructure resides in the U.S. The ITC order may force Innoscience to undertake costly and time-consuming design-around efforts; during this period, orders could be lost. [2] The signal investors should monitor most closely: whether Innoscience files for design-around approval in Q3/Q4 2026—and whether NVIDIA switches suppliers as a result. ⚠️ Risk #2: Fragmentation of technical pathways—GaN-on-Si vs. GaN-on-SiC vs. GaN-on-GaN Currently, GaN-on-Si (silicon-based) dominates the mainstream. However, in high-voltage applications, a shift toward GaN-on-SiC (silicon carbide-based GaN) or GaN-on-GaN (bulk GaN substrates) may occur. If such a transition materializes, the process-related barriers protecting IDM device manufacturers could be reconfigured—and existing capacity may face impairment. ⚠️ Risk #3: Valuation bubbles in GaN-themed stocks All A-share stocks associated with the “GaN” theme surged significantly in the first half of 2026. Yet very few possess genuine IDM-level GaN device shipment capability. For pure epitaxial layer, substrate, or fabless design firms, GaN-related business typically constitutes only a tiny fraction of overall operations—meaning their stock price gains may far outpace actual business delivery. ⚠️ Risk #4: Customer concentration Innoscience’s AI/data center business is scaling rapidly—but if NVIDIA’s 800 V platform rollout slows (e.g., due to AI investment bubbles), GaN adoption in AI power supplies could be delayed.

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