Beijing Junzheng’s IPO Amidst the Semiconductor Winter: Can ‘Computing + Storage + Analog’ Break the Cycle?

The global semiconductor industry is still “shivering in the winter”—with high inventory, ongoing price wars, and geopolitical tensions adding to the woes. However, Beijing Junzheng is determined to “swim against the current”: Recently, it suddenly submitted a prospectus to the Hong Kong Stock Exchange for a dual listing of “A+H” shares. Having been in the A-share market for 13 years with a market value of nearly 40 billion, is its move to the Hong Kong market aimed at “borrowing a boat to go to sea” to expand its global business, or is it to withstand cyclical fluctuations by “finding another source of funding”?

As an engineer who deals with chip design daily, today we will delve into the operations of this “veteran domestic chip manufacturer”: from starting with educational electronics to relying on storage chips to support half of its business, and now sprinting towards the Hong Kong market, where does its confidence come from? What pitfalls does it face?

1. From “Good Memory Star Chip Supplier” to “Global Leader in Automotive Storage”: The Rise of Beijing Junzheng

Let’s first talk about the “history of Beijing Junzheng”; it is practically a “survival story of domestic chips”.

In 2005, founder Liu Qiang and his team left Ark Technology to start their own venture—at that time, domestic processors were still in their “infancy”, yet he chose to tackle the hard nut of “independent research and development”, creating the 32-bit embedded processor core XBurst. Unexpectedly, right after starting the business, they hit the “educational electronics” trend: Good Memory Star, BBK, and Noah’s Ark, the then “learning tools”, all used Junzheng’s chips, simply because Junzheng’s chips “were powerful and energy-efficient”, providing 20% longer battery life than competitors in learning machines, quickly becoming the “leading supplier of educational electronic chips”.

Next, they capitalized on the PMP (Portable Multimedia Player) trend. At the end of 2007, Junzheng launched the first decoding chip in China that supported the RMVB format—at that time, mainstream MP4 players couldn’t even play RMVB, and this move directly broke the “video format barrier”. Major digital manufacturers like Patriot and Onda came knocking, making Junzheng a “core player” in the PMP field.

However, what truly elevated Junzheng was the acquisition in 2019: it acquired Beijing Xicheng (and also took control of the American ISSI), expanding its business from “computing chips” to “storage + analog chips”, directly entering high-barrier, high-margin markets like automotive electronics and industrial medical applications. Looking at Junzheng’s current business landscape, it has become a “triple engine” of “computing + storage + analog”:

• Storage chips are the “cash cow”: In the first half of 2025, revenue from storage chips will account for over 60%, with the global market share of automotive-grade SRAM (Static Random Access Memory) being the highest, and cumulative shipments of automotive electronic chips reaching 1 billion—equivalent to a few vehicles out of every 10 new cars using its storage chips;
• Computing chips are the “growth engine”: With the explosive demand for AIoT and smart security, revenue from computing chips increased by 41.6% from 2022 to 2024, with sales doubling;
• Analog chips are the “supplementary item”: Entering automotive electronics and smart home appliances, creating a “synergistic effect” with storage and computing.

Today, Beijing Junzheng is no longer the small company that relied on educational electronics; it has become a “hidden champion” in global niche markets—by 2024, it is projected to be the global leader in battery-related IP-CamSoC (security camera chips) and automotive-grade SRAM, with an overall SRAM market share of second place, over 80% of its revenue coming from overseas, and products sold in over 50 countries. This is also the core confidence behind its push into the Hong Kong market.

2. Pushing into the Hong Kong Market: Is it for “Funding Expansion” or “Breaking the Cycle”? The Prospectus Holds the Answer

Why push into the Hong Kong market during the semiconductor winter? Beijing Junzheng’s prospectus states clearly: “To raise funds for business expansion, broaden financing channels, and deepen globalization.” Translated, this means three demands:

1. Fueling “Globalization”: Junzheng’s overseas revenue accounts for over 80%, but to compete with international giants like Micron and NXP for market share, it needs to invest in building overseas teams and providing localized services—such as on-site support for automotive electronics customers and customized development for AIoT customers, all of which require funding. The Hong Kong market is an international capital market, and after going public, it will be easier to attract overseas institutional investors and facilitate transactions in Hong Kong dollars and US dollars, making dealings with overseas customers smoother.

2. Withstanding “Cyclical Fluctuations”: The “cyclical curse” of the semiconductor industry is unavoidable, especially for storage chips, which are like a “roller coaster”—in 2022, Junzheng’s storage chip revenue was still high, but by 2024, due to industry price wars, revenue dropped by 36%, with average selling prices (ASP) falling from 7.1 yuan to 5.4 yuan. Now, with the “A+H” dual platform, it effectively adds a “funding reservoir”: financing in the A-share market is convenient, while the Hong Kong market connects to international capital, allowing one side to provide support even if the other side is sluggish, reducing the impact of cycles on performance.

3. Boosting “R&D” Efforts: Chip design is a “money-burning endeavor”, especially for automotive electronics and industrial chips, which have long R&D cycles and high certification costs. Junzheng’s R&D investment has been increasing in recent years, with R&D expenses projected to reach 681 million yuan in 2024, accounting for 16.2% of revenue, an increase of 4.3 percentage points from 2022—many companies cut R&D during industry downturns, but Junzheng is increasing its investment to seize the next wave of technological dividends (such as automotive-grade DDR5 and AIoT-specific chips). After going public in Hong Kong, its R&D funding will be even more robust.

However, there are also concerns: Junzheng’s “three engines” have a high proportion of storage chips, which are typical “cyclical products”; a price drop directly impacts revenue. Although computing chips are on the rise, the competition in the AIoT and smart security markets is fierce, and it must compete with HiSilicon and Rockchip for market share. The funds raised from this Hong Kong listing will need to address these shortcomings, and the future layout remains to be seen.

3. Performance “Roller Coaster”: How Does it Maintain a Stable Gross Margin?

When discussing Junzheng, one interesting point is that its performance fluctuates with the industry cycle, yet its gross margin remains stable at 33%-35%—many peers see their gross margins drop by 10 percentage points during downturns. How does Junzheng achieve this?

The key lies in the “balance of business structure”:

• Using “High-Margin Businesses” to Offset “Cyclical Product Fluctuations”: Although Junzheng’s storage chips are greatly affected by cycles, the gross margins of storage applications in automotive electronics and industrial medical fields are 15%-20% higher than those in consumer electronics. From 2022 to 2024, shipments of automotive electronic chips increased by 40%, and industrial chips rose by 25%, with these high-margin businesses increasing their share, directly “offsetting” the impact of falling storage chip prices;
• Computing Chips “Growing Against the Trend” to Fill the Gap: When storage chip revenue declines, computing chips have risen against the trend, driven by AIoT and smart security, with sales doubling from 2022 to 2024, and the gross margin of computing chips is about 5 percentage points higher than that of storage chips, effectively providing a “silver lining”;
• Fabless Model “Lightweight Approach”: Junzheng operates on a fabless model, avoiding the need to build factories or purchase equipment, with costs primarily in R&D and design, unlike companies with fabs that bear depreciation pressures during downturns. This model allows it to quickly adjust capacity and control costs during industry slumps.

However, the issues are also evident:

• Storage Chips “Dependent on Market Conditions”: Junzheng’s storage revenue accounts for over 60%, and the prices and demand for storage chips are entirely dependent on the industry cycle; if the cycle declines again, revenue will be impacted;
• R&D Investment “Swallowing Profits”: In 2024, R&D expenses will account for 16.2% of revenue, which, while ensuring technological leadership, also squeezes net profits—net profit is projected to halve from 779 million to 364 million from 2022 to 2024, with increased R&D investment being a significant reason.

4. Shareholder Reductions and OmniVision’s “Abandonment of Purchase”: What Challenges Does the Hong Kong Listing Face?

Junzheng’s push into the Hong Kong market is not without its challenges; there are several “hurdles” to overcome:

The first hurdle is the “pressure from shareholder reductions”. Since 2022, Junzheng’s shareholders and executives have frequently reduced their holdings; for instance, in July 2025, Beijing Yitang Shengxin reduced nearly 1% of its shares, cashing out nearly 400 million. Although the reason for the reduction is “funding planning”, during the industry winter, shareholder cash-outs can easily raise market concerns: “Are insiders not optimistic about the future?” Hong Kong investors are particularly sensitive to “shareholder reductions”, which may affect the valuation after listing.

The second hurdle is the “uncertainty from OmniVision Group”. In 2022, Weir Group (OmniVision’s parent company) planned to invest 4 billion to increase its stake in Junzheng, aiming for business synergy in “automotive + security”—combining OmniVision’s image sensors (CIS) with Junzheng’s storage and computing chips to form a “complete solution for security cameras” and complementing the automotive sector. However, Weir Group did not complete the stake increase, and now OmniVision’s founder, Yu Renrong, is merely a non-executive director of Junzheng. This means the originally expected “business synergy” has been diminished, and Junzheng must rely on itself to capture market share.

The third hurdle is the “valuation curse of semiconductor companies in Hong Kong”. Many semiconductor companies that have gone public in Hong Kong in recent years have “broken their issue price”—for example, a certain storage chip company saw its stock drop by 20% on the first day of trading, and another analog chip company had a valuation 30% lower than in the A-share market after listing. Junzheng’s price-to-earnings ratio in the A-share market is about 30 times, but in Hong Kong, it may be pressured to lower valuations due to the “industry winter” and “storage cycle fluctuations”, potentially failing to achieve the expected financing effect.

5. A Final Word: Where is Junzheng’s “Breakthrough Point”? How Should Ordinary People View It?

For Junzheng, the Hong Kong listing is just the “first step”; the real “breakthrough point” lies in two aspects:

1. Deepening and Perfecting “Automotive Electronics”: Automotive electronics is the most “cyclically resilient” track in the semiconductor industry—sales of new energy vehicles are still rising, and the demand for automotive-grade chips is “rigid”. Moreover, the certification cycle for automotive-grade chips is long and has high barriers; once integrated into the customer supply chain, stable supply can last for 5-10 years. Junzheng has already achieved global leadership in automotive-grade SRAM; if it can also enter automotive-grade DDR5 and automotive analog chips, it can further increase gross margins and reduce reliance on consumer-grade storage;
2. Achieving True Synergy in “Computing + Storage + Analog”: Currently, Junzheng’s three major businesses still operate “independently”; if it can launch integrated solutions of “computing + storage + analog”—for example, providing AIoT devices with a package of “processor + storage + power management chips” and offering security cameras a combination of “SoC + storage + sensor interface chips”, it can enhance customer stickiness, shifting from “selling individual chips” to “selling solutions”, thereby increasing pricing power.

For ordinary people:

• Investors: If you are optimistic about the automotive electronics and AIoT sectors, you can pay attention to Junzheng’s valuation after its Hong Kong listing—if the valuation is more than 20% lower than in the A-share market, and the automotive electronics business continues to grow, there may be opportunities; however, be wary of the risk of a further downturn in the storage cycle, as the proportion of storage chips is too high.
• Industry Observers: Junzheng’s “A+H” listing is a microcosm of “the globalization of domestic chip companies”—previously, domestic chip companies relied on A-share financing, but now they are starting to connect with international capital, which is a positive development. However, whether it can succeed depends on “technological strength” and “business resilience”; merely relying on “listing financing” is not enough; there must be competitive products.

The “winter” of the semiconductor industry will eventually pass. Junzheng’s push into the Hong Kong market is like “stocking up on grain in winter”—if it can survive the winter, when the storage cycle recovers and the demand for automotive electronics surges, it may usher in a new round of growth. However, if the “grain” (funds) stocked is not used wisely and fails to address technological shortcomings, it may “starve” before spring arrives.