Setting CNY 62.60 (USD 9.10) per share as its initial public offering price, Espressif Systems stands out in a crowd of the 25 STAR board pioneers. It's going to raise over CNY 1.2 billion (USD 174 million) through this IPO.
Recently we have seen the whole supply chains migrating into the Shanghai Stock Exchange Sci-Tech Innovation Board, known as the STAR Market, to seek new funding sources. Obviously, the degree of need for financing varies across the stages of certain industry verticals. While foundries normally lose money, trying to boost their scale, fabless chipmakers reap fruits from vast markets. Espressif Systems is among those self-sustained companies.
The Shanghai-based semiconductor manufacturer’s revenue hit CNY 474.92 million (USD 69 million) in 2018, growing with a breathtaking CAGR of 96.6% over the last two years. Net profit growth records are even more astounding: CNY 93.88 million (USD 13.64 million) in 2018, up 220% from the previous year. The chipmaker is a capital-intensive company, having on board only 241 people, more than two thirds of which are involved in R&D activity.
In an effort to provide and facilitate a wireless connectivity across the globe, Espressif produces and markets Wi-Fi and Bluetooth/BLE chipsets of the three different types as well as two kinds of modules. According to the firm's prospectus, the lion’s share (almost 90%) of revenues was coming from the microchip business in 2016. However, this picture has been changing lately: the company made more than 32% of the operating income on the module-making field last year.
According to Gartner, over 110 billion units of various IoT equipment were sold in 2018 worldwide. The research company also estimated global IoT market scale at the level of USD 3 trillion. Chipmakers are the core value-adding players among the IoT ecosystem-builders. This thing is good and bad at once: although hardware manufacturing might enrich the industry players today, entry barriers can be diluted by technology spillover in the long run.