Subscribe

Cheap Chip Test: Leadyo Files for IPO on Shanghai Tech Board
COVID-19 and China
The devil is in the detail. Image credit: Laura Ockel/Unsplash

► On the wave of the local industry tide, Leadyo is heading to the Star Market.
► The company’s future largely depends on the big trends in the sector.

Guangdong province-based semiconductor testing maverick Leadyo (利扬芯片) filed a prospectus with the local capital market watchdog – the China Securities Regulatory Committee (CSRC) – on April 17, intending to go public on the Shanghai bourse’s Sci-Tech Innovation Board. It is currently trading on the National Equities Exchange and Quotations (NEEQ), China’s Over-The-Counter (OTC) market, under the ticker 833474.

Goaded on by the Middle Kingdom’s utterly ambitious economic development plans, the country’s regulators have lately been pushing ahead with a financial sector reform. On March 6, for instance, CSRC started (in Chinese) collecting public opinions on possible direct transfers of outstanding NEEQ listings to the Star Market. Leadyo can become a prime example – and, maybe, even a role model – for the OTC-listed small technology companies.

A ten-year-old firm, Leadyo is involved in Chip Probing (CP), which is the process of visual defect-detection on a wafer (normally, without function testing), and Final Test (FT), a pre-distribution process that helps to check whether microdevices have safely been bonded and packaged. The chipmaker’s most significant upstream partners include microelectronic components producers Goodix (汇顶科技, 603160:SH) and Nations Technologies (国民技术, 300077:SZ), mixed-signal System-on-a-Chip (SoC) designer Allwinner (全志科技, 300458:SZ) and wireless chip maker Beken (博通集成, 603068:SH), to name a few. 

The fresh IPO candidate has something to boast of. In 2019, when the global semiconductor market retreated by over 12%, it boosted annual operating income by more than 67%, taking home CNY 232 million (USD 33 million). In the same year, the company made a profit of nearly CNY 61 million (USD 9 million), up almost 282% from 2018’s record. With plenty of new clients and somewhat weak competition in the segment, it managed to increase the gross profit margin from approximately 40% to 54% over the same period – mostly due to the economy of scale.

Obviously, Leadyo has benefited from the combination of China’s big semiconductor adventure, which aims to catch up with the world’s leaders within a short timeframe, following the planetwide two-decade-long industry trend of Integrated Circuit (IC) testing outsourcing.

While this bonanza might be hampered by the COVID-19 pandemic (check out our take on how the outbreak can affect the country’s semiconductor sphere in the mid-term), there are some positive signs, too. For one, Taiwanese cosmic foundry TSMC has recently shown that the crisis not only didn’t hit its financials but actually brought the manufacturer 91% more money in January – March 2020 than in the first quarter of the last year.

ANALYST
See Also

Communicate Directly with the Author!

Ask the author questions about the copied text

Research Reports
Editor's Picks