Zhuohai Technology has reportedly filed for an IPO on the Beijing Stock Exchange, marking a renewed bid to go public following a previously aborted attempt.
In June 2022, the Wuxi-based company had applied to list on the ChiNext board of the Shenzhen Stock Exchange, reaching the hearing stage by January 2023 before the process was terminated that same month. Zhuohai later entered the Innovation Tier of the National Equities Exchange and Quotations (NEEQ) in August 2024 under the code 874380.
Founded in 2009, Zhuohai specializes in frontend metrology equipment used in semiconductor manufacturing. Its business encompasses the development, repair, and sales of these systems. These are critical tools for measuring key parameters or detecting defects in lithography, etching, and thin film deposition processes. Most of them operate using optical or electron beam technologies.
According to data from SEMI, frontend metrology systems account for approximately 13% of the global semiconductor equipment market. Between 2019 and 2023, the mainland Chinese market for frontend metrology and repair equipment expanded from RMB 1.48 billion (USD 207.2 million) to RMB 4.98 billion (USD 697.2 million), reflecting a CAGR (compound annual growth rate) of 35.44%, according to Frost & Sullivan. The market is projected to reach RMB 12.77 billion (USD 1.8 billion) by 2027, growing at a projected CAGR of 26.69%.
Policy shifts in China may further accelerate demand. New rules state that the origin of a chip is determined by where critical wafer processing occurs, potentially strengthening the case for domestic sourcing in semiconductor manufacturing.
Still, technical hurdles remain. Frontend metrology tools, often described as the “eyes” of chip production, play a decisive role in wafer yield rates. As of 2023, Chinese brands made up only about 5% of the domestic new equipment market, which is largely dominated by US-based KLA and Applied Materials, along with Japan’s Hitachi.
However, in the repair segment, Zhuohai has been steadily gaining ground. Its market share rose from 2.07% in 2018 to 7.39% in 2023, ranking third globally behind KLA and Hitachi. The company’s repair capabilities now extend to 12-inch wafers and 14-nanometer nodes, with leading domestic performance in process coverage, product variety, and scale.
Operating upstream in the semiconductor equipment value chain, Zhuohai sources used systems from major integrated device manufacturers (IDMs) such as KLA, then refurbishes and enhances them using proprietary technologies. These tools are acquired through partnerships with resellers and auctions in South Korea, the US, and other regions. As of 2024, its inventory was valued at RMB 741 million (USD 103.7 million), representing 74.87% of current assets and reflecting its tight control over upstream supply.
Nonetheless, geopolitical risks pose a threat to this model. Restrictions on the export of decommissioned tools could disrupt procurement channels.
On the customer side, Zhuohai serves domestic semiconductor makers including Hua Hong Semiconductor, Silan Microelectronics, and China Resources Microelectronics, with end users in 2024 extending to listed firms like BYD and Gree Electric.
Due to the capital intensity and technical demands of chip fabrication, Zhuohai’s customer base remains relatively concentrated. In 2024, its top five clients contributed 56.12% of revenue—down from 70.64% in 2022 and 66.01% in 2023—yet still reflective of significant client concentration risk.
Zhuohai’s business is organized into four segments: refurbished equipment, self-developed equipment, components and parts, and technical services. From 2022–2024, revenue rose from RMB 314 million (USD 44 million) to RMB 465 million (USD 65.1 million), while net profit fell from RMB 132 million (USD 18.5 million) in 2023 to RMB 104 million (USD 14.6 million) in 2024, reflecting a 21.6% year-on-year (YoY) decline amid cyclical market pressures. Gross margin also declined, from 60.58% in 2022 to 46.56% in 2024.
Refurbished tools remain Zhuohai’s core revenue driver, generating RMB 428 million (USD 60 million) in 2024, accounting for 92.24% of total income. Unit sales grew 22.3% YoY, but gross margin narrowed to 46.49% amid rising procurement costs and intensifying price competition. This business centers on restoring decommissioned devices for resale, including electron beam defect inspection systems and thin film thickness meters, primarily supporting process nodes from 14–28 nm.
Self-developed equipment contributed RMB 12 million (USD 1.7 million), or 2.62% of revenue, with a gross margin of 37.43%. Commercialized products in this category, such as stress measurement tools and four-point probe sheet resistance meters, are said to match the performance of leading international models, although market adoption remains limited.
Components and parts made up 3.39% of total revenue, led by high-repetition-rate pulsed lasers and precision transport systems. Several of these components have been integrated into both self-developed and refurbished systems.
Technical services, including maintenance and production line debugging, accounted for roughly 1.75% of revenue. These offerings are aimed at boosting customer retention through added value.
Despite its product diversification, Zhuohai continues to lag in R&D investment. From 2022–2024, R&D spending stood at 4.81%, 7.46%, and 7.25% of revenue, respectively, far below the 36.07% allocated by Skyverse Technology and the 30% reported by Jingce Electronic.
The refurbished segment also remains susceptible to cost inflation and pricing pressure. In 2024, gross margin for some models dropped by 14.01% due to these headwinds.
While Zhuohai has made incremental gains in self-developed technologies, this segment still contributes just 3% of revenue, underscoring the company’s need to accelerate innovation and reduce reliance on legacy products.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Peng Xiaoqiu for 36Kr.