IPO Outlook | Cellular Communication Chip Leader Yixin Communication Races for Hong Kong Stock Market, but Can Scale Advantage Stable Profitability?

The global mobile network is undergoing profound changes, particularly in recent years against the backdrop of rapid developments in physical AI, where cellular communication chips are becoming an essential infrastructure for achieving intelligence. Data shows that by 2025, the total shipments of global cellular communication chips will reach 703 million units, with a market size estimated at approximately 16.25 billion based on revenue. The number of cellular IoT connections downstream is expanding in parallel, with the cellular IoT connection count in the Chinese market alone reaching 2.9 billion by 2025. The continuous penetration of connected devices provides a solid foundation for upstream chip design companies to secure deterministic growth. GMTEight notes that recently, Shanghai Yixin Communications Technology Co., Ltd. (hereinafter referred to as Yixin Communications) resubmitted its listing application to the Hong Kong Stock Exchange. According to the Frost & Sullivan report, Yixin Communications ranks third in revenue in the global cellular communication chip market, with a market share of 3.9%; when calculated by shipment volume, the companys global shipments of cellular communication chips reached a staggering 144 million units, accounting for 20.4% of global cellular communication chip shipments during the same period. Despite its prominent market influence, whether Yixin Communications can translate this scale advantage into sustained profit returns remains uncertain. From a financial performance perspective, the company has seen steady revenue growth in recent years, but profitability has not risen in tandem and has even exhibited significant volatility. This contradiction of increased revenue without increased profits may to some extent affect the capital market's valuation judgment post-listing. Can enlarged scale prevent profit erosion from falling prices? From a business structure perspective, Yixin Communications is a typical fabless chip design company, outsourcing wafer manufacturing, packaging, and testing to third-party partners while focusing on chip design, R&D, and sales. Its product matrix encompasses several cellular communication standards including NB-IoT, Cat.1bis, and LTE Cat.4, with downstream applications covering smart metering, mobile payments, wearable devices, AI smart devices, and more. In addition to chip sales, the company also generates revenue by providing IP licensing and chip design services to a leading global semiconductor company. Looking back at Yixin Communications' historical performance, the overall revenue has been on an upward trajectory: in 2023, total revenue was 533 million, with a modest growth of 3.6% to 552 million in 2024, a year-on-year surge of 24.8% to 689 million in 2025, and achieving revenue of 416 million in the first half of 2026, a year-on-year growth of 23.3%. However, during the same period, the performance of Yixin Communications' net profit tells a different story: in 2023, the company recorded a net loss of 159 million, turned profitable in 2024 with a net profit of 12 million, but again reported a net loss of 16 million in 2025. By the first half of 2026, Yixin Communications' losses further widened to 39 million. The drastic fluctuations in gross profit margin are a direct driver of profit volatility. Yixin Communications' overall gross profit margin was only 8.9% in 2023, climbed sharply to 22.3% in 2024, fell back to 18.3% in 2025, and plummeted to 7.8% in the first half of 2026. One important reason behind this roller coaster trend is the continuous decline in average selling prices of the companys two core products, the NB-IoT chip and the Cat.1bis chip. From 2023 to 2025, the average price of the NB-IoT chip dropped from 5.0 to 4.1, a decrease of about 18%; the average price of the Cat.1bis chip fell from 7.7 to 4.5, a drop of over 40%. In the first half of 2026, prices of both product categories further declined. The continuous compression of selling prices has directly eroded gross profit margins, leading to a sharp drop in the gross profit margin for chip sales to 4.2% in the first half of 2026, down from 11.4% in the same period in 2025. However, the decline in prices has brought about a surge in shipment volumes. From 2023 to 2025, the sales of the Cat.1bis chip increased from 44.11 million units to 105 million units. This strategy of increasing volume to compensate for price has maintained revenue growth, but at the cost of declining profitability quality. In stark contrast to the chip business is the company's licensing and service business. This segment has maintained a gross profit margin of over 97% for years, but its revenue is highly dependent on a single customer, Customer Q, and is characterized by clear project-based and non-continuous features. In the first half of 2026, revenue from this business dropped from 45 million in the same period of 2025 to 16 million. The dual existence of revenue growth and profit volatility is the core contradiction revealed in Yixin Communications' prospectus. Whether this second-largest chip company by shipment volume can find a stable profit pivot based on its scale advantage seems to be a key question facing the company. Will product matrix expansion become the decisive factor? For Yixin Communications, which aspires to enter the capital market, its market position in segmented fields does not need further elaboration, but the secondary market does not price solely based on scale; rather, many times investors care more about whether scale can sustainable profits. In my view, the key variables determining Yixin Communications' long-term value hinge on two questions: first, whether the companys product structure can upgrade from low-speed and medium-speed to high-speed; second, and more importantly, when the profit turning point will arrive. The upgrade of products to high speed is a strategic focus worth paying attention to for Yixin Communications in the future. As mentioned earlier, the companys revenue is highly concentrated in the mid-low speed products of NB-IoT and Cat.1bis, which is the structural root cause of the ongoing pressure on gross profit margins. Currently, the mid-low speed chip market has entered a mature phase marked by intense competition and high standardization, with a continuous downtrend in average prices being a prevailing trend. In the prospectus, Yixin Communications has outlined its breakout path as extending to high-speed products such as LTE Cat.4 and 5G RedCap. It is undeniable that the average selling price and gross profit margin potential of high-speed products significantly exceed that of existing categories, but the ramp-up of new products requires time while prices of old products continue to decline. In other words, Yixin Communications is in a transitional period where the old and new do not connect, and the duration of this phase will directly determine when the profit turning point will come. The competitive landscape is also worth noting. Yixin Communications ranks second globally in both the NB-IoT and Cat.1bis segments, demonstrating its competitiveness in specific fields. However, the technological barriers in the mid-low speed chip market are relatively limited, with standardized offerings and low switching costs for customers making price competition the norm. The company has also admitted in the prospectus that it has limited bargaining power in key terms such as wafer procurement pricing. In emerging fields like 5G RedCap, both international giants and domestic peers are accelerating their layouts; it remains to be seen whether Yixin Communications can retain its market share and achieve profit improvement in this new round of competition. Additionally, the licensing and service business is a double-edged sword. Although this segment enjoys a very high gross profit margin, its revenue is almost entirely derived from a single overseas customer and has clear project-based, non-continuous characteristics, making it difficult to become a stable source of profit. In summary, Yixin Communications operates in a certainty-driven growth track, undeniably possessing the advantages of being second in global shipment volume and solid technical accumulation. However, the capital market's scrutiny will center on one core question: whether high-speed products can be commercialized as planned and whether they can truly improve profit structure. Until the gross profit margin rebounds from its low point, Yixin Communications' value judgment may remain suspended between being a scale champion and profitability under examination, and before significant optimization in profitability conditions, it may not be easy for Yixin Communications to win the favor of investors.