Fabless chip design company Core Storage Technologies Co., Ltd. (hereinafter referred to as Core Storage) has spent four months since its application to list on the Hong Kong Stock Exchange was accepted, with GF Securities and CITIC Securities acting as joint sponsors.
This is not Core Storage's first IPO attempt. In April 2022, the company submitted an application for an A-share listing to the Shenzhen Stock Exchange, sponsored by CITIC Securities. On November 18, 2022, Core Storage successfully passed the review meeting of the Shenzhen Stock Exchange's GEM Listing Committee. In December 2023, Core Storage voluntarily withdrew its A-share IPO application, and in the same month, the Shenzhen Stock Exchange terminated its GEM listing review. Regarding the reason for terminating the A-share listing, Core Storage stated that it was due to considerations of the expected lengthy and uncertain approval process for the A-share application, which could adversely affect the company's business operations.
1. Significant Performance Fluctuations, Declining Sales Volume and Unit Price According to Tianyancha, Core Storage was established in 2014. The company is a fabless chip design company focusing on the research, development, design, and sales of general-purpose chips, providing customers with code-type flash memory chips ranging from 1Mbit to 8Gbit in capacity. The company's products are widely used in network communications, AI communications, consumer electronics, smart homes, the Internet of Things, industrial medical applications, automotive electronics, computers, and peripheral devices.
According to data from CIC, based on 2024 revenue calculations: for code-type flash memory chips, Core Storage ranks sixth among global fabless companies; for SLC NAND flash memory, it ranks fourth among all global fabless companies; and for NOR flash memory, it ranks fifth among all global fabless companies.
During the track record period, Core Storage's revenue came from contracts for NOR, SLC NAND, MCP, and other products.
From 2023 to 2024 and the nine months ended September 2025 (hereinafter referred to as the reporting period), revenue from NOR was RMB 242 million, RMB 159 million, and RMB 128 million, accounting for 36.5%, 36%, and 33.8% of the period's revenue, respectively. Revenue from SLC NAND was RMB 319 million, RMB 216 million, and RMB 198 million, accounting for 48.1%, 48.8%, and 52.3% of the period's revenue, respectively. Revenue from MCP was RMB 73.221 million, RMB 42.950 million, and RMB 29.283 million, accounting for 11%, 9.7%, and 7.7% of the period's revenue, respectively.
In 2024, the company's main products experienced a significant decline compared to the previous year. The company attributed the decline mainly to a decrease in sales volume for NOR and SLC NAND products, primarily due to the time required for order and inventory adjustments across the supply chain after a prolonged industry downturn, leading to temporary operational delays, especially in the early stages of industry recovery. The company also implemented strategic pricing adjustments in the early stages of the 2024 industry recovery cycle, resulting in a decline in average selling prices.
Looking at volume and price details, during the reporting period, NOR sales volume was 370 million units, 294 million units, and 226 million units, with average selling prices of RMB 0.65, RMB 0.54, and RMB 0.57, respectively. SLC NAND sales volume was 60.763 million units, 55.153 million units, and 49.961 million units, with average selling prices of RMB 5.24, RMB 3.91, and RMB 3.97, respectively. MCP sales volume was 3.964 million units, 2.498 million units, and 1.650 million units, with average selling prices of RMB 18.47, RMB 17.20, and RMB 17.74, respectively.
As the semiconductor industry traditionally exhibits significant cyclical trends. During periods of strong demand, companies in the industry typically actively expand their operational scale to ensure the capacity needed for expected future growth. However, when actual demand does not rise as expected or declines, or when expansion outpaces genuine demand growth, the industry often enters an environment of overcapacity.
Affected by industry demand, Core Storage's performance showed considerable instability during the period, with performance growth appearing somewhat weak.
In terms of overall performance, during the reporting period, Core Storage achieved operating revenues of RMB 663 million, RMB 442 million, and RMB 379 million, net profits of -RMB 14.310 million, -RMB 37.694 million, and RMB 8.958 million, net profit margins of -2.2%, -8.5%, and 2.4%, and gross profit margins of 15.5%, 14.0%, and 18.8%, respectively.
In 2024 and the nine months ended September 2025, the company's year-on-year revenue growth was -33.3% and 9.86%, respectively. Additionally, the company recorded losses in both 2023 and 2024. In the nine months ended September 2025, the company recorded a turnaround to profitability. The company attributed the profit improvement to the broad recovery of the global memory chip market. Driven by the recovery, the global memory chip market grew significantly in 2024 and continued its growth trend after the first three quarters of 2025.
Bai Wenxi, Deputy Chairman of the China Enterprise Capital Alliance, analyzed that Core Storage's main business in code-type flash memory chips belongs to the typical semiconductor industry, which is greatly affected by global supply and demand relationships. From 2023 to 2024, global integrated circuit demand was weak, and the industry was in a "destocking" winter. The company's strategic pricing adjustments led to a significant drop in product average selling prices, putting pressure on both revenue and profit. In 2025, the global memory chip market recovered, and the company's performance reached an inflection point, achieving a turnaround to profitability. Such dramatic fluctuations are a direct reflection of the industry's characteristics. At the same time, the company's own operational model, with highly concentrated supply chains and customers, also amplified the risk of performance volatility.
2. Reduced R&D Expenses, Received Warning Letter for Disclosure Violations Although the company emphasizes its strong focus on R&D expenditure, an examination of past R&D spending reveals a significant contraction in the company's R&D expenses.
During the reporting period, Core Storage's R&D expenses were RMB 85.222 million, RMB 65.866 million, and RMB 33.317 million, accounting for 12.9%, 14.9%, and 8.8% of the period's revenue, respectively. In the nine months ended September 2025, the company's R&D expense ratio decreased by 33.6% year-on-year, which the company attributed to a reduction in employee costs of RMB 11.20 million due to a decrease in staff and a reduction of RMB 3.30 million in depreciation and amortization expenses related to the normal amortization of EDA software.
As of September 30, 2025, Core Storage's R&D team consisted of 74 members, accounting for 48.1% of the total workforce.
Core Storage primarily sells its products through a distribution model. During the reporting period, revenue generated from the distribution channel accounted for 84.7%, 71.2%, and 82.6% of total revenue, respectively. Meanwhile, revenue generated from direct sales customers accounted for 15.3%, 28.8%, and 17.4% of total revenue, respectively.
During the reporting period, the company's revenue from its top five customers was RMB 310 million, RMB 195 million, and RMB 169 million, accounting for 46.8%, 44.1%, and 44.6% of total revenue, respectively. Revenue from the largest customer was RMB 69.00 million, RMB 65.50 million, and RMB 79.40 million, accounting for 10.4%, 14.8%, and 21.0% of total revenue, respectively.
It is not difficult to see that during the period, revenue from the top five downstream customers remained stable at over 44%. Moreover, the revenue share from the largest customer increased significantly from 10.4% at the beginning of the period to 21%. This sharp increase in customer concentration inevitably raises external concerns about the company's weak bargaining power.
Furthermore, at the beginning of the reporting period, Core Storage's own trade receivables and inventory were at relatively high levels, significantly occupying current cash flow, leading to a net outflow of cash flow in 2023.
At the end of each period in the reporting period, Core Storage's trade and other receivables were RMB 165 million, RMB 128 million, and RMB 158 million, with trade receivable turnover days of 39 days, 61 days, and 51 days, respectively.
During the same period, the company's inventory was RMB 363 million, RMB 318 million, and RMB 286 million, with inventory turnover days of 215 days, 327 days, and 265 days, respectively.
As of the end of each period in the reporting period, the net cash flow from operating activities generated by Core Storage was -RMB 193 million, RMB 59.866 million, and RMB 47.320 million, respectively. Cash and cash equivalents at period-end were RMB 105 million, RMB 129 million, and RMB 99.282 million, respectively.
In terms of solvency, at the end of each period in the reporting period, Core Storage's current ratios were 5.1, 4.6, and 4.5, and its asset-liability ratios were 0.13, 0.16, and 0.14, respectively.
For this IPO, Core Storage plans to use the raised funds primarily for: driving product iteration and establishing a diversified product portfolio through continuous R&D and innovation; expanding R&D activities for CIMAI chips and driving technological and product iteration and upgrades; expanding R&D activities for analog chips and driving technological and product iteration and upgrades; enhancing operational capabilities for the next five years; and strategic investments and acquisitions in the next five years.
As of the signing date of the prospectus, the actual controller of Core Storage is Long Dongqing. Based on direct shareholding, Long Dongqing, in conjunction with persons acting in concert and through an employee持股 platform, controls approximately 62.4% of the company's voting rights.
In 2024 and the nine months ended September 2025, Core Storage declared dividends of RMB 30.90 million and RMB 20.60 million, respectively.
During the previous application to the Shenzhen Stock Exchange, in January 2024, due to differences between the forecasted 2022 financial performance submitted by Core Storage to the Shenzhen Stock Exchange for its A-share listing application and the company's actual 2022 financial performance, the Shenzhen Stock Exchange issued a letter to the company, urging it to ensure the accuracy of data disclosed in the listing application documents.
In its regulatory letter, the Shenzhen Stock Exchange stated that the forecasted 2022 performance disclosed in Core Storage's prospectus and other information disclosure documents differed significantly from the actual performance. The relevant information disclosure was not true, accurate, or complete, violating the relevant provisions of the Shenzhen Stock Exchange GEM Stock Issuance and Listing Review Rules. It was decided to take self-regulatory measures against Core Storage by issuing a written warning.
In November 2022, when replying to an inquiry regarding performance expectations, Core Storage stated that the basis for the 2022 performance forecast was full and prudent. Core Storage also adjusted the expected data for net profit attributable to the parent company from RMB 165 million to RMB 185 million to RMB 175 million to RMB 195 million.
Information shows that Core Storage updated its 2022 financial data on March 31, 2023. In 2022, Core Storage achieved revenue of RMB 748 million, which was RMB 182 million to RMB 252 million less than the expected data. Net profit attributable to the parent company and net profit attributable to the parent company after deducting non-recurring gains and losses were RMB 75.72 million and RMB 51.67 million, respectively, also significantly different from the expected data.
As a result of this incident, Core Storage's then sponsor, CITIC Construction Investment, and its accounting firm, Dahua, also received regulatory letters from the Shenzhen Stock Exchange and were subject to self-regulatory measures involving written warnings.
Bai Wenxi stated that for a company that had already passed the review meeting but had not obtained the registration approval for a long time, being formally named and issued a written warning by the regulatory authority meant that the compliance and information disclosure quality of its IPO project had raised a red flag. Under the review environment at that time, the probability of continuing to advance the registration with such a regulatory record was extremely low.
Core Storage stated that upon consideration, the difference between the 2022 financial performance forecast and the actual financial performance was due to unforeseen circumstances beyond the directors' control. The 2022 financial performance forecast was prepared by the directors based on data known to them at the time after appropriate and prudent consideration and did not involve fraud or dishonesty by the directors. According to advice from Chinese legal counsel, the letter from the Shenzhen Stock Exchange is not considered an administrative penalty.
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