The semiconductor industry is undergoing a quiet revolution driven by third-generation semiconductors. As silicon-based chips approach their physical limits, new materials like silicon carbide (SiC) and gallium nitride (GaN) are becoming foundational for next-generation applications due to their superior high-temperature, high-frequency, and high-voltage performance. These materials are critical for AI computing infrastructure, green energy, electric vehicles, and smart grids.
Since late 2024, several Chinese third-generation semiconductor companies have advanced their Hong Kong listing plans. Gallium nitride power device leader INNOSCIENCE (02577) completed its IPO in December 2024. Meanwhile, global SiC epitaxial wafer frontrunner EPIWORLD (02726) recently launched its Hong Kong share offering and will soon list on the main board. These companies exemplify China's transition from follower to leader in the global third-generation semiconductor supply chain.
Understanding the strategic importance of third-generation semiconductors is key to appreciating EPIWORLD and INNOSCIENCE's value. Compared to first-generation silicon and germanium, SiC and GaN offer three times wider bandgap and ten times higher breakdown field strength. This enables smaller devices to handle higher voltages, operate at higher frequencies, and generate less heat - precisely what cutting-edge applications require. From AI data center power supplies needing extreme efficiency to electric vehicle inverters operating on 800V platforms, third-generation semiconductors form the material foundation for electrification and智能化.
EPIWORLD: Global Epitaxial Leader Anchored in Technology Dr. Zhao Jianhui, EPIWORLD's founder, brings over 35 years of SiC expertise. As the original inventor of commercial vertical trench SiC JFET power devices and the first IEEE Fellow recognized for SiC contributions, his scientific background provides unparalleled technical accumulation.
Founded in Xiamen in 2011, EPIWORLD specializes in developing, producing, and selling SiC epitaxial wafers. These customized semiconductor wafers grown on SiC substrates determine final device performance and yield. EPIWORLD leads this specialized segment with over 31% global market share by sales volume, serving external markets as one of few independent suppliers (79% overseas sales at peak). This means most top-tier SiC device manufacturers are EPIWORLD customers.
The company's competitive edge lies in multiple technological barriers. It spearheaded the world's first and only SEMI international standard for SiC epitaxial wafers, effectively setting industry rules. In wafer size advancement, EPIWORLD became the first company to mass-produce 8-inch SiC epitaxial wafers in 2024, and the first to achieve 12-inch technical breakthrough. Larger wafers mean lower per-chip costs and higher production efficiency, with the 8-inch to 12-inch transition expected to define future competition.
EPIWORLD serves 134 customers, including 8 of the global top 10 SiC power device makers. At least three customers' SiC products have entered NVIDIA's supply chain for megawatt AI data centers, making EPIWORLD the only Chinese epitaxial company achieving large-scale international supply chain integration.
Financially, EPIWORDD remained profitable during the 2024-2025 industry inventory correction that pushed most peers into losses. Despite average selling price declining over 63% in 2.5 years, the company reported RMB146 million net profit (excluding share-based compensation) for the first nine months of 2025. Strong cash position grew from RMB270 million in 2022 to RMB1.83 billion by September 2025, with net assets expanding from RMB580 million to RMB2.98 billion.
EPIWORLD's upcoming IPO proceeds will primarily fund 8-inch capacity expansion and 12-inch R&D, further consolidating its technological leadership.
INNOSCIENCE: GaN Global Leader Scaling for Dominance INNOSCIENCE represents the "industrial capital + engineering culture" model for creating global champions. Founded in 2015, the company became the absolute leader in GaN power semiconductors within a decade, listing on Hong Kong's main board in December 2024.
INNOSCIENCE adopted the forward-looking GaN-on-Si technology route and committed to 8-inch wafer production, gaining a generation lead in cost control and scaling capability. It became the first IDM company achieving 8-inch GaN-on-Si mass production, with its Suzhou factory reaching 13,000 monthly wafer capacity by end-2024 and targeting 70,000 within five years.
The company uniquely covers full voltage spectrum from 15V to 1200V, with products spanning GaN HEMT discrete devices, ICs, and modules. Applications range from consumer fast charging and data center power supplies to EV powertrains, industrial power, 5G infrastructure, and even humanoid robot joint motors.
Notably, INNOSCIENCE announced strategic collaboration with NVIDIA in 2025 to promote 800V DC power architecture in AI data centers. This partnership sent its stock price doubling within a month,市值 exceeding HKD 50 billion, reflecting market recognition of GaN's role in high-power AI scenarios.
The vertically integrated model enables deep design-manufacturing coordination and supply chain control. With China controlling 80-90% of global gallium raw materials, INNOSCIENCE enjoys inherent supply security. Its manufacturing yield exceeds 95%, far above industry average.
Despite reporting RMB 1.045 billion net loss in 2024 (5% YoY improvement), investors focus on explosive revenue growth from RMB 68 million in 2021 to RMB 828 million in 2024 (130% CAGR). Analysts project profitability by 2027 with revenue exceeding RMB 3 billion. The stock surged over 240% post-listing, reaching HK$106 peak in September 2025 with市值 approaching HKD 94 billion.
Complementary Leadership in Third-Generation Semiconductors EPIWORLD and INNOSCIENCE represent different approaches to global leadership with shared使命. SiC's vast market will predominantly follow the foundry model like first-generation semiconductors, benefiting specialized epitaxial wafer suppliers like EPIWORLD regardless of which device manufacturers dominate. The transition to 12-inch competition will require less capital intensity for EPIWORLD compared to device makers.
Conclusion: Era-Defining Choice SiC and GaN complement rather than compete - the former dominating high-voltage/high-power applications, the latter excelling in high-frequency/low-loss scenarios. EPIWORLD demonstrates scientific excellence in epitaxial wafers, while INNOSCIENCE leverages scale advantages through 8-inch mass production. One company shows profitability resilience through industry cycles, the other exhibits high-growth potential despite current losses.
Together, they announce China's arrival as home to world-class third-generation semiconductor enterprises. This represents dual victory in technological revolution and capital narrative, marking China's transition from follower to leader in semiconductors. As electrification and AI acceleration drive 800V platforms and trillion-watt computing demands, the third-generation semiconductor era has unequivocally arrived.
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