The share price of BLACK SESAME (HKG: 02533), often referred to as a leader in China's smart driving chip sector, closed at HK$11.33 on July 15, marking a 1.43% increase and bringing its market capitalisation to approximately HK$8.07 billion.
This movement followed an announcement the previous evening confirming the completion of its acquisition of Yizhi Electronic Technology Co., Ltd. The process, which began with an initial intent announcement in early December last year, concluded after roughly seven months with BLACK SESAME securing a 60% equity stake in Yizhi Electronic for a total consideration of approximately 478 million yuan.
Details of the 478 Million Yuan Deal for a Loss-Making Entity
On July 14, BLACK SESAME formally disclosed the completion of the acquisition, structured through a combination of an equity transfer and a capital increase. The company utilised a special purpose vehicle established in Wuhan to acquire 32.84% of existing shares from original shareholders for 457.8 million yuan. An additional investment of approximately 20.22 million yuan was made to subscribe for new registered capital, securing a 40.44% post-increase stake. These two transactions collectively grant BLACK SESAME indirect control over 60% of Yizhi Electronic.
Following this deal, Yizhi Electronic becomes a non-wholly owned subsidiary of BLACK SESAME, and its financial results will be consolidated into the parent company's financial statements.
Founded in July 2016 and headquartered in Zhuhai, Yizhi Electronic focuses on AI machine vision algorithms and SoC chip design. Its product portfolio spans three main series: Smart Automotive (SA), Smart Hardware (SH), and Smart Video Surveillance (SV), with computing power generally ranging from 0.5T to 2T. The company achieved mass production of edge AI SoCs with its proprietary NPU as early as 2019, positioning it as an early player in delivering integrated "algorithm + chip" solutions. These products are currently deployed in smart automotive, hardware, and security applications.
BLACK SESAME stated in its announcement that Yizhi Electronic's expertise in low-power, cost-effective AI SoCs will complement its own mid-to-low computing power product line, enabling a complete computing power ecosystem spanning from 0.5TOPS to over 1000TOPS. This move is expected to transform BLACK SESAME from a pure-play autonomous driving chip supplier into a provider of one-stop computing solutions. Its business scope will extend to areas like smart gimbals, action cameras, AI glasses, and robotic vacuum cleaners, covering both lightweight visual perception and advanced autonomous driving needs.
However, the financial health of the acquisition target is currently less than stellar, as Yizhi Electronic remains in a state of continuous losses. According to a BLACK SESAME filing with the Hong Kong Stock Exchange on June 2, Yizhi Electronic reported revenues of 89.521 million yuan, 133 million yuan, and 173 million yuan for 2023, 2024, and 2025 respectively. Corresponding operating losses for those years were 66.815 million yuan, 40.846 million yuan, and 32.805 million yuan, with total comprehensive annual losses reaching 112 million yuan, 86.67 million yuan, and 86.756 million yuan.
Despite this financial backdrop, the acquisition agreement sets forth aggressive performance commitments. Yizhi Electronic is required to achieve significant revenue growth and turn a profit on an adjusted basis over the next three years. Specifically, post-acquisition targets include revenues of no less than 300 million yuan in 2026, 400 million yuan in 2027, and 500 million yuan in 2028. Adjusted net profit targets are set at no less than 5 million yuan in 2026, 35 million yuan in 2027, and 50 million yuan in 2028, with a cumulative three-year total of at least 90 million yuan.
BLACK SESAME has also established safeguards for potential underperformance. The agreement stipulates that if Yizhi Electronic's revenue falls below 210 million yuan in 2026, 280 million yuan in 2027, or 350 million yuan in 2028, or if its adjusted net profit is negative in 2026, below 14 million yuan in 2027, or below 20 million yuan in 2028, then BLACK SESAME has the right to require the management shareholders to transfer a combined 20% equity stake in the target company to a designated party for a nominal sum of 1 yuan or the legally permissible minimum consideration.
The Pressing Need for a New Growth Engine
In reality, the acquirer, BLACK SESAME, faces its own significant challenges. Founded in 2016 and headquartered in Wuhan, the company listed on the main board of the Hong Kong Stock Exchange in 2024 and is a prominent player in China's smart vehicle computing chip sector. Its full-year 2025 financial report shows total revenue reached 822 million yuan, representing a 73.4% year-on-year increase. The advanced driver-assistance systems (ADAS) product and solutions segment remained the dominant contributor, generating 687 million yuan in revenue, up 56.8% year-on-year, and accounting for 83.58% of total revenue.
However, this revenue scale is not particularly commanding within the competitive smart driving chip landscape. For comparison, Horizon Robotics reported that its product and solution business revenue surged to 1.62 billion yuan in 2025, a 144.2% increase, while its licensing and service business generated 1.94 billion yuan, up 17.4%—this single segment already surpasses BLACK SESAME's total revenue. The global automotive-grade smart driving SoC giant Mobileye reported total revenue of $1.894 billion for its 2025 fiscal year, highlighting a vast disparity in scale.
In response to this intense market competition, BLACK SESAME appears to be urgently seeking a second growth engine. Public reports indicate that the company initiated strategic planning for its embodied AI business as early as the end of 2024. Starting in early 2025, its robotics computing platform business began generating revenue and achieving project deployments with customers. The 2025 annual report confirmed this progress, showing embodied AI solution revenue reached 96 million yuan for the year.
A formal announcement came in November last year when BLACK SESAME held a launch event for its SesameX computing platform, officially declaring its entry into the humanoid robotics arena. At the time, founder and CEO Shan Jizhang stated that the company's R&D and mass-production experience gained in the smart automotive industry would directly empower new applications in the robotics field.
From this strategic perspective, Yizhi Electronic's product line likely represents a key consideration for the acquisition. Currently, BLACK SESAME's core business focuses on developing automotive-grade high-performance AI chips. Its main products include the Huashan A2000 series (computing power 250TOPS–1000TOPS) and the Wudang C1200 cross-domain fusion chip, primarily targeting L2 to L4 autonomous driving and cockpit-driving integration solutions.
It is noteworthy that BLACK SESAME itself is under significant financial pressure. Its 2025 annual report revealed full-year R&D expenses of 1.435 billion yuan, far exceeding its total revenue. The company reported a net loss of 1.424 billion yuan for the year, swinging from a profit to a substantial loss. Given this strained financial position, the decision to invest an additional 478 million yuan to acquire a company still operating at a loss raises questions about the potential growth it can unlock for BLACK SESAME, a point likely to draw continued industry scrutiny.
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