Shenzhen-based semiconductor memory manufacturer SCY Electronic Co., Ltd. is making a dash for a listing on the ChiNext board.
This company, focused on embedded storage chips and memory modules, counts prominent investors like Xiaomi among its shareholders. However, just before submitting its listing application, Xiaomi cashed out approximately 240 million yuan through a share sale.
Concurrently, internal governance issues pose concerns. The company's former deputy general manager, Chen Weitong, was arrested in August 2024 on suspicion of smuggling ordinary goods. During his tenure, transactions worth tens of millions of yuan occurred between the company and entities connected to him.
From an operational perspective, while the company reported significant revenue and profit growth in 2025, this impressive performance is shadowed by negative operating cash flow for three consecutive years, driven by rising raw material costs, high supplier concentration, and aggressive inventory stockpiling.
Founded in 2008, SCY primarily engages in the R&D, packaging, testing, production, and sales of embedded storage chips (e.g., eMMC, UFS, LPDDR) and storage modules (e.g., SSDs, memory modules). Its products are used in AI smart terminals, smart vehicles, industrial, and medical equipment.
Founders Ni Huangzhong and Li Mufei, a married couple, collectively control 60.4881% of the company's shares.
Xiaomi's investment in SCY began in November 2023. At that time, Beijing Xiaomi Intelligent Manufacturing Equity Investment Fund Partnership and a related entity invested a total of 260 million yuan to acquire shares. It is estimated Xiaomi's portion of this investment was around 240 million yuan.
This investment was not purely financial. The move was described as strategic to extend the industrial chain. Furthermore, Xiaomi appears on SCY's customer list, indicating a business partnership.
A deeper financial link exists through supply chain financing provided by Xiaomi Finance (Hong Kong) Co., Ltd. to SCY for wafer procurement. Outstanding balances under this facility were 129 million yuan, 37 million yuan, and 153 million yuan for 2023, 2024, and 2025 respectively, with corresponding interest expenses. Thus, the Xiaomi ecosystem is involved as a shareholder, customer, and creditor.
Nevertheless, in May 2026, roughly a month before the prospectus was formally disclosed, the Xiaomi fund sold 13.12858 million shares at 18.31 yuan per share, fetching about 240 million yuan. The prospectus attributes this to Xiaomi's "own capital needs," but such a last-minute cash-out inevitably raises market questions about the company's investment value.
Post-sale, the Xiaomi fund's stake fell to 4.9944%, just below the 5% disclosure threshold, making it the fifth-largest shareholder.
A separate major governance issue involves former Deputy General Manager Chen Weitong. He resigned in July 2024 and was arrested the following month. A first-instance court judgment was issued in March 2026, but as of the prospectus signing date, it was not yet final, and Chen remained in custody.
Chen was an incentive holder in an employee持股 platform and indirectly held a 0.2173% stake in SCY. More notably, three companies he controlled acted as distributors for SCY during the reporting period.
Sales to these related entities totaled 63.7896 million yuan and 54.4853 million yuan in 2023 and 2024, accounting for 3.23% and 2.46% of revenue, respectively. This比例 dropped sharply to 0.13% (5.5391 million yuan) in 2025, and sales ceased by year-end. While the prospectus states these sales were necessary and fairly priced, the合规性 of transactions involving an arrested former executive's firms requires further scrutiny.
Additionally, the company and its subsidiaries faced multiple administrative penalties from tax and customs authorities during the period, including fines for incorrect import declarations and accepting irregular VAT invoices, highlighting internal control weaknesses during rapid expansion.
Financially, SCY frequently borrowed funds from its controlling shareholders and related parties. At the end of 2024, it owed approximately 149 million yuan to Ni Huangzhong and a related entity, though all loans were repaid by June 2025. Such arrangements raise questions about operational independence and self-sustaining cash flow.
Operationally, SCY's revenue for 2023, 2024, and 2025 was 1.977 billion yuan, 2.218 billion yuan, and 4.271 billion yuan, respectively. Net profit attributable to shareholders swung from a loss of 23.8903 million yuan in 2023 to a profit of 29.7082 million yuan in 2024, then surged to 577 million yuan in 2025.
The explosive growth was primarily driven by the embedded storage chip business, whose revenue jumped and毛利率 improved significantly. However, this growth comes with risks of rising costs and inventory buildup. Key raw material prices, such as NAND Flash and DRAM wafers, saw substantial increases in 2025.
The industry is cyclical, and SCY chose to aggressively build inventory. By the end of 2025, inventory book value reached 2.358 billion yuan, accounting for 58.09% of total assets, more than doubling from the previous year. This exposes the company to significant inventory devaluation risk if the industry cycle turns.
The company warns in its prospectus of potential profit declines or losses post-listing due to economic or industry downturns.
This inventory buildup has severely impacted cash flow. Net cash flow from operating activities was negative for three consecutive years: -599 million yuan, -174 million yuan, and -132 million yuan for 2023-2025. By the end of 2025, monetary funds of 463 million yuan were insufficient to cover short-term borrowings of 595 million yuan.
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