InnoScience Makes Progress In Patent Dispute, But Growing Competition Remains Bigger Threat

Benzinga_recent_news12-09

The U.S. International Trade Commission ruled largely in the GaN semiconductor maker's favor last week in a patent dispute with Infineon, though a final decision is still pending By Hugh Chen Nearly ...

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Nearly two years after being sued by an industry titan for patent infringement, a major cloud hanging over power semiconductor makerInnoScience  Technology Holding Co. Ltd. appears to be lifting, easing a major distraction for the company and investors.The legal dispute withInfineon Technologies, which dates back to March 2024, posed a significant risk to InnoScience, even as it listed its shares in Hong Kong about a year ago. The company currently mostly does business in China, but an unfavorable ruling could have barred it from selling some of its products in the U.S. in the future.The GaN power semiconductor market is undoubtedly on the rise. The market is expected to grow from 2.7 billion yuan  in 2024 to 19.2 billion yuan in 2028, representing 63% annual growth, according to a November note from Bank of ","collect":0,"end_time":0,"defaultTopTitle":"benzinga.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","LU2065732104.USD":"ALLSPRING (LUX) WF GLOBAL SMALL CAP EQUITY \"I\" (USD) ACC","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","LU0557290698.USD":"施罗德环球可持续增长基金","LU2028103732.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"AMG\" (USD) INC","LU0158827781.USD":" ALLIANZ GLOBAL SUSTAINABILITY \"AT\" (USD) ACC","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU0528227936.USD":"富达环球人口趋势基金A-ACC","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","LU2089283258.USD":"安联环球可持续基金Cl AM Dis","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","BK4097":"系统软件","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU0971096721.USD":"富达环球金融服务 A","LU1548497426.USD":"安联环球人工智能AT Acc","BK4581":"高盛持仓","LU0912757837.SGD":"JPMorgan Investment Funds - Global Income A (mth) SGD-H","PRGS":"Progress Software Corporation","LU1791710400.SGD":"Fidelity Global Demographics A-ACC-SGD","LU0106831901.USD":"贝莱德世界金融基金A2","LU2133065610.SGD":"JPMorgan Investment Funds - Global Dividend A (mth) SGD","LU0314104364.USD":"MANULIFE GF AMERICAN GROWTH \"AA\" (USD) INC","LU0795875086.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU0882574139.USD":"富达环球消费行业基金A ACC","LU2347655156.SGD":"JPMorgan Investment Funds - Global Income A (icdiv) SGD-H","LU0006306889.USD":"SCHRODER ISF US LARGE CAP \"A\" (USD) INC AV","BK4534":"瑞士信贷持仓","LU1244550494.USD":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","BK4585":"ETF&股票定投概念","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","BK4127":"投资银行业与经纪业","LU0106261372.USD":"SCHRODER ISF US LARGE CAP \"A\" ACC","LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","LU0225283273.USD":"SCHRODER ISF GLOBAL EQUITY ALPHA \"A\" (USD) ACC","LU2271345857.HKD":"ALLIANZ GLOBAL SUSTAINABILITY \"AT\" (HKD) ACC","BK4516":"特朗普概念","LU1244550577.SGD":"FTIF - Franklin Global Multi-Asset Income A (Mdis) SGD-H1","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","BK4504":"桥水持仓","LU0795875169.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD-H","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","LU1732800096.USD":"摩根大通环球收益基金A (irc)","BK4588":"碎股"},"translate_title":"InnoScience在专利纠纷中取得进展，但日益激烈的竞争仍然是更大的威胁","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PRGS":1.5},"content_text":"The U.S. International Trade Commission ruled largely in the GaN semiconductor maker's favor last week in a patent dispute with Infineon, though a final decision is still pending\nBy Hugh Chen\nNearly two years after being sued by an industry titan for patent infringement, a major cloud hanging over power semiconductor maker InnoScience (Suzhou) Technology Holding Co. Ltd. (2577.HK) appears to be lifting, easing a major distraction for the company and investors.\nThe legal dispute with Infineon Technologies (IFX.DE), which dates back to March 2024, posed a significant risk to InnoScience, even as it listed its shares in Hong Kong about a year ago. The company currently mostly does business in China, but an unfavorable ruling could have barred it from selling some of its products in the U.S. in the future.\nThat potential roadblock appeared to dissipate somewhat last week when the company announced that the U.S. International Trade Commission (ITC) ruled partly in its favor regarding one of the two patents in the case. InnoScience said its products related to the other patent also did not infringe on that patent. It stated the ruling \"further clarifies the status of InnoScience's relevant intellectual property and will clear the way for its future global development.\"\nInfineon saw things a bit differently, pointing out that the ITC found in its favor regarding one of the patents in the lawsuit, according to its own statement. It added a final decision is expected on April 2 next year, and confirmation of the initial decision could lead to a ban of related InnoScience products to the U.S.\nInvestors appeared to side with InnoScience in determining the ITC's decision was largely positive for the Chinese company. InnoScience's stock initially fell 1.5% the day of the announcement last Wednesday, but have come roaring back since then and now trade nearly 10% above pre-announcement levels.\nSince its founding in 2017, InnoScience has been a key driver of a niche but promising technology in the power semiconductor industry called gallium nitride (GaN). The technology offers advantages over traditional silicon-based semiconductors, including higher efficiency and faster switching speeds, and InnoScience has been a stronger promoter of the material.\nThe company's technological leadership in the technology – including being the first to mass-produce 8-inch GaN wafers – positions it to capture growth in the small but quickly expanding GaN market. However, investors should remain cautious, as fast-growing competition remains a major challenge to the company as others crowd into the space.\nThe GaN power semiconductor market is undoubtedly on the rise. The market is expected to grow from 2.7 billion yuan ($382 million) in 2024 to 19.2 billion yuan in 2028, representing 63% annual growth, according to a November note from Bank of America. InnoScience is currently the leader in GaN power semiconductors, with 30% of the market last year – nearly twice second-place Navitas (NVTS.US) at 17%, according to Bank of America.\nSeveral factors put InnoScience in strong position going forward. Central among them is its integrated device manufacturer (IDM) model, which means the company handles everything from design to manufacturing to marketing of its products.\nThis approach gives InnoScience greater control over its supply chain and production quality compared to the fabless model, where manufacturing is outsourced to third parties. The model's major downside is its far higher costs, since companies must spend huge amounts to build expensive production lines. But in this case, the advantages of vertical integration are becoming increasingly apparent. Navitas uses the fabless model and is currently scrambling to find new manufacturing partners after production partner TSMC announced plans to exit the GaN manufacturing business in 2027.\nInnoScience's business model also gives it a more diversified revenue stream, since it not only makes end products like GaN chips and modules, but also wafers – the raw material out of which chips are \"carved.\"\nTwo recent supply deals underscore this advantage. The latest, announced last week with U.S.-based ON Semiconductor, and an earlier similar agreement with Europe's STMicroelectronics, will see InnoScience supply its GaN wafers to both companies. These partnerships should help diversify InnoScience's geographic revenue mix, which currently remains heavily concentrated in China.\nMorgan Stanley, in an October note, projected that InnoScience's revenue would outpace overall GaN market growth, expanding 66% annually through 2027. It attributed this outlook largely to the company's technological leadership and the advantages of its IDM model.\nThat growth trajectory is already evident in the company's recent results. In the first half of 2025, InnoScience's revenue jumped 43.4% to 553.4 million yuan ($71.1 million). More significantly, the company achieved its first ever positive gross profit margin of 6.8%.\nInnoScience still posted a net loss of 429 million yuan for the period, though this represented an improvement from the 488 million yuan loss in the prior-year period.\nAnother major positive development for InnoScience came in July, when global AI chip leader Nvidia announced it had selected InnoScience to supply it with 800V DC power solutions for its Rubin Ultra GPU, which is slated for commercialization in 2027. This represents an important breakthrough for InnoScience into the data center segment, one of the fastest-growing areas for GaN power semiconductors.\nBuoyed by these positive developments, InnoScience's stock has delivered impressive returns. Its shares climbed steadily after its Hong Kong listing last December, more than tripling from their IPO price of HK$30.86 to hit a peak of nearly HK$100 in early September, before moderating to their latest close of HK$80.85 last Friday.\nHowever, investors should be aware of significant downside risks, led by intensifying competition. InnoScience is aggressively expanding capacity, targeting 60,000 wafers per month by 2027, up from 13,000 in the first half of this year. But the company is hardly alone in this buildout. Morgan Stanley forecasts that global GaN capacity will surge from 100,000 wafers per month in 2024 to 345,000 6-inch wafer equivalents by 2029.\nSuch rapid buildups are quite common in the chip sector, which is famous for its regular boom-bust cycles due to overbuilding. Overall industry utilization is expected to improve but remain below 60% over the next five years, suggesting persistent pricing and profitability pressures across the GaN market, according to Morgan Stanley. As a result, the investment bank expects InnoScience's gross margin to improve only at a moderate pace in 2026 and 2027, with the company losing money through at least next year.\nAt the end of the day, InnoScience's potential to become a dominant force in the fast-growing GaN market is promising but far from assured. While it enjoys technological leadership and a diversified business model, the path to profitability remains uncertain amid surging industry capacity and persistent pricing pressures. The ITC ruling appears to be an important step forward for the company, yet that won't do anything to address the bigger competitive issues.\nBenzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.12","shortVersion":"4.35.12","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2590357020","isCrawlerRequest":true}