Six months after its decade-long shareholder exited, this leading polysilicon company is pursuing an IPO on the STAR Market.

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Recently, Jiangsu Xinhua Semiconductor Technology Co., Ltd. (hereinafter referred to as "Xinhua Technology"), the domestic leader in electronic-grade polysilicon, had its STAR Market IPO application accepted by the Shanghai Stock Exchange, becoming the first IPO project to be accepted in the Year of the Horse.

Boosted by the high prosperity of the semiconductor industry, Xinhua Technology has seen significant performance growth. In the first three quarters of 2025, revenue and net profit attributable to the parent company reached 1.336 billion yuan and 123 million yuan, both surpassing the levels for the entire year of 2024.

For this IPO, Xinhua Technology plans to raise 1.32 billion yuan to invest in several projects, including a 10,000-ton/year high-purity electronic-grade polysilicon industrial cluster and a 1,500-ton/year ultra-high-purity polysilicon project.

However, behind this IPO, which seems perfectly timed with the wafer expansion boom, there are intertwined concerns about capital exit and selective information disclosure.

On the eve of its IPO, Xinhua Technology’s largest “backer” of ten years, the GCL Group, troubled by huge losses in its main photovoltaic business and the backlash from bet agreements, made a “clear-out” exit with more than 1.4 billion yuan.

While expansion has brought rising debt, Xinhua Technology played a “word game” in its prospectus, focusing on asset-liability ratios based on “parent company data” to paint a picture of declining asset-liability ratios.

Whether Xinhua Technology can successfully sprint to a listing is drawing attention.

A Decade-long "Backer" Quietly Exits

Looking back at Xinhua Technology's growth history, it has been imprinted with the “GCL Group” since its inception.

In 2015, GCL-controlled Zhongneng Silicon Industry (hereafter collectively referred to as "GCL Group") and the National Integrated Circuit Fund jointly established Xinhua Technology.

Among them, GCL Group took the lead, holding 50.98% of the shares.

This “industry giant + state team” dual-shareholder start laid the foundation for Xinhua Technology’s entry into electronic-grade polysilicon.

To promote Xinhua Technology's development, GCL Group can be said to have contributed both money and effort.

Xinhua Technology’s first mass electronic-grade polysilicon production line in China, the “Xuzhou Line,” was expanded and upgraded based on GCL’s original line assets; moreover, in 2017, GCL and its affiliates put up land and property as key collateral guarantees for Xinhua Technology’s 900 million yuan syndicated loan.

Thanks to 10 years of industrial resource support from major shareholders, Xinhua Technology gradually grew into a leader in China’s electronic-grade polysilicon sector. According to statistics from the Semiconductor Materials Division of the China Electronic Materials Industry Association, in 2024, Xinhua Technology’s market share in high-purity electronic-grade polysilicon for domestic integrated circuits exceeded 50%, ranking first.

But just before the IPO, GCL Group chose to exit.

In September 2025, GCL Group transferred all its shares in Xinhua Technology, valued at 1.472 billion yuan, to Hefei Guocai No. 3 Private Fund under state-owned China National Building Material, making the latter the largest shareholder.

This was a reluctant exit.

Dragged down by losses in its main photovoltaic business, GCL Group was mired in losses, with net losses for 2024 reaching 4.75 billion yuan.

Under immense pressure to “survive,” monetizing the now-matured Xinhua Technology became GCL Group's best option for a quick “cash recovery.”

After divesting Xinhua Technology in September 2025, GCL Group’s photovoltaic materials business profit in the third quarter of that year reached 960 million yuan, a rare turnaround compared to the massive 1.81 billion yuan loss in the same period of 2024.

Another pressure came from Xinhua Technology's repeatedly delayed IPO journey, which unexpectedly became a burden swallowing GCL Group's profits.

It is worth noting that as early as 2016, when GCL Group brought in outside investors for Xinhua Technology, it signed a bet-for-repurchase agreement: if Xinhua Technology failed to complete its IPO within the stipulated time, GCL Group would be required to repurchase.

However, Xinhua Technology’s IPO timeline kept falling short. After starting IPO counseling in 2022, the listing stalled, forcing repeated extensions of the bet agreement deadline, with the latest supplement extending the IPO deadline to the end of 2026.

Weak cash-generating ability of the main business, combined with the mounting pressure of repurchase, ultimately forced GCL Group to “sell with tears” this semiconductor polysilicon asset.

However, Xinhua Technology's ability to embark on the IPO roadmap only six months after its major shareholder exited is thanks to its unique shareholding governance structure.

According to STAR Market regulations, the issuer must satisfy the requirement that “there has been no change in actual controller in the past two years” before applying for an IPO.

Over the past decade, GCL Group’s holding percentage was gradually diluted from the initial 50.98% down to 24.55% before the exit, resulting in a “no actual controller” equity structure for Xinhua Technology early on.

In this context, the mere change of the largest shareholder did not trigger the regulatory red line of “actual controller change,” thus preserving Xinhua Technology’s eligibility for rapid IPO application.

The Real Leverage Behind Capacity Expansion

Xinhua Technology specializes in electronic-grade polysilicon for semiconductor industries, which is the core raw material for producing semiconductor wafers.

The advantage is that Xinhua Technology covers all applications, including 12-inch and other wafer sizes.

Among them, 12-inch wafers are currently the most mainstream specification, and the main direction for global wafer fab capacity expansion. They accounted for over 75% of the global wafer shipment area in 2024, applied in high-end integrated circuit products such as smartphones, tablets, GPUs/CPUs.

Driven by the AI wave, a 12-inch wafer fab expansion boom has arrived. SEMI predicts that by 2026, the number of mass-produced 12-inch fabs in mainland China will exceed 70, with corresponding capacity rising to 3.21 million wafers per month.

The increase in 12-inch wafer capacity will directly drive the corresponding release of wafer demand.

However, compared to expansion in downstream wafer fabs, polysilicon materials are relatively scarce.

12-inch wafers require extremely high-purity polysilicon, with purity over 11N (99.999999999%), presenting high technical barriers.

Currently, the global electronic-grade polysilicon market is monopolized by a few companies: Germany’s Wacker, US Hemlock, and Japan's Tokuyama; domestically, only Xinhua Technology can achieve large-scale stable supply of electronic-grade polysilicon for 12-inch wafer applications.

Incomplete statistics show that Wacker, Hemlock, and Tokuyama have annual electronic-grade polysilicon capacities of 15,000-20,000 tons, 10,000 tons, and 6,000-8,000 tons, respectively.

Currently, Xinhua Technology's electronic-grade polysilicon capacity is 18,000 tons/year, with Xuzhou and Inner Mongolia lines at 8,000 tons/year and 10,000 tons/year, respectively—already rivaling or surpassing some global major players.

The rapid scale-up in capacity has brought higher financial leverage. To advance the Inner Mongolia production line, Xinhua Technology’s subsidiary Inner Mongolia Xinhua signed a 1 billion yuan, 7-year fixed asset loan agreement with China Construction Bank in 2023.

This increased Xinhua Technology’s overall debt level. Financials show that, for the past three years, Xinhua Technology’s consolidated asset-liability ratio has stayed above 40%.

But when demonstrating its debt-servicing ability and financial structure in its prospectus, Xinhua Technology mainly cited “parent company data” asset-liability ratios.

According to the prospectus, as of year-end 2022 to September 2025, Xinhua Technology's parent company asset-liability ratios were 40.90%, 27.56%, 26.80%, and 25.25%, respectively.

Based on this, the company stated in its prospectus: “The company’s asset-liability ratio (parent company) continued to decline, mainly due to increased capital from shareholders and repayment of long-term bank loans.”

When comparing with peers such as Shanghai Silicon Industry and Xi’an Yicai, Xinhua Technology also used parent company data to demonstrate its asset-liability ratio is similar to peers.

But from an objective financial analysis perspective, comparisons based on parent company data have certain limitations.

Currently, Xinhua Technology’s consolidated asset-liability ratio is nearly 15 percentage points higher than the parent company. The main reason is Inner Mongolia Xinhua, which carries the debt for new capacity, and its debt is not included in the parent company’s statement.

“When assessing the overall leverage and debt risk of capital-intensive companies, omitting the debt data from core expansion subsidiaries often fails to fully reflect the true financial situation,” pointed out a finance professional in Beijing.

Whether Xinhua Technology's use of parent company data for peer comparisons is reasonable and accurate in information disclosure, and whether this becomes the focus of future regulatory inquiries, is under scrutiny.

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