China's First Domestic EUV Lithography Equipment Stock Makes Another Push for Hong Kong Listing: Why Seek Capital Injection While Holding Hundreds of Millions in Idle Cash?

This article is from Times Weekly, author: Zhu Chengcheng

A new example of the surge in A-share listed companies seeking IPOs in Hong Kong. On March 15, XinQi Microelectronics (688630.SH) submitted its application to the Hong Kong Stock Exchange, marking its second attempt to list in both “A+H” markets since August last year.

XinQi Microelectronics focuses on micro-nano direct-write lithography technology, with products covering PCB, IC substrates, advanced packaging, and mask plates. In April 2021, the company listed on the STAR Market and was dubbed the “First Domestic Lithography Equipment Stock” by the market at the time. According to its prospectus, based on 2024 revenue, XinQi Microelectronics is the world’s largest supplier of PCB direct imaging equipment, with a market share of about 15%.

Research from China Merchants Securities suggests that the accelerated expansion of capacity in the PCB industry by 2025 will lead to rising demand for equipment, increased prices, and opportunities for domestic substitution, resulting in strong stock performance in the PCB equipment sector. Looking ahead to 2026, with the confirmed trend of AI industry development, PCB materials, processes, and architecture will continue to evolve, potentially creating incremental demand for high-end equipment.

Against this backdrop, XinQi Microelectronics’ Hong Kong listing may aim to raise funds to support capacity expansion and R&D. On one hand, the funds are primarily intended for the construction of a second-phase production base in Hefei to increase production capacity and meet growing market demand; on the other hand, they will be used for R&D of PCB direct imaging equipment and semiconductor direct-write lithography equipment. Additionally, part of the funds will be allocated to strengthen sales networks, especially in Southeast Asia, Japan, and South Korea.

However, concerns have also been raised about XinQi Microelectronics’ financial situation. The company announced on March 13 that it plans to use no more than 250 million yuan of idle raised funds and no more than 200 million yuan of its own funds for cash management, investing in high-security, highly liquid principal-protected products. While simultaneously managing cash and pursuing Hong Kong financing, the necessity and timing of fund use have become focal points for the market.

On March 16, Times Weekly reporters contacted XinQi Microelectronics regarding these issues, but the company stated it was “not convenient to comment.” Subsequently, an interview request was sent to their official email, but no reply has been received as of press time.

Capacity expansion reveals operational pressures

Research from Dongwu Securities indicates that profit for equipment manufacturers mainly comes from accelerated capacity expansion by PCB companies. For example, NVIDIA’s main suppliers Shenghong Technology and Huatian Technology have seen continued capital support since Q4 2024. The active expansion by PCB board manufacturers and server OEMs is a core factor driving higher profitability for upstream equipment suppliers.

Driven by industry demand, XinQi Microelectronics’ revenue has shown rapid growth over the past three years. From 2023 to 2025, the company’s revenue is projected to be 829 million yuan, 954 million yuan, and 1.408 billion yuan, respectively; net profits are expected to be 179 million yuan, 161 million yuan, and 290 million yuan in the same period. Overall, revenue has significantly expanded, but profits experienced a temporary decline in 2024 before recovering in 2025.

Changes in capacity directly reflect demand pressures. The company’s first-phase production base in Hefei, operational since 2021, mainly produces high-end PCB direct imaging equipment, wafer-level packaging direct-write lithography equipment, and FPD equipment. From 2023 to 2025, capacity utilization rates at this base were 78.0%, 116.3%, and 145.3%, respectively, remaining high and even exceeding full capacity, indicating that order demand has clearly surpassed existing capacity.

To alleviate capacity bottlenecks, XinQi Microelectronics is advancing the construction of a second-phase base. The project covers approximately 40,400 square meters and entered preliminary trial operation in September 2025. It produces automated production line systems, high-end PCB direct imaging equipment, laser drilling equipment, and packaging and display-related equipment. By the end of 2025, the second phase had 48 automated production lines supporting 96 LDI machines.

The company states that it will gradually transition to full-scale production based on order volume to enhance overall manufacturing capacity and support medium- to long-term growth.

However, operational efficiency and capital utilization issues are emerging amid capacity expansion. The prospectus shows that from 2023 to 2025, inventory levels increased from 309 million yuan to 771 million yuan, with a rising proportion of finished goods. Correspondingly, inventory turnover days extended from 227.5 days to 287.2 days, indicating declining turnover efficiency.

Meanwhile, the collection cycle for accounts receivable remains high. From 2023 to 2025, the company’s accounts receivable turnover days were 318.6, 361.5, and 275.2 days, respectively. Although there was some improvement in 2025, the figure remains long. Coupled with accounts payable turnover of about 200 days, the company’s cash conversion cycle reached 346.6, 404.4, and 351.2 days during these years, generally close to or exceeding one year.

In the context of industry prosperity and capacity expansion, XinQi Microelectronics is in a rapid growth phase, but whether operational efficiency and cash flow can be simultaneously optimized will be key factors affecting growth quality and financial stability.

R&D expenses declining year after year

The prospectus shows that the rapid technological iteration and short update cycles in the direct-write lithography equipment industry make technological innovation a core long-term competitive advantage. Competition is fierce among a few well-resourced international companies from Europe and Japan, which are striving to maintain or expand their market share.

XinQi Microelectronics emphasizes in its prospectus that its products are based on micro-nano direct-write lithography technology, involving multidisciplinary integration of precision mechanics, ultraviolet optics, computer science, graphics processing, pattern recognition, deep learning, and automation control. Due to the complexity of the technology system, long R&D cycles, and high uncertainty, failure to keep pace with technological evolution or achieve expected R&D results could adversely affect its market position.

From an investment perspective, R&D intensity has been decreasing. From 2023 to 2025, R&D expenses were 95 million yuan, 98 million yuan, and 131 million yuan, accounting for 11.4%, 10.2%, and 9.3% of revenue, respectively. Although absolute R&D investment has continued to grow, its proportion relative to revenue has declined each year.

Looking ahead, the company still aims to strengthen its technological capabilities. The prospectus states that XinQi Microelectronics plans to achieve breakthroughs in direct-write lithography technology and intends to expand its R&D team by about 30 to 40 members, with annual salaries ranging from 800,000 to 3 million yuan. The focus will be on product design, development, technological research, and innovation. The company also plans to build a scalable platform-based technology foundation utilizing AI to support sustainable growth and global expansion.

However, compared to its clear talent expansion plans, the use of raised funds for R&D remains somewhat vague. The prospectus only discloses that part of the funds will be allocated to R&D projects, but specific proportions, investment structures, and phased schedules are not detailed.

As of March 17, XinQi Microelectronics closed at 170.54 yuan per share, down 4.45%, with a total market value of 22.467 billion yuan.