What's Behind Innoscience's Rapid Rise to GaN Market Leadership
GaN vendor Innoscience offers products at the price half of that sold by Western competitors including Infineon and EPC, which have sued Innoscience for IP infringement. Innoscience said it has filed an Inter Partes Review with the U.S. Patent and Trademark Office in June to challenge the validity of Infineon’s asserted patents (No. US 9899481).
Recently, Innoscience (Suzhou) Technology Co., Ltd. (hereinafter referred to as "Innoscience") submitted a listing application to the Hong Kong Stock Exchange, with CICC and CMB International as joint sponsors.
Curious about how this company rise up so quickly to challenge the leader in compound semiconductors? Here are some details about Innoscience and its founder:
Innoscience, founded in 2017, is the world's first company to achieve mass production of 8-inch silicon-based gallium nitride (GaN) wafers. It is also the only company globally capable of providing a full voltage range of silicon-based GaN semiconductor products at an industrial scale.
GaN is a wide-bandgap semiconductor with exceptional switching performance, enabling smaller, more efficient, and cost-effective power systems. Its products are used in automotive, data centers, solar motor drives, and consumer electronics.
In terms of revenue, Innoscience ranked first among all GaN power semiconductor companies worldwide in 2023, capturing 33.7% of the GaN power semiconductor market. The company completed its Series E financing in 2023, reaching a post-investment valuation of RMB 23.5 billion.
Math Ph.D. to Start a Semiconductor Business
The founder, Luo Weiwei, earned her Ph.D. in Applied Mathematics from Massey University in New Zealand. Luo worked at NASA for 15 years, advancing from Senior Project Manager to Chief Scientist.
In 2015, during a wave of semiconductor industry professionals returning to China to start businesses, Luo seized the opportunity presented by the development of the third-generation semiconductor industry and decisively returned to China to form a team. In 2017, Luo founded Innoscience.
At that time, only one employee was willing to follow her back to China to start the business, and funding for research and development was slow to materialize, presenting numerous challenges. Somehow, they pulled it through.
Currently, Innoscience’s founder and chairwoman, Luo Weiwei, directly holds 5.9% of the company’s shares and indirectly holds 23.1%. Through agreements, she also controls 5.47% of the shares held by the company’s co-founder, giving her control over a total of 34.48% of the company’s shares.
Moreover, Innoscience’s CEO Wu Jingang holds a Ph.D. in Physical Chemistry from the Lanzhou Institute of Chemical Physics at the Chinese Academy of Sciences and was previously the Vice President of Technology Development at SMIC. CFO Zhong Shan has also held executive positions at several listed companies.
Not Turning a Profit Yet
Innoscience is known to own the world’s largest GaN power semiconductor base, with a production capacity of 10,000 wafers per month. It is the first company globally to achieve mass production of 8-inch silicon-based GaN wafers and remains the only one capable of providing a full voltage range of silicon-based GaN semiconductor products at an industrial scale.
China’s car battery giant CATL became Innoscience’s largest customer in 2023, contributing RMB 1.9 billion in revenue, accounting for 32.1% of the company’s total revenue.
However, Innoscience has yet to turn a profit, with losses over the past three years exceeding the total amount raised in its five rounds of financing. According to its prospectus, Innoscience recorded revenues of RMB 68.215 million, RMB 136 million, and RMB 593 million for 2021, 2022, and 2023, respectively. The company also reported annual losses of RMB 3.399 billion, RMB 2.206 billion, and RMB 1.102 billion for the same periods.
Innoscience attributed its ongoing losses to significant depreciation of production equipment, substantial R&D expenses, and increasing sales and marketing costs. During the reporting period, the company’s sales and marketing expenses were RMB 28.4 million, RMB 69.3 million, and RMB 90.1 million, respectively, while its R&D expenses were RMB 662 million, RMB 581 million, and RMB 348 million, respectively.
The company stated that the reduction in R&D expenses was mainly due to its transition from the R&D stage to large-scale production starting in the second quarter of 2022. During the reporting period, the company’s capacity utilization rates were 72.3%, 69.8%, and 71.8%, respectively.
Through its IPO, Innoscience plans to allocate 15% of the raised funds to R&D and expanding its GaN product portfolio, 50% to expanding its 8-inch GaN wafer production capacity, and the remaining funds to expand its distribution network and for other operational needs.