Rating: Neutral | Target Price Range: RMB 41.8–51.8 (base-case fair range, midpoint RMB 46.68) | Current Price: RMB 52.98 (2026-10-23 close) | Time Horizon: 6–12 months | Confidence Level: 0.55
Margin of safety: None. On a uniform basis, (base-case fair lower bound − current price)/current price = (41.8−52.98)/52.98 ≈ −21%; the probability-weighted fair value across three scenarios is ~RMB 51.0, essentially flat with the current price (−3.7%). One-sentence conclusion: The upcycle reversal is real, but the current price has largely priced in the base-case path; the opportunity lies after the gross margin confirmation in the Q3 report on 2026-10-30, not now.
China Resources Micro (CRM) is the largest power semiconductor IDM (integrated design–manufacturing–packaging & testing) in mainland China, standing on the eve of the realization of this power semiconductor price-hike cycle in 2026: industry-wide 8-inch supply contraction, compounded by AI server power demand crowding out capacity, drove industry average prices up 15–20% YoY in 2026H1; the company's overall capacity utilization is near full load, with H1 revenue of RMB 6.128 billion (+17.4%) and non-GAAP net profit of RMB 414 million (+51.5%, cross-checked against estimates). The IDM logic of "holding production lines to capture price hikes" as a profit watershed has become visible in peer comparisons (during the same period, Fabless peer StarPower's net profit fell −76%).
But three constraints are equally clear: First, of H1's +113% growth in net profit attributable to shareholders, 42.7% came from non-recurring items (RMB 224 million fair-value gains from Hantiantiancheng's listing plus government subsidies); the two rounds of price-hike letters added only +0.97pp YoY to the blended gross margin (26.62%). Second, the company's equity stakes in two 12-inch fabs drag down earnings by RMB 500–600 million per year under the equity method; the slope of loss reduction in 2027 is the single largest variable for earnings elasticity, and the asset-injection commitment covers only the Chongqing fab and carries preconditions. Third, the current price implies PB of 3.0x and non-GAAP TTM of 115x; back-solving from a reasonable PE of 30–40x implies 2027E attributable net profit of RMB 1.76–2.35 billion, requiring two-year non-GAAP growth of 106% (from actual 2025) — expectations are high and room for error is small. Overall judgment: fairly valued with no margin of safety; neutral and wait-and-see. Whether gross margin clears 27% in the Q3 report on 10-30 is the path watershed: confirmation opens the bull case at RMB 67.8–82.8, while falsification activates the bear case at RMB 35.4–38.9.
Key evidence:
Two reservations must be stated: First, the company's 2025 annual report cites WSTS's forecast for the discrete device market growth in 2026 at only +8.2% (the industry's high growth is storage-driven); the company's +17.4% outperformance blends price elasticity, share gains, and new product ramp, and the price component carries pullback risk in 2027. Second, over the same period, Renesas raised its internal inventory target from 120 days to 150 days (characterized in 2026-09 reports as "precautionary stocking"); in an environment of active buyer stockpiling plus supply contraction, there is no data to split the 9-month order visibility between genuine end-demand pull and precautionary stocking. ON Semiconductor's third price hike landing in October and peers' guidance of high net profit growth support the cycle direction being real, but a falsifiable stance should be maintained on demand sustainability into 2027.
Key evidence:
Key evidence:
Our own base case (2027E attributable net profit of RMB 1.5–1.65 billion) is systematically 10–20% below the consensus of RMB 1.813 billion. This is a subjective judgment: H2 price pass-through remains unconfirmed in reported results, the slope of equity-method loss reduction is uncertain, and sell-side coverage is extremely thin. If the sell side is right, the current price (= consensus × 38.8x) is already reasonably cheap; if our base case is right, the current price is ~12% overvalued. The gap between these two possibilities is precisely the substance of this "Neutral" rating.
Key evidence:
The combined equity-method book value of the two fabs is RMB 4.963 billion (~RMB 3.73/share); a failed ramp would expose the company to impairment risk (a 10%–20% provision would mean a one-time loss of RMB 430–870 million); conversely, if the Shenzhen fab ramps to 40,000 wafers/month as planned in 2027 and the Chongqing fab stays at full production, the annual drag could narrow to −RMB 300–400 million — the single largest elasticity item in the base-case 2027 non-GAAP path of RMB 1.15–1.35 billion.
Key evidence:
The divergence in sub-segment size forecasts must be presented side by side: J.P. Morgan forecasts AI power semiconductors at ~USD 2.7 billion in 2025 → ~USD 16 billion in 2028 (CAGR ~82%), while Morgan Stanley forecasts only USD 10.6 billion by 2030 — a two-year difference and roughly one-third difference in size; Yole's CAGR for power semiconductors overall over 2025–2031 is only 8.7%. The industry inflection direction is credible (Infineon's AI data center power revenue exceeded EUR 700 million in FY2025, nearly 3x growth — independent corroboration), but extrapolating to company revenue on the most aggressive assumptions is premature: whether the 2026 annual report separately discloses data center/server power revenue (moving from "below disclosure threshold" to explicit disclosure) is a testable milestone.
| Metric | FY2023 | FY2024 | FY2025 | 2026H1 (latest) |
|---|---|---|---|---|
| Operating revenue (RMB 100M) | 99.01 | 101.19 (+2.2%) | 110.54 (+9.2%) | 61.28 (+17.4%) |
| Attributable net profit (RMB 100M, disclosed · cross-checked) | 14.79 | 7.62 (−48.5%) | 6.61 (−13.4%) | 7.22 (+113.2%) |
| Non-GAAP attributable net profit (RMB 100M, disclosed · cross-checked) | 11.27 | 6.44 (−42.9%) | 4.71 (−26.8%) | 4.14 (+51.5%) |
| Blended gross margin | 32.22% | 27.19% | 26.38% | 26.62% |
| Attributable net margin | 14.94% | 7.54% | 5.98% | 11.79% |
| Operating cash flow (RMB 100M) | 17.38 | 20.36 (+17.2%) | 20.85 (+2.4%) | 13.91 (+95.1%) |
| Free cash flow (RMB 100M, OCF−CapEx, this report's estimate) | −34.67 | 4.67 | 5.77 | 8.05 |
| Cash-like assets (cash + trading financial assets, RMB 100M, this report's estimate) | — | — | 96.27 | 102.87 |
| Interest-bearing debt (RMB 100M, this report's estimate) | — | — | 1.76 | 1.21 |
| Debt-to-asset ratio | — | 16.53% | 18.71% | 18.14% |
| Weighted average ROE | 7.15% | 3.47% | 2.91% | 3.11% (half-year, not annualized) |
Note: Balance-sheet stock figures (cash-like assets/interest-bearing debt) are from the latest balance sheet dated 2026-06-30; cash-like assets include structured deposits and wealth-management products (trading financial assets of RMB 1.325 billion); restricted cash of only RMB 1,146 is negligible; interest-bearing debt = short-term borrowings + non-current liabilities due within one year + lease liabilities (long-term borrowings/bonds payable are 0). Net cash of ~RMB 10.17 billion (estimated; RMB 7.66/share, 14.4% of market cap).
Reasons for metric changes (items with YoY ≥±20%): ①FY2024 attributable −48.5%/non-GAAP −42.9%: power semiconductor price war + destocking, gross margin −5.0pp YoY; ②FY2025 attributable −13.4%: the company attributes this to the ramp-up of the associate Chongqing/Shenzhen 12-inch fabs — "depreciation from heavy-asset investment had a certain impact on the company's profit metrics" — compounded by recurring government subsidies falling from RMB 216 million to RMB 137 million; ③2026Q1 attributable +296.6%: "a financial asset held by the company listed in Hong Kong in March, with fair-value change gains of RMB 185 million recognized in the period"; ④2026H1 attributable +113.2%: jointly driven by full utilization, price adjustments, and RMB 308 million of non-recurring items; ⑤2026H1 operating cash flow +95.1%: "mainly due to improved profitability and reduced changes in working capital occupation vs. the same period last year"; ⑥FY2023 free cash flow −RMB 3.467 billion: CapEx of RMB 5.205 billion at the peak of 12-inch construction (falling back to the RMB 1.5 billion range from 2024).
2026H1 revenue of RMB 6.128 billion (+17.44%), attributable net profit of RMB 722 million (+113.23%), non-GAAP net profit of RMB 414 million (+51.48%) — all three are disclosed values (cross-checked against estimates). The interim proposal is a dividend of RMB 0.56 per 10 shares (ex-dividend executed on 10-23, the company's first interim dividend since listing). Three takeaways:
Business model in brief: Full IDM value chain (chip design + masks + wafer fabrication + packaging/testing), with asset-heavy manufacturing as the base and products & solutions as the main revenue driver. In the 2026H1 revenue mix, "Products & Solutions" (MOSFET/IGBT/SiC/power ICs, with new-energy-related sectors accounting for 44%) was about 55.7%, and "Manufacturing & Services" (open-foundry + packaging/testing + masks) about 44.3%. Revenue is not subscription-based and fluctuates with the semiconductor price cycle; the company is currently in the early-to-middle stage of a price-upcycle and holds pricing power on supply-tight part numbers (automotive/AI/energy-storage high-voltage products; a company-wide price increase starting at 10% in February), but has weak bargaining power on low/medium-voltage consumer MOSFETs.
Cash content of earnings: OCF/net profit attributable to parent for FY2023–2026H1 was 1.17→2.67→3.16→1.93 — cash flow has consistently and significantly outperformed book profit, mainly because the profit line is suppressed by non-cash items (equity-method losses on 12-inch JVs of −RMB 503 million, asset impairments of −RMB 116 million, inventory write-downs), not by operating deterioration. FCF/net profit was −2.34→0.61→0.87→1.11; the large negative FCF in 2023 was due to the 12-inch capex peak (CapEx of RMB 5.2 billion), while from 2024 onward CapEx fell back to the RMB 1.5 billion level and FCF turned positive with year-by-year improvement. Recurring earnings check: in 2026H1 the gap between net profit attributable to parent and recurring net profit was RMB 308 million (≥15% threshold), with one-off items accounting for 42.7% — core earnings were actually RMB 414 million, up +51.5% YoY, a positive trend but from a low base; in FY2025 government subsidies accounted for 20.7% of net profit attributable to parent (28.4% in FY2024), indicating a relatively high dependence on policy support.
Return on capital: FY2025 ROIC was about 1.7%, annualized about 4.8% in 2026H1, significantly below the roughly 10% cost of capital — over RMB 10 billion in net cash (low yield) and the equity investments in 12-inch lines have diluted returns; the "growth-quality gate" has not yet opened. ROE slid from 14% in 2022 to 2.91% in FY2025; the significance of this cycle lies precisely in whether ROE can return to the 6–8% central range.
CapEx quality: FY2025 CapEx was RMB 1.508 billion vs. depreciation & amortization of about RMB 1.32 billion (ratio 1.14), with the expansion peak behind; no breakdown between maintenance vs. growth capex was disclosed. Based on the D&A scale, maintenance capex is estimated at about RMB 1.3 billion/year. Most expansionary spending on the two new 12-inch lines sits at the equity-investee level (off balance sheet), so consolidated CapEx no longer represents group-wide investment intensity — see the "Industry Characteristics" chapter.
Red flags: ① The two equity-invested 12-inch lines posted a combined net loss of RMB 1.801 billion in FY2025, with equity-method losses continuously eroding consolidated profit; ② Dividend payout ratio of 15–19% (17.7%/19.4%/15.48% for FY2023–25 respectively), no buyback-and-cancellation in the past three years — direct shareholder returns are relatively weak; ③ No abnormal concentration disclosed among the top five customers, but related-party purchases rose from 1.85% to 7.49% of total purchases over three years — pricing fairness needs monitoring.
Consistency between words and deeds: partially delivered. ① The FY2024 annual report pledged "revenue-scale doubling growth" in third-generation semiconductors → FY2025 SiC revenue actually more than doubled, delivered; ② Shenzhen 12-inch "line-through by end-2024 with ramp-up" → still ramping in mid-2026 (planned 40k wafers/month), slower than early guidance, and the company has not given a clear date for full utilization; ③ The FY2025 annual report pledged Chongqing 12-inch to "maintain high utilization" in 2026 → 2026H1 overall utilization was near full, basically delivered. Overall, pragmatic but slow on execution; no systematic overstatement observed.
Shareholder friendliness: neutral to slightly weak. No equity refinancing (no dilution) and no buyback-and-cancellation in the past three years; FY2025 full-year dividend of RMB 102 million (payout ratio 15.48%), and the first interim dividend of RMB 74 million implemented in 2026 — both absolute amounts and payout ratio are low (dividend yield at current price about 0.15%). After the share price pullback in July 2026, investors called for buybacks; the company responded only that it "attaches great importance to market-value management" without launching a plan. A positive: the "Quality Improvement, Efficiency Enhancement and Return Focus" special program has included market-value management in executives' performance assessments.
Risk signals: ① A period of governance turbulence — in 2025 the Chairman (Chen Xiaojun → He Xiaolong) and President Li Hong changed in succession, and on 2026-08-08-25 — rather, 2026-08-25 — Li Yue, an independent director and chair of the Audit & Compliance Committee, resigned mid-term, dropping independent directors below one-third of the board; this vacancy window spans both the Q3 report and annual-report audit periods; ② In March 2026 the board voided certain vesting periods of the 2021 incentive plan (FY2025 company-level assessment "undetermined") — decoupling incentives from performance is a double-edged signal; ③ Several core technical personnel made small-scale share sales within 2026 (a few thousand shares each — negligible in size but a consistent pattern).
| Segment (core operations) | Revenue share | Gross margin | YoY | Business logic in one line |
|---|---|---|---|---|
| Products & Solutions (IDM products) | 55.7% | 22.17% | +16.98% | MOSFET/IGBT/SiC/power ICs, new-energy-related 44%, price war suppressing margins |
| Manufacturing & Services (foundry & OSAT) | 44.3% | 31.97% | +2.24% | Open-foundry + packaging/testing + masks; direct beneficiary of the current price-upcycle |
The gross-margin gap between the two segments is 9.8pp (near the 10pp threshold): Manufacturing & Services is 9.8 percentage points higher, because scarce foundry/OSAT capacity (8-inch capacity shrinking) converts directly into price increases, while the product side is still dragged down by the price war in low/medium-voltage consumer MOSFETs and product mix (consumer share). Gross-profit contribution estimate: by core-operation gross profit, Manufacturing & Services contributes 44.3%×31.97%≈14.2 vs. Products & Solutions 55.7%×22.17%≈12.4 — Manufacturing & Services, despite its smaller revenue share, contributes about 53% of core-operation gross profit: "the profit driver is not the revenue driver." Segment total profit confirms the same direction: wafer fabrication segment total profit RMB 941 million (main profit driver), discrete devices RMB 327 million, IC design RMB 76 million, packaging/testing −RMB 163 million (dragged by the ramp at Run'an/Sipan power packaging; FY2025 packaging/testing revenue +24% but still loss-making). Growth comes from the product side (+17%) while profit elasticity comes from manufacturing — this mismatch means 2027 earnings elasticity depends heavily on "the sustainability of price increases."
Accounting red flags: ① High share of non-recurring items (high severity): 42.7% of attributable net profit in 2026H1, 57.3% in Q1; fair-value gains (Handay QQ (Hantian Tiancheng)) of RMB 267 million are one-off — core earnings must be judged on recurring basis; ② High weight of government subsidies (medium): RMB 137 million recognized in P&L in FY2025, 20.7% of attributable net profit (28.4% in FY2024); ③ Related-party purchases 1.85%→5.42%→7.49% over three years (medium) — purchases from the controlling shareholder's system quadrupled in three years; pricing fairness needs verification; ④ Notes receivable financing +48.7% and accounts receivable +17.4% both outpacing revenue (low); ⑤ Inventory write-down provision balance RMB 305 million, about 12% of inventory (low), reflecting continued inventory-impairment pressure under price competition.
Cross-period consistency: ① OCF/attributable net profit 1.17→2.67→3.16, consistently high — consistent with management's explanation that "D&A + equity-method losses + impairments are non-cash items"; ② Manufacturing & Services gross margin 37.42%→34.34%→31.97%, down for three consecutive years, cumulative −5.45pp — unexplained by the company at segment level (stabilization and rebound from 2026H1 is the point to watch); ③ Overall gross margin 32.22%→27.19%→26.38%, a cliff-drop, then stabilizing at 26.62% in 2026H1 — consistent with the "downstream recovery + price increases" explanation; ④ Asset impairment losses 0.26→0.74→1.16 billion RMB rising over three years, and RMB 67 million in 2026H1 alone — unexplained by the company; consistent with the backdrop of inventory pressure from the price war but with no official narrative.
Current market data (2026-10-23 close): share price RMB 52.98, market cap RMB 70.37 billion, total shares 1.32821 billion. PE(TTM) 67.4x — earnings are at an early cyclical recovery from trough (triple distortion: low recurring base + 12-inch JV drag + high non-recurring share), percentile for reference only; primary anchor PB(MRQ) 3.0x (39th percentile of the past 5 years / 29th of 10 years — not extreme, but must be viewed alongside ROE: at the same 3x PB, 2022 corresponded to ROE of 14%, now only 2.9%); recurring TTM PE 115x; forward: 2026E 54.9x (Huatai: RMB 1.282 billion), 2027E 38.8x (consensus RMB 1.813 billion, n=2, implying +32.5% 2027 growth, PEG 1.19 — but about half of that growth relies on the price-upcycle and loss reduction rather than sustainable growth, so PEG is cross-reference only).
| Peer | PE(TTM) | PB | ROE(FY2025) | 2026H1 attributable profit growth | Key difference |
|---|---|---|---|---|---|
| CR Micro (Huarun Micro) | 67.4 | 3.0 | 2.91% | +113.2% | Largest domestic IDM, dual engines of foundry + products, earnings quality recovering |
| Silan Micro | 67.3 | 3.54 | 3.30% | +94.8% | Larger IDM scale (2025 revenue RMB 13.05 billion) but gross margin only 18.6%, lower earnings quality |
| StarPower Semiconductor | 89.1 | 2.52 | 5.95% | −76.4% | Fabless automotive module leader, squeezed by foundry price hikes, PB at 10-year low zone |
| NCE Power | 42.7 | 3.72 | 9.51% | −0.7% | Fabless MOSFET design, asset-light high ROE, hurt this round |
| Yangjie Technology | 29.7 | 4.24 | 13.75% | +28.2% | Diode IDM, best earnings quality (gross margin 35.7%) |
| Infineon (reference) | — | — | — | FY2026 guidance revenue +11% | Global No.1 (17.3% share), AI power revenue over €700 million in FY2025 |
What expectations does the market already imply? Backing out from a reasonable PE of 30–40x, the current RMB 70.37 billion market cap implies 2027E attributable net profit of RMB 1.76–2.35 billion (35x → RMB 2.01 billion) and sustainable ROE of about 10%; on a recurring basis, about RMB 2 billion — vs. actual FY2025 recurring profit of RMB 471 million, a two-year CAGR of +106%; vs. 2026E recurring of RMB 850 million, a one-year +135%. One-sentence verdict: the current price requires the company to grow true operating earnings from ~RMB 830 million to ~RMB 2 billion within two years and lift ROE from 2.9% back to 10% — i.e., "cyclical price-reversal + 12-inch loss reduction + AI power/SiC volume ramp" all materializing simultaneously; sell-side consensus (RMB 1.813 billion) only sits at the very bottom of the implied range, leaving little room for error.
Three layers of value (EPV): Asset value (floor) = book value per share RMB 17.68 (2026-06-30, including 12-inch equity-investee book value of RMB 3.73/share, which carries impairment risk if the ramp fails); EPV (zero growth; normalized FCFF RMB 1.3 billion / 10% cost of capital + net cash RMB 7.66/share) ≈ RMB 17.4/share (range 16.3–18.4, this report's own calculation); growth option = current price − EPV ≈ RMB 35.5, about 67% of the current price — the current price is mainly supported by the growth-option layer: the aggregate premium paid for AI power/SiC options, 12-inch capacity elasticity, cyclical price reversal, and potential asset-injection expectations. A high growth-option share is not itself a death sentence (a hybrid of cyclical reversal + structural growth), but the growth-quality gate (ROIC vs. cost of capital) is not yet open; this premium depends on the "2027 recurring profit of RMB 1.15–1.35 billion" path materializing and the market sustaining a 38–45x forward tolerance.
Three scenarios and odds (exit-multiple anchoring rationale: base case 37–43x anchored to Yangjie's 29.7x TTM (cleanest peer earnings) and NCE Power's 42.7x, plus its own 5-year median PE of 43.75x, taking a point in between — IDM platform + net cash at 14% of market cap supports a premium over Yangjie; bull case 50–55x anchored to its own 3-year median of 75.3x as historical tolerance, discounted for growth quality; neither anchored to the current multiple):
| Scenario | Probability | Fair-value range | vs. current price | Key swing factors |
|---|---|---|---|---|
| Bear | 30% | RMB 35.4–38.9 (midpoint 37.15) | −33% to −27% (midpoint −30%) | Price increases disproven (gross margin stuck below 26.5%) + AI inventory destocking in 2027H1 colliding with new peer capacity, recurring profit falls back to RMB 600–700 million; PB 2.0–2.2x × BVPS 17.68, extreme 1.8x → RMB 31.8 (−40%); most pessimistic external marker is Goldman Sachs' 2026-09 target of RMB 42.69 (via aggregator, its basis a relative call at a 60x PE cap — not comparable to this cyclical-disproof + impairment scenario, not adopted as a boundary) |
| Base | 45% | RMB 41.8–51.8 (midpoint 46.68) | −21% to −2% (midpoint −13.5%) | Moderate realization of price increases: 2026 attributable profit RMB 1.2–1.3 billion, 2027 RMB 1.5–1.65 billion (recurring 1.15–1.35 billion), Q3 gross margin above 27%, Runpeng loss reduction begins; PB cross-check: end-2027 BVPS RMB 18.5 × 2.5x ≈ RMB 46 converging |
| Bull | 25% | RMB 67.8–82.8 (midpoint 75.1) | +28% to +56% (midpoint +42%) | AI power revenue becomes visible + third round of price increases lands + 12-inch loss reduction beats expectations, 2027 attributable profit RMB 1.8–2.0 billion × 50–55x; still below the optimistic tier of the Huatai/consensus median target of RMB 87.5 |
Probability-weighted fair value is about RMB 51.0, −3.7% vs. current price — the odds structure is nearly symmetric, but the downside tail (−33%) is deeper than the base-case midpoint (−13.5%); the safety cushion rests mainly on net cash and book value per share rather than earnings.
Our own earnings forecast (reconciliation anchor): 2026E revenue RMB 12.5–12.8 billion (+13%~+16%), attributable profit RMB 1.23–1.32 billion (recurring 810–900 million + non-recurring 380–420 million); 2027E revenue RMB 14.0–15.0 billion, attributable profit RMB 1.5–1.65 billion (recurring 1.15–1.35 billion). Key assumptions: H2 gross margin 27.5–28.5% (two rounds of price increases passing through + material-cost offsets), equity-method drag of −RMB 500–550 million per year, conservative H2 non-recurring of RMB 90–180 million (two-way volatility in Hantian Tiancheng's share price); in 2027, Shenzhen 12-inch ramp + SiC/AI share rising to ~10%, gross margin 28–30%, equity-method losses narrowing to −RMB 300–400 million. The company gave no quantitative guidance; vs. Huatai's RMB 1.282 billion, broadly consistent; vs. consensus RMB 1.813 billion, 9–17% lower (more conservative on the pace of loss reduction and the fade of non-recurring items).
Conclusion: fairly valued, no margin of safety — assess quality and price separately. Quality is above average (IDM platform + 12-inch depth + net cash of RMB 10.17 billion (estimated) + central-SOE background), but the price is not cheap (elevated implied expectations, 115x on recurring basis). An upgrade to undervalued requires "2027 recurring profit of RMB 1.2 billion+ and gross-margin trend above 28%"; a downgrade to overvalued requires "Q3 gross-margin disproof or stalling 12-inch loss reduction." The current position is "wait for event confirmation, not immediate allocation."
Industry size: The power semiconductor market must be cited by measurement scope (this report uses Tier-1 sources as headline figures): under the power discrete + power module scope, the 2025 market is approximately USD 32.5 billion (cited in Infineon's FY2026Q3 results/Yole), and Yole forecasts a 2025–2031 CAGR of 7.1% to USD 41.3 billion — steady growth within a mature market; among segments, SiC devices reach approximately USD 3.7 billion in 2025 and USD 11.0 billion in 2031 (Yole, CAGR 20%), the fastest-growing sub-segment; the broader scope including power ICs (Omdia) puts the 2025 global market at USD 75.5 billion. The China market in 2025 is approximately RMB 187.1 billion, accounting for over 33% of global demand (Jiwei Consulting); under Omdia's scope, China is USD 29.1 billion, or 38.5% — under both scopes China accounts for more than one-third of the global total, making it the largest single market. The industry's path over the past three years: USD 35.7 billion in 2023 → USD 32.3 billion in 2024 (−9.5%, destocking + price war) → USD 32.5 billion in 2025 (stabilizing) → 2026 sees volume and price rising together, with Chinese players' share climbing against the trend.
Quantified chain of the demand inflection (AI power): Driving variable — global AI server incremental power chip wafer starts in 2026 account for approximately 3–4% of global 8-inch capacity (company IR); the AI power semiconductor sub-market grows from approximately USD 2.7 billion in 2025 to approximately USD 16.0 billion in 2028 (J.P. Morgan, CAGR ~82%; Morgan Stanley's conservative estimate is USD 10.6 billion by 2030 — both scopes presented side by side); unit content — the power semiconductor value per AI server is nearly 5x that of a traditional server (company IR) to 8–18x (Morgan Stanley), with 15–25 DrMOS devices arranged around each AI accelerator card, rack power density rising from several kilowatts to tens of kilowatts, and power architecture shifting to 800V HVDC (NVIDIA announced volume deployment from 2027, first shipments in 2026Q3); penetration ramp — 2026Q3 to 2028 is the steep penetration phase (Infineon's AI power revenue: over EUR 700 million in FY2025 → ~EUR 1.5 billion in FY2026E → ~EUR 2.5 billion in FY2027E, an independently verifiable slope); company share — CR Micro's superjunction MOS G4, DrMOS, and 12-inch BCD cover the full server power chain; products are "already in the volume ramp-up stage" but revenue share is undisclosed. The industry side of the chain has been quantified; the company-share side awaits disclosure in the 2026 annual report. The second chain on the automotive side: BEV power semiconductor content is 5–10x that of ICE vehicles; "800V+SiC" penetration reaches ~15% in 2025 and, aided by substrate price declines (6-inch automotive-grade substrates fell from RMB 4,000+/wafer in 2024 to bottom around RMB 2,000 in 2025 and are now recovering), is moving down into the RMB 200,000–300,000 vehicle segment.
Value chain and value distribution: Upstream — silicon wafers/epi wafers (8-inch silicon wafer prices up ~10% since 2025H2), SiC substrates + epi (60%+ of SiC device cost, SICC leads globally with 27.6% share in conductive substrates), equipment (lengthening lead times for 8-inch etch/deposition gear, second-hand lithography tools hard to find); midstream — three models: IDM (Infineon/Silan/CR Micro/Yangjie) vs Fabless + foundry (StarPower/NCE) vs specialized module makers; downstream — consumer (price war persists) → industrial/grid (stable volume and price) → solar/storage (high-voltage shift in storage PCS) → NEVs (dozens of main-drive modules per car) → AI data centers (the newest and strongest engine). The iron law of value distribution in this cycle: who captures the price-hike profits is determined by "who owns the capacity + product tier" — in 2026H1, IDM players CR Micro's net profit rose +113% and Silan's +95%, while StarPower, which outsources capacity, fell −76% (gross margin down to 20.6%) and NCE −0.7% — "having in-house capacity or not" became the profit watershed, with gross margin retained by integrated capacity holders. CR Micro holds a dual identity of IDM + open foundry, sitting at the core of midstream manufacturing, with strong bargaining power over tight part numbers and weak power over consumer part numbers, and partially absorbing upstream cost increases internally; relative to Infineon (system-level AI power solutions, co-defining 800VDC with NVIDIA), it remains primarily at the chip/device level and is climbing toward module and system level.
Supply-demand and competitive landscape: On the supply side, 8-inch capacity is shrinking — TSMC is shutting legacy 8-inch fabs from 2025H2 and Samsung cutting output in 2026 (together about one-tenth of global 8-inch capacity); global 8-inch total capacity in 2026 falls −2.4% YoY; new capacity mostly comes online in late 2026–2027 and is constrained by equipment lead times; domestic 6/8/12-inch power lines generally run at >90% utilization. On the demand side, structural divergence: automotive IGBT/SiC/AI power modules are in shortage (lead times 40+ weeks, hot part numbers 52 weeks), while low/mid-voltage consumer MOSFETs remain oversupplied. The industry has moved from the across-the-board price war of 2024 into a 2026 with both volume and price rising, but the price hikes are mixed with forward stockpiling (Renesas raising its inventory target from 120 to 150 days); true demand will be discerned when 2027 orders materialize — this is the key to judging whether the cycle peaks in 2027H1. Concentration: global CR5 (Infineon 17.3%/onsemi/ST/Mitsubishi/Fuji, Omdia 2025); Silan at 4.2% enters the global top five for the first time, and CR Micro ranks ninth globally (Yole revenue scope), the largest Chinese MOSFET maker by scale (the only domestic player in the global top ten, with ~3.0% share); domestic substitution rate for automotive IGBT was ~20% in 2024, and 35–54% across MOSFET segments — substantial substitution runway remains. Entry barriers: automotive qualification (AEC-Q101/IATF16949, 2–3 year validation cycles), capital-intensive fabs (any misstep means a gap), specialized process know-how (driven by voltage/reliability/yield rather than line width), and customer stickiness. Substitution threats: SiC vs Si-IGBT (−80% total energy consumption under the same conditions), GaN vs mid/low-voltage Si MOSFET — for CR Micro these are both threats and a second growth curve.
Cycle and regulation: The cycle is in the "early-to-mid upswing": 8-inch foundry utilization rising from 75–80% in 2025 to ~88% in 2026 (global mature-node utilization may reach 91% by 2026Q4, Sigmaintell); leading price indicators — onsemi's third price hike effective 2026-10-10, with the company stating elevated prices will hold through 2027, Taiwanese players planning another 10–15% hike on spot orders, SiC substrates bottoming out and recovering; the leading indicators of a cycle peak are the concentrated release of peers' 8/12-inch new capacity in 2027H1 and a decline in major customers' inventory days. Regulatory: the Big Fund Phase III (registered capital RMB 344 billion, exceeding Phases I and II combined) allocates ~70% to equipment and materials localization — the more realistic transmission to the company is capital co-investment by the China Resources system/local funds in the 12-inch line (the Runke Fund model); the US BIS "50% affiliation rule" has been delayed to 2027-01-10, and Japan's third round of equipment controls takes effect 2026-08-01 (case-by-case approval) — the company's core business in mature-node power devices has no direct export-ban exposure, but lengthened equipment/spare-part acquisition cycles are a real constraint on the 12-inch ramp; at the same time, controls are forcing downstream players toward localization, on balance more beneficial than harmful for the domestic power semiconductor chain.
Company positioning in the industry: Chasing Infineon, leading domestic peers — a Chinese player in the global first tier of power semiconductors (ninth globally per Yole), the largest domestic IDM, and China's largest MOSFET maker by scale; share trending upward (in this round, significantly greater elasticity than Fabless peers amid full utilization + price hikes). Moat sources: the design-manufacturing-assembly integrated capacity platform (the beneficiary structure of this cycle's profit watershed), the 12-inch specialty process platform + power IC integration, funding and Big Fund synergy from its SOE background, and the long-term qualification barriers with automotive/industrial customers. Scope discrepancies to note: the company's annual report, citing Omdia, claims "second among Chinese power semiconductor companies, first in China MOSFET," while the Yole revenue scope ranks it ninth globally (the two scopes differ in statistical coverage — the former is a China-region ranking, the latter a global revenue ranking; both are accepted).
The defining dimension of a power semiconductor IDM is not PE but the mismatch among capacity, utilization, and the depreciation cycle — a generic framework will miss this layer:
Capacity map (as of 2026H1): Self-owned 6-inch ~230k wafers/month + 8-inch ~140k wafers/month (overall utilization near full); equity stake in the Chongqing 12-inch line (Runxi) at ~30k wafers/month, already at full production; equity stake in the Shenzhen 12-inch line (Runpeng) accelerating its ramp (planned 40k wafers/month). Mask platform 40nm entering volume production.
CapEx cycle: Consolidated CapEx plunged from RMB 5.205 billion in 2023 (peak of 12-inch construction) to RMB 1.569/1.508 billion in 2024/2025, and only RMB 586 million in 2026H1 — the expansion peak has passed; the company has entered a cash-harvest phase of "curbing CapEx, harvesting utilization" (FCF turned from −RMB 3.47 billion to an annualized ~RMB 1.6 billion in 2026H1). But the group's true investment intensity is higher than the consolidated figure: expansionary spending on the two 12-inch lines sits at the equity-investee level (off balance sheet), with CR Micro absorbing losses under the equity method without consolidating depreciation — a double-edged structure: capex and balance-sheet pressure are shared with China Resources Group/the Big Fund, at the cost of an annual equity-method loss of RMB 0.5–0.6 billion, minority shareholders siphoning future income, and impairment exposure on the RMB 4.96 billion book value. The economics of the 12-inch line: at full production, diluting upfront depreciation, unit cost is significantly below 8-inch (die output per wafer ~2.2x that of 8-inch); the high-generation SGT G5/G6 and SJ G4 are all based on the 12-inch platform — every additional 10k wafers/month on the Shenzhen line corresponds to annualized revenue increments of hundreds of millions of yuan, and directly unlocks delivery capability for high-margin AI power/automotive products; conversely, if the ramp stalls, losses from upfront depreciation will keep widening (Runpeng lost RMB 1.198 billion in FY2025).
Implications for this report's valuation: An IDM's earnings elasticity comes from the three-factor resonance of "utilization × price − depreciation"; currently utilization is full, price pass-through has begun, and from 2027 the depreciation curve will be diluted by full production — this is the entire mechanism behind the base-case jump in non-GAAP net profit from RMB 850 million to RMB 1.15–1.35 billion in 2027, and also why that jump assumption is most fragile (a reversal of any factor gives it all back).
Overall rating: Neutral, confidence 0.55, time horizon 6–12 months. CR Micro is one of the best-positioned domestic names in this power semiconductor price-hike cycle (IDM at full utilization + net cash of RMB 10.17 billion + 12-inch depth + SOE consolidation platform), but the current price of RMB 52.98 already carries a 13.5% premium to the base-case fair-value center, with probability-weighted fair value roughly equal to the current price — the odds are unfavorable and the decisive hand has yet to be revealed. Quality and price assessed separately: quality above average; price fair to expensive.
Strategy: ① Do not chase at current levels; ② if the Q3 report on 10-30 shows gross margin ≥27% and rising QoQ — confirming price hikes flowing into the P&L, re-rate toward the upper edge of the base case/bull case; ③ if the stock pulls back below the base-case center of RMB 46.7 with no new negative news — a margin of safety begins to emerge, reassess position; ④ if it touches RMB 67.8 (lower edge of bull case) — evaluate taking profits.
Risk and catalyst alerts: The primary falsification conditions are Q3 gross margin failing to exceed 27%, or in January 2027 overseas price lists retreating / major customers' inventory falling from 150 days (stockpiling ebbing); downside risks are concentrated in widening losses or impairment at the equity-method 12-inch lines (RMB 430–870 million exposure), stalling headline growth after non-recurring gains taper, and high-beta overshoot in a sector-wide drawdown. Upside catalysts in chronological order: 10-30 Q3 report → Q4 third price-hike letter → AI power revenue made explicit in the 2026 annual report → 2027 Runpeng loss reduction / injection expectations.
Price anchor of this report: RMB 52.98 (2026-10-23 close, completed_close); unless otherwise noted, financial data is as of 2026-06-30 (2026 interim report, unaudited). Report date: 2026-10-26. This report is an independent research estimate and does not constitute investment advice.