On September 28, Zhaosheng Microelectronics (300782) announced its 2025 Private Placement Prospectus, signaling that the company is a step closer to implementing its 3.475 billion RMB fundraising project. According to the announcement, the company plans to allocate 3 billion RMB for the expansion of its RF chips manufacturing capacity.

In the context of foreign capital dominating the global RF chips front-end market, Zhaosheng Micro is capturing the opportunity for domestic substitution of high-end customized products with this fundraising initiative. The company expects an after-tax internal rate of return (IRR) of 14.17% from this RF chips manufacturing expansion project.

Growth of China’s Integrated Circuit Industry and RF Front-End Solutions

In recent years, particularly since 2018, China’s integrated circuit industry has grown rapidly, with industry scale expanding consistently. According to data from the China Semiconductor Industry Association, the market size of the Chinese integrated circuit industry grew from 653.2 billion RMB in 2018 to 1.0458 trillion RMB by 2024, with a compound annual growth rate (CAGR) of 8.42%, higher than the global growth rate.

The RF front-end industry is a crucial segment of the integrated circuit sector. With continuous advancements in communication technologies, the demand for RF front-end solutions is increasing. The customization, integration, and modularization of RF front-end solutions have gradually become industry trends. According to QY Research, the global market size for RF front-end modules is expected to reach 26.54 billion USD in 2024.

Challenges in the Global RF Front-End Market

Currently, the global RF front-end market is highly concentrated, with manufacturers from the U.S. and Japan dominating the market. According to Yole data, in 2022, Broadcom, Qualcomm, Qorvo, Skyworks, and Murata together occupied approximately 80% of the global market share. Additionally, RF front-end design and manufacturing processes are complex, with high entry barriers. Leading international firms, using the IDM model (Integrated Device Manufacturing), operate across the entire process, from design to manufacturing and testing, establishing a complete industry ecosystem and high technical barriers.

Zhaosheng Microelectronics’ Strategic Move: RF chips Domestic Substitution

In its revised 2025 Private Placement Prospectus, Zhaosheng Micro pointed out that, with the increasingly complex international situation, major smart terminal manufacturers are gradually increasing their procurement from domestic RF chips suppliers. The future of high-end customized product substitution presents vast opportunities for domestic companies. Currently, domestic RF front-end firms mainly operate under the Fabless model, in which chip manufacturing is outsourced to wafer foundries using their generic production lines. This model makes it difficult to achieve specialized processes and customization compared to international RF chips leaders that operate under the IDM model.

Zhaosheng Micro, however, is transitioning from the Fabless model to a Fab-Lite model, which allows it to outsource some manufacturing tasks while maintaining critical production capabilities. This shift forms a complete industry ecosystem from R&D and design to wafer manufacturing, packaging, testing, and sales. The company’s move to establish its own production lines for RF chips manufacturing has led to the creation of customized products that are highly recognized by customers. These products are in strong demand, and the company plans to expand its production capacity to further stabilize the supply of existing products and eliminate external risks.

RF chips Manufacturing Expansion Project and Future Outlook

Zhaosheng Micro plans to raise up to 3.475 billion RMB through its private placement. Of this amount, 3 billion RMB will be allocated to expanding RF chips manufacturing capacity, and 475 million RMB will be used to replenish working capital.

The RF chips manufacturing expansion project aims for a post-tax financial IRR of 14.17% and has an investment payback period of 8.29 years, including a 4-year construction period. The company’s successful execution of this project will contribute to the ongoing transformation of China’s RF chips industry, fulfilling domestic needs for high-end customized products and further enhancing Zhaosheng Micro’s market competitiveness.

Conclusion: The Future of RF chipss in China’s Semiconductor Industry

Zhaosheng Micro’s initiative to expand its RF chips manufacturing capacity represents a crucial step in the domestic production of high-end RF chipss. The success of this project will not only boost Zhaosheng Micro’s position in the market but also foster the growth of China’s RF chips industry, contributing to its ability to replace imported products. As the global market for RF chipss continues to grow, Zhaosheng Micro’s strategic efforts to enhance domestic production will be pivotal to the company’s success and to the broader transformation of China’s semiconductor industry.