Summary of Key Points
Suzhou Guanli Technology is a low-profile semiconductor equipment supplier that focuses on two main areas: providing high-purity chemical supply systems for wafer factories (responsible for purifying and transporting various cleaning chemicals used in the manufacturing process) and producing wafer cleaning equipment. Its customers include nearly all major domestic semiconductor companies such as ChangXin Memory, SMIC, and Yangtze Memory. The company's revenue increased from 843 million yuan to 1.33 billion yuan between 2023 and 2025, making it the leading provider of liquid chemical supply systems in the domestic semiconductor industry. It is currently preparing for an IPO on the GEM board to raise 1.5 billion yuan. However, there are two underlying concerns: first, a significant portion of its earnings (25% of its revenue in 2025) is in the form of accounts receivable; second, it relies on the expansion cycle of the memory industry, which could affect both orders and cash flow if the industry slows down.
Detailed Analysis
1. What exactly does Guanli Technology do? — The cleaning experts that supply “vessels” for wafer factories
Chip manufacturing is highly sensitive to contamination: A single wafer goes through hundreds of processing steps, each of which requires cleaning to prevent particle or impurity residues from rendering the chip unusable (for example, the 7nm manufacturing process demands a level of cleanliness at the atomic level). Cleaning processes account for 30% of the total manufacturing time and are the most time-consuming.
Guanli Technology's business revolves around cleaning:
- First product category: High-purity chemical supply systems: These systems purify and mix high-purity chemicals such as sulfuric acid and hydrofluoric acid, then deliver them to each production device through sealed pipelines (similar to how blood is transported through the body’s veins), ensuring no contamination throughout the process. If there are issues with this system, it can result in reduced chip yield or even complete wafer failure.
- Second product category: Wet-process cleaning equipment: This equipment is used for directly cleaning and etching the wafer surface to remove impurities.
In short, Guanli Technology's products are essential for the entire manufacturing process, from the introduction of chemicals to the production stage and all the way to waste recycling, forming the “lifeblood” of chip manufacturing.
2. How did it manage to secure contracts with giants like ChangXin and SMIC? — By riding on the wave of expansion
There are two key reasons why Guanli Technology has been able to enter the supply chains of these large companies:
- Irreplaceable products: Its systems are essential infrastructure that must be in place before wafer production can begin (they are installed earlier than other equipment). Before a wafer factory can start operating, it needs to establish clean rooms and high-purity chemical systems; therefore, whenever a wafer factory expands, Guanli Technology gets the opportunity to secure contracts first.
- Opportunity for domestic substitution: Domestic wafer manufacturers (such as Yangtze Memory in its third phase of expansion) are increasing their use of domestically produced equipment (Yangtze Memory has already reached over 50% usage), and Guanli Technology’s products meet this demand, making it the preferred choice.
This combination of factors contributed to a 58% increase in revenue over three years, as the domestic semiconductor industry's expansion gave it a significant advantage.
3. Revenue growth, but cash flow challenges: 25% of every 100 yuan earned stays with customers
Despite its impressive revenue figures, Guanli Technology faces cash flow issues:
- High accounts receivable: As of 2025, the company had 338 million yuan in accounts receivable, accounting for 25% of its annual revenue. This is because its products are customized (each wafer factory’s production line requires a tailored system), and the delivery cycle takes several months. Additionally, the acceptance process with these large customers is strict, giving them significant bargaining power, delaying cash collection.
- Capital tied up in projects: The cost of fulfilling contracts accounted for 45% of its current assets (759 million yuan) in 2025. These funds were invested in purchasing materials, manufacturing equipment, and construction, but they cannot be recognized as revenue until the projects are completed and accepted.
In essence, most of the company's earnings are either tied up or locked into unfinished projects, putting significant pressure on its cash flow.
4. The volatility of the memory industry: How long can this boom last?
Guanli Technology’s business is heavily dependent on the expansion of the memory industry. In recent years, the demand for AI servers has driven up prices for memory chips, leading to increased orders from companies like ChangXin and Yangtze Memory. However, the industry is now facing uncertainties:
- Diversifying demand: The consumer market (mobile phones, PCs) is showing signs of weakening demand, slowing down the pace of price increases in the memory sector, which is currently supported mainly by AI servers.
- Cyclical risks: The memory industry is highly volatile, with cycles of price increases, expansion, overproduction, price drops, and reduced production. For example, SK Hynix’ stock price dropped by 15% in a single day, reflecting market concerns about whether AI demand will sustain new capacity.
If the memory industry slows down or expands more slowly, Guanli Technology’s orders may decrease, and the funds invested in projects may become harder to recover. This is one of the reasons why the company is seeking additional funding through its IPO.
Conclusion
Guanli Technology is an “invisible champion” in the semiconductor supply chain, achieving rapid growth by leveraging the expansion of major companies. However, it faces challenges related to capital constraints and industry cycles. Its IPO marks a milestone in its development but also highlights the growth and challenges faced by domestic semiconductor upstream companies in the context of domestic substitution. Whether it can continue to grow in the future depends on both the trends in the memory industry and its ability to manage its cash flow issues.