US Stock IPO Preview | With $21.78 million in revenue, Jiewei Chip aims to be the "water seller" for metaverse infrastructure

The global metaverse industry is experiencing a spiral ascent cycle of hardware-software-ecosystem. According to the latest data from IDC, global AR/VR device shipments are expected to reach 76.7 million units in 2024, a year-on-year increase of 32.8%, driving a surge in demand for customized GPUs/CPUs.

Against this backdrop, the metaverse in China has also gone through a path of rising fervor, retreating, and now stabilizing development. However, whenever a trend emerges, there will be a large number of "water sellers," who may become the future "hidden champions."

Recently, the parent company of Chinese metaverse computing infrastructure product and service provider Jiewei Chip Technology Co., Ltd., Semidux (Cayman) Holding, updated its IPO application with the U.S. Securities and Exchange Commission (SEC), planning to list on NASDAQ under the stock code "JIE." It submitted a confidential filing to the SEC on June 6, 2023, and later publicly disclosed its prospectus on January 26, 2024.

Rapid Revenue Growth, Yet Cash Flow Under Pressure

According to Zhitong Finance APP, Jiewei Chip is a supplier and service provider of metaverse computing infrastructure, with main products including chips, customized servers, and cloud gaming terminals, as well as computing resource optimization software, technology, maintenance services, and server leasing to meet the ever-changing demands of the metaverse industry.

Through independent research and development and sales of upstream customized chip products, midstream customized server products, and downstream cloud gaming terminal products, it has established a vertically integrated industrial chain business model. However, being in the rapidly changing metaverse track seems to have destined Jiewei Chip to be closely linked with the word "volatility."

From the financial reports, in the past fiscal years 2023, 2024 (fiscal year ending March 31), and the first six months of 2025 (ending September 30, 2024), Jiewei Chip's revenues were $9.5387 million, $21.7808 million, and $9.8872 million, respectively, with corresponding net profits of -$809,100, $1,357,500, and $538,300, indicating that both its revenue and profit broke through in the 2024 fiscal year.

From the revenue structure, hardware sales are the core driving force. In the 2024 fiscal year, the sales revenue from chips, customized servers, and cloud gaming terminals accounted for 80.9%, a significant year-on-year increase of 151.4%, making it an undeniable "pillar." Among them, the chip business's contribution is particularly prominent, with its self-developed "Star One" and "Star Series" chips targeting cloud computing and cloud gaming scenarios, reducing latency through customized hardware acceleration modules, becoming the key to supporting revenue growth.

In fact, this does not seem surprising, as the rapid expansion of metaverse users and content is expected to drive demand for computing resources to grow exponentially. According to Frost & Sullivan, future cloud computing and edge computing servers will feature characteristics of the metaverse. Resources such as rendering servers for processing adaptive graphics, edge servers, and cloud servers, along with blockchain and low-latency computing, are expected to become mainstream in future metaverse computing According to the company's official website, the Star One customized chip is mainly used for cloud gaming and cloud computing. It adopts advanced semiconductor processes and is equipped with customized hardware acceleration algorithms and modules, significantly reducing computing latency in metaverse scenarios such as cloud computing and cloud gaming. The chip design employs a combination of standard circuits and customized circuits to optimize power consumption, area, and yield.

In addition, the self-developed Star series chips by Jiewei can enhance server performance by fully expanding GPU/FPGA and other computing acceleration cards without replacing existing servers, avoiding issues related to heat dissipation and power supply efficiency concentrated in the internal space of the servers, such as those of graphics processing units (GPUs), and reducing the frequency of server iterations.

However, from the customer perspective, in the six months ending September 30, 2024, four customers accounted for approximately 32.0%, 13.6%, 11.0%, and 10.8% of the company's total revenue, respectively. In the fiscal year ending March 31, 2024, one customer accounted for approximately 45.9% of its total revenue. In the fiscal year ending March 31, 2023, two customers accounted for approximately 54.8% of total revenue.

It is not difficult to see that this excessive reliance on a single customer makes Jiewei's performance highly susceptible to changes in customer demand, posing significant volatility risks. If the company faces the loss of one or more key customers, it will have a substantial adverse impact on its revenue and operating performance.

On the other hand, cash flow pressure remains a concern. As of September 30, 2024, the company had only $990,000 in cash on hand. This IPO fundraising may be an important step to alleviate liquidity pressure and expand R&D investment. Similarly, this will inevitably require Jiewei to not only strive to expand new customer groups and reduce reliance on a single customer in future operations but also to strengthen cash flow management to ensure the company's stable operation.

The Metaverse is Thriving, but Practical Scenarios Await Testing

In recent years, with the support of technologies such as 5G and AR, the metaverse has become a hot topic, spreading rapidly through word of mouth. Its realization through real-time massive information interaction and immersive experiences is based on the continuous improvement of underlying technologies such as communication technology and data processing technology. The rapid adoption of 5G technology in China and the continuous upgrade of computing power will enhance users' immersive experiences and further promote the development of the metaverse.

After years of development, interactive hardware technology has rapidly matured, and various industries are now entering a phase of rapid growth. According to data from PwC, the global metaverse market is expected to grow at a compound annual growth rate of 36%, reaching 303.74 billion yuan (approximately $47.3 billion) by 2025.

However, in the past two years, the enthusiasm for the metaverse has noticeably declined. The current metaverse track still faces the dilemma of "concept heat and slow implementation": the explosion of AIGC has diluted market attention, while the maturity of hardware performance and content ecology has yet to meet user expectations.

Currently, Jiewei's chip products are primarily applied in general entertainment scenarios. For the company, the opportunity for "overtaking on a curve" lies in the dividends from China's 5G infrastructure and computing power upgrades. A Frost & Sullivan report pointed out that future metaverse computing will rely on new infrastructure such as rendering servers and edge computing, which aligns closely with the company's business. However, the challenges are also clear: how to penetrate broader B-end markets such as industry and education from general entertainment scenarios and resist the dimensionality reduction attacks from international giants As a company primarily focused on hardware sales, Jiewei Chip undoubtedly plays the role of a "water seller" in the infrastructure field of the metaverse. This strategic choice not only considers the avoidance of competition risks in the terminal market but also exposes the shortcoming of insufficient core technology reserves. Its IPO in the United States is not only a key measure to break through the funding bottleneck but will also face the harsh scrutiny of the international capital market.

In this hardware competition for the metaverse, Jiewei Chip is like a marathon runner who has just completed the first water station. Ahead lies a golden track with limitless opportunities, but also three formidable peaks of technology, capital, and ecology. Whether it can leverage the favorable winds of the capital market to complete its transformation still requires time to provide an answer