Reported by NUPIAO News | Song Jianan
On the evening of August 17, VeriSilicon Microelectronics (Shanghai) Co., Ltd. (hereinafter referred to as “VeriSilicon”), China’s leading semiconductor IP provider, disclosed its 2026 semi-annual report. During the reporting period, the company achieved revenue of 1.864 billion yuan, a massive 91.37% year-over-year increase from 974 million yuan in the same period of 2025. However, the net loss attributable to shareholders stood at 612 million yuan, with losses widening by 91% year-over-year. The non-GAAP net loss was 622 million yuan.
Following the earnings release, as of the time of writing on August 18, VeriSilicon’s stock was trading at 216 yuan, down 4.55%, with a total market capitalization of 113.6 billion yuan. Compared to its year-high of 375.67 yuan, the stock has retreated over 42% from its peak, and has fallen approximately 25% from the recent high of 286.27 yuan over the past three months.
Looking at the financials, the widening losses are the result of both industry-specific characteristics and strategic investments. On one hand, the chip customization industry has an inherent timing mismatch between investment and revenue recognition. Design project cycles typically last 9 to 12 months, while mass-production delivery cycles can stretch from 6 to 18 months. Current R&D and labor costs are fully expensed, while order revenue is recognized slowly in batches—meaning the benefits of large AI orders haven’t yet appeared on the current income statement.
On the other hand, the company’s R&D investment in H1 totaled 941 million yuan, representing a whopping 50.49% of revenue. Its R&D team has grown to 1,883 people, with over 87% holding master’s degrees or higher, primarily focused on NPU, Chiplet, automotive-grade IP, and edge AI platform development.
Additionally, share-based compensation and amortization of intangible assets from the acquisition of Pixelworks have further pushed up current-period expenses. Excluding share-based compensation, the loss narrows to 479 million yuan, and after removing M&A-related costs, the adjusted EBITDA loss stands at 222 million yuan. In January this year, VeriSilicon fully acquired Pixelworks through its holding platform Tiansui Xinyuan to strengthen its edge AI glasses and mobile display customization capabilities.
Breaking down the business segments, mass-production services remain the core revenue driver for VeriSilicon, generating 1.163 billion yuan in the period—an explosive 185.29% year-over-year surge. Design services brought in 350 million yuan, up 50.73%; IP licensing fees reached 293 million yuan, up 4.32%; and IP royalty income was 56 million yuan, up 10.85%.
On the downstream application side, data processing has become the absolute growth engine. This segment generated 732 million yuan in H1, skyrocketing 292.17% year-over-year and accounting for nearly 40% of total revenue, driven by surging AIGC chip customization demand from cloud providers. IoT and consumer electronics businesses contributed 443 million yuan and 350 million yuan respectively, while automotive electronics and industrial sectors continued to expand steadily.
The company’s gross margin for H1 stood at 31.34%, down 11.98 percentage points year-over-year. The root cause is a shift in revenue mix—lower-margin, delivery-heavy mass-production services now account for a much larger share, while the proportion of high-margin IP licensing has contracted.
Notably, as of the end of June, the company’s order backlog reached 12.449 billion yuan, a 142.52% increase from the end of Q1. Mass-production orders exceeded 10 billion yuan, with 83% of orders coming from the AI data processing sector. From January to August 17, 2026, VeriSilicon signed new orders worth 15.142 billion yuan, reaching 254% of the full-year 2025 new order value, with 90% of those being AI computing-related. This massive reserve of orders will be gradually converted into revenue over the next 1 to 2 years.
Founded in 2001, VeriSilicon is one of the few Chinese semiconductor IP and full-stack chip customization service providers ranked among the global leaders. The company pioneered the SiPaaS (Silicon Platform as a Service) model and collaborates with global cloud providers, automakers, and consumer electronics giants. Listed on Shanghai’s STAR Market in 2020, it’s often called “China’s first semiconductor IP stock.” In April this year, VeriSilicon filed for an H-share listing on the Hong Kong Stock Exchange, advancing its A+H dual capital platform strategy.
The company’s founder, chairman, and CEO is David Wei-Min Dai, who holds a PhD from UC Berkeley and previously worked at U.S. universities and semiconductor companies. He’s a representative figure in China’s semiconductor IP industry. VeriSilicon has no controlling shareholder, with a widely dispersed ownership structure. Major shareholders include the National Integrated Circuit Industry Investment Fund, various industrial capital entities, and employee stock ownership platforms.
The company operates two core business segments: semiconductor IP licensing services and one-stop chip customization services. The latter is further divided into design services and mass-production services.
On the IP front, VeriSilicon independently owns six processor IPs—GPU, NPU, VPU, DSP, ISP, and Display—and maintains a portfolio of over 1,700 analog, RF, and interface IPs. Customers can pay for IP licenses and royalties.
The chip customization business handles the entire delivery process, from specification definition, front-end and back-end design, and software development, all the way to wafer foundry and packaging/testing. Design services focus on the chip development phase; mass-production services manage scaled supply after tape-out. This segment offers high revenue elasticity but carries lower gross margins, making it the primary revenue driver in recent years.
According to the latest CIC (China Insights Consultancy) report, as of the end of 2025, VeriSilicon holds the largest number of semiconductor IP categories globally, ranks first in mainland China and eighth worldwide in total IP revenue, sixth globally in IP licensing revenue, and second globally among suppliers primarily focused on digital IP.
Regarding the inflection point for profitability, VeriSilicon stated in its financial report that as mass-production orders continue to convert and R&D expenses as a percentage of revenue keep declining, it expects adjusted EBITDA to turn positive in H2 2026, with adjusted net profit attributable to shareholders turning profitable for the full year 2027.
The company believes that as revenue scales continue to expand, the advantages of mass-production business scale will be progressively realized. R&D spending growth will lag behind revenue growth, expense ratios will decline year by year, and economies of scale will gradually absorb the current loss pressure.
However, risks remain, including semiconductor industry cyclical fluctuations, overseas technology licensing restrictions, pressure from large accounts receivable collections, and potential loss of top-tier talent. Intensifying industry competition and weaker-than-expected downstream AI demand could also delay the timeline for profitability.
Overall, VeriSilicon’s semi-annual report serves as a microcosm of China’s AI chip design services industry—the AIGC wave is generating massive customization demand, and short-term profit pressure is an inevitable phase of market expansion. Nevertheless, high R&D costs, delayed revenue recognition, and industry cycles are all variables that could extend the profitability recovery timeline. The market needs to closely track order conversion speed and expense ratio changes to verify whether the company can meet its turnaround targets on schedule.
