Innoscience (02577.HK) Hot Stock Analysis: Investment Opportunities and Risks Driven by Lock-Up Release and Patent Developments

Innoscience became a recent hot stock due to the core catalyst of a large-scale lock-up share release event on December 30, 2025. The scale of this release reaches 444.2288 million shares, accounting for as high as 87.99% of tradable shares, with a released market value of approximately HK$32.429 billion (calculated based on the stock price before the release) [2][3]. This is the largest lock-up release event for a newly listed stock in the year-end lock-up release wave of Hong Kong stocks, triggering widespread market concern about short-term liquidity pressure.

On December 2, 2025, Eastern Time, the U.S. International Trade Commission (ITC) ruled that Innoscience did not infringe on either of the two patents involved in the Section 337 investigation initiated by Infineon [4][5]. This ruling is a milestone: in July 2024, Infineon filed infringement charges with the ITC based on 4 patents, and later voluntarily withdrew two of them, while the remaining two were also ruled non-infringing. This is a critical victory for the company in the patent battle, clearing a major obstacle for the global development of the gallium nitride industry.

The company’s strategic cooperation landscape continues to expand: on December 3, 2025, it reached a strategic cooperation with ON Semiconductor (U.S.) to jointly promote the construction of the gallium nitride industry ecosystem [5]. It had previously signed a similar agreement with STMicroelectronics (Europe), forming a global cooperation network. In addition, the next-generation 6.6kW GaN on-board charger system was successfully installed in Changan Automobile, marking the company’s products entering the mainstream automotive supply chain.

On December 11, 2025, Hang Seng Indexes Company announced the removal of Innoscience from the “Hang Seng Stock Connect Software & Semiconductor Index”, effective December 16 [2]. This adjustment triggered passive capital selling, becoming the direct trigger for the stock price decline.

From a technical analysis perspective, the current stock price is below several important moving averages: the 10-day moving average is at HK$71.63, the 30-day moving average is at HK$73.47, and the 50-day moving average is at HK$74.29 [1]. The pattern of the stock price being below the moving averages indicates a weak short-term trend. The stock price has fallen 12.10% in the past month, significantly underperforming the broader market (which rose 4.62% in the same period) [1]. The weekly trading range fluctuates between HK$65.90 and HK$79.60, indicating intense market games.

• Support Level
  : HK$65-HK$68 range (previous high-volume trading zone)
• Resistance Level
  : HK$71-HK$74 (short-term moving average cluster zone)
• Strong Support
  : HK$57-HK$60 (250-day moving average and previous low)

On January 6, 2026, there was a net inflow of HK$9.322 million from main capital, indicating that some funds started buying on dips [2]. However, on January 5, Southbound Capital reduced holdings by 1.659 million shares [2], reflecting profit-taking pressure from Stock Connect funds. Short-selling activities are relatively moderate, with 9,900 shares shorted, accounting for only 0.14% of trading volume [2], indicating limited short-selling momentum.

The discussion heat on the Xueqiu community is high, with investors focusing on the following topics: actual selling pressure after the lock-up release, whether the current valuation level is attractive, and subsequent share reduction intentions of shareholders. Active discussions on social media reflect the market’s high attention to this stock.

CMBC Securities initiated coverage with an “Overweight” rating [6], while Morgan Stanley expects the company’s revenue to achieve a compound annual growth rate (CAGR) of 66%, and it is still expected to maintain high growth through 2027 [5].

Innoscience is a global leader in the gallium nitride power semiconductor sector, ranking first with a 30% global market share based on 2023 revenue [5]. The company is the world’s first enterprise to achieve mass production of 8-inch silicon-based gallium nitride wafers, establishing significant technical barriers. The gallium nitride power semiconductor market is in a period of rapid growth, expected to grow from US$2.7 billion in 2024 to US$19.2 billion in 2028, with a compound annual growth rate of 63% [5].

In H1 2025, the company achieved operating revenue of RMB 553 million, representing a 43.4% year-on-year increase [5]. More importantly, the company recorded gross profit for the first time, with a gross profit margin of 6.8%, marking a transition from a pure R&D investment phase to commercial profitability. The net loss was RMB 429 million, narrowing year-on-year (compared to RMB 488 million in the same period last year) [5], and the loss margin continues to improve.

The company’s products cover high-growth fields such as data centers, new energy vehicles, humanoid robots, consumer electronics, and AI infrastructure. Key customers include industry leaders such as Midea, Changan Automobile, Great Wall Power, and NVIDIA [5].

1. Selling Pressure from Lock-Up Release
   : With the large-scale lock-up shares just released, shareholders may reduce their holdings, increasing supply and pressuring the stock price [2][3]
2. Sustained Losses
   : The company has continued to record net losses from 2021 to H1 2024, with negative operating cash flow [1]
3. Patent Risks
   : It still faces patent lawsuit risks from international semiconductor giants, with the final ruling expected to be announced on April 2, 2026 [4]
4. Index Exclusion
   : Having been removed from relevant Hang Seng Stock Connect indexes, passive capital continues to flow out [2]
5. Customer Concentration
   : The revenue from the top five customers accounts for a relatively high proportion, posing customer concentration risks [1]

Southbound Capital faces profit-taking pressure (Stock Connect fund position adjustments), the semiconductor sector as a whole has high volatility, and competition is intensifying—competitors such as Navitas are catching up, with a market share of 17% [5].

Innoscience (02577.HK) has become a hot stock mainly driven by two factors: the lock-up share release and developments in the patent lawsuit. As the global leader in gallium nitride power semiconductors, the company has leading technical advantages and favorable industry growth prospects, with Morgan Stanley expecting its revenue to achieve a CAGR of 66% [5].

However, in the short term, the company faces multiple pressures: expected selling after the lock-up release, passive capital outflows due to index exclusion, valuation pressure from not yet being profitable, and uncertainty surrounding the final ruling of the patent lawsuit. Technically, the stock price is below multiple moving averages, and its performance in the past month has significantly underperformed the broader market.

In the medium term, key points to focus on include: the progress of digesting the lock-up release pressure, Southbound Capital position adjustment status, the final ruling of the patent lawsuit in April 2026, and the upcoming release of the new quarter’s financial reports. In the long term, the company is expected to benefit from the growth in demand for AI data centers and new energy vehicles, but the timing of the profitability inflection point needs continuous tracking.