In-depth Analysis of Lianxun Instruments' Patent Dispute

The patent dispute between Lianxun Instruments and U.S.-based Aehr Inc. occurred in September 2024 (shortly before the company submitted its IPO application). Aehr Inc. alleges that Lianxun Instruments infringed on two invention patents it applied for in China (Patent Nos.: ZL201310159573.4 and ZL200880018734.5). The plaintiff initially claimed RMB 1 million per case, and during the court session on October 17, 2025, increased the compensation amount per case to RMB 5 million,

[1][2].

Notably, the Intermediate People’s Court of Suzhou has issued first-instance judgments for the two cases,

. However, as of the date of the draft prospectus submitted for the IPO review meeting, the case is still within the appeal period, and the final ruling remains uncertain[1].

According to data disclosed in the prospectus, the litigated products (mainly wafer-level burn-in systems and other power device testing equipment) have made significant contributions to the company’s operations during the reporting period:

Period	Revenue Share of Litigated Products	Gross Profit Share of Litigated Products
2022	Approximately 18.53%	Over 20%
2023-2024	Showing a downward trend	Showing a downward trend
January-September 2025	Significantly decreased	Significantly decreased

The company stated that with the continuous market promotion of subsequent iterative products and the deepening industrialization of other product lines, the importance of the litigated products has decreased significantly[1][3].

If the company ultimately loses the case, it may face the following risks:

• Sales Ban
  : The court may order the company to immediately cease manufacturing, selling, and using the alleged infringing products, resulting in the suspension of the litigated product line
• Financial Compensation
  : The company will be required to compensate Aehr Inc. for the claimed losses and rights protection expenses
• Customer Churn
  : Some downstream customers may adjust their orders due to patent risks, affecting market share

• The litigated products account for
  10%-18%
  of the company’s total revenue; if sales are completely suspended, it will directly impact the company’s revenue scale
• The company’s overall gross profit margin is approximately 60%, and the gross profit share of litigated products exceeds 20%; losing the case will significantly affect the company’s profitability
• Alternative technology products are still in the prototype stage, making it difficult to fully fill the performance gap in the short term

• The ongoing patent dispute may affect regulators’ and the market’s judgment on the company’s technological independence, shaking the foundation of its sci-tech innovation attribute as a ‘leader in domestic substitution’[2]
• The litigation result may cause the IPO review committee to question the company’s ability to continue operations
• Even if the company ultimately wins the case, the uncertainty during the litigation period may also have a negative impact on its IPO valuation

The company has adopted the following response strategies:

• Filed requests for invalidation of the patents involved with the China National Intellectual Property Administration, and some of the patents have been declared invalid[1]
• Launched R&D of alternative technology products, adopting a probe structure different from that of the litigated patents, and has currently entered the prototype manufacturing stage[3]
• The company expects that the alternative products can effectively fill the performance gap that may be caused by the litigated products

1. Positive Factors
   :
   • The first-instance judgment has dismissed all of the plaintiff’s claims
   • Some of the patents involved have been declared invalid
   • The company has launched R&D of alternative technologies

2. Uncertain Factors
   :
   • The outcome of the appeal period is still uncertain
   • Alternative technology products have not yet undergone industrialization verification
   • The litigated products remain the main products in the power device testing field in the short term

3. Key Conclusions
   :
   • If the company loses the case and cannot quickly achieve technological substitution, the litigated products, which account for 10%-18% of revenue, will suffer a
     material impact
     , with an estimated revenue impact of approximately RMB 80 million to RMB 150 million (calculated based on the 2025 projected revenue of RMB 1.15 billion to RMB 1.2 billion)
   • The company stated in the prospectus that the probability of bearing the risk of losing the case is low, but investors still need to closely follow the progress of the litigation
   • The core impact of this case may not lie in direct economic losses, but in the doubts about the company’s sci-tech innovation attributes and technological independence

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[1] Sina Finance - “A Suzhou, Jiangsu IPO Candidate Plagued by Patent Litigation, with Inventory Backlog Exceeding RMB 4.7 Billion” (https://finance.sina.com.cn/stock/newstock/2026-01-12/doc-inhfzysv5663709.shtml)

[2] NetEase - “The Life-or-Death IPO Dilemma of Suzhou Lianxun Instruments: The ‘Sci-Tech Innovation’ Facade Amidst RMB 100 Million Debt and Infringement Litigation” (https://www.163.com/dy/article/KJ0NFBQO05568W0A.html)

[3] Caizhongshe - “Mired in a Patent Dispute, Lianxun Instruments’ High-Growth Narrative After Turning a Profit Is Questioned” (https://m.caizhongshe.cn/news-4777068291067497781.html)