Impact Assessment of Liunxun Instruments' IPO Patent Dispute: Valuation Analysis of the RMB 1.7 Billion Fundraising

Based on the collected information, I will provide you with a systematic analysis report on the impact of Liunxun Instruments’ IPO and patent disputes on its valuation.

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Suzhou Liunxun Instruments Co., Ltd. was founded in 2017, a high-tech enterprise focusing on electronic measuring instruments and semiconductor testing equipment. The company will be reviewed by the Listing Committee of the STAR Market of the Shanghai Stock Exchange on January 14, 2026, a key milestone in its IPO process [1][2]. Its sponsor is CITIC Securities. The fundraising amount for this IPO has been reduced from the initial RMB 1.954 billion to RMB 1.711 billion, representing an adjustment of approximately 12.4% [3].

In terms of main business, Liunxun Instruments is at the intersection of two high-boom tracks: optical communication and semiconductor testing, and is a key part of the domestic substitution strategy. The company’s products cover the entire chain of testing from chips to modules, and it has established a prominent market position in niche segments such as wafer-level burn-in systems and high-speed bit error rate testers [4].

Liunxun Instruments has achieved impressive performance growth in recent years:

Financial Indicator	2022	2023	2024	Q1-Q3 2025
Operating Revenue (RMB 100 million)	2.14	2.76	7.89	~7.0
Net Profit Attributable to Parent (RMB 10,000)	Loss	Loss	14,000	9,768.70
YoY Growth of Operating Revenue	-	28.97%	185.87%	-
Net Profit Attributable to Parent Excluding Non-Recurring Items (RMB 10,000)	-2,746	-6,270	13,201	-

Data shows that after consecutive losses in 2022-2023, the company achieved explosive performance growth in 2024, with operating revenue surging 185.87% and net profit turning from loss to profit [1][4]. This growth is mainly due to the strong demand for high-end testing equipment from downstream AI computing power construction and new energy vehicle industries.

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Liunxun Instruments is facing a patent lawsuit from U.S.-based Aehr Test Systems. In September 2024, Aehr filed a lawsuit with the Suzhou Intermediate People’s Court on the grounds that Liunxun Instruments infringed two invention patents it applied for in China [1][3]. The details are as follows:

: Aehr Test Systems (U.S. listed company, NASDAQ ticker: AEHR), a global leading supplier of semiconductor testing equipment.

:

• Patent 1: ZL201310159573.4, “Method for Testing Microelectronic Circuits, Tester Device and Portable Assembly Device”, application date: April 4, 2008
• Patent 2: ZL200880018734.5 (invention title relates to power device testing methods)

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• Initial claim: RMB 1 million compensation per case, cease infringement
• October 17, 2025: Aehr increased the compensation amount to RMB 5 million per case [4][5]

: Wafer-level burn-in system (power device testing equipment), one of the company’s core products.

The involved product occupies an important position in the company’s business, with the following specific contributions in 2024:

Indicator	Amount	Proportion of Total Revenue/Profit
Operating Revenue of Involved Product	RMB 146 million	18.53%
Gross Profit of Involved Product	RMB 104 million	20.73%

In addition, as of the end of March 2025, 3 of the company’s major sales contracts with tax-inclusive amounts exceeding RMB 30 million involve wafer-level burn-in systems, with a total contract amount of up to RMB 120 million [1]. This indicates that the involved product plays an important supporting role in the company’s business in the short term.

:

• November-December 2024: Liunxun Instruments submitted the “Request for Patent Invalidation” to the National Intellectual Property Administration
• May 2025: Some claims of the first patent were declared invalid
• July 2025: Some claims of the second patent were declared invalid [4]

:

• On December 3 and December 10, 2025, the Suzhou Intermediate People’s Court issued first-instance judgments respectively
• The court held that based on the credible evidence in the case, it cannot be proved that the 9 accused infringing products fall within the protection scope of the claims of the involved patents
• Judgment result: Reject all litigation claims of Aehr in the two invention patent infringement disputes [1]

: Both cases are in the appeal period, and the final judgment results are still uncertain.

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According to the company’s prospectus and reply to the inquiry letter, if it loses the lawsuit, the direct losses faced by the company mainly include:

Type of Loss	Amount	Degree of Impact
Economic Compensation	Up to RMB 10 million (RMB 5 million × 2 cases)	Minor (accounting for approximately 0.7% of 2024 net profit)
Litigation Costs	Several hundred thousand yuan	Minor

If the company loses the lawsuit and the judgment takes effect, it must stop manufacturing, using, selling, offering to sell, and importing all products that infringe the plaintiff’s patent rights before the expiration of the involved patents (April 4, 2028) [5]. This injunction may have the following impacts on the company:

1. Risk of Product Line Interruption
   : The involved product (wafer-level burn-in system) contributed nearly 20% of revenue and gross profit in 2024. Suspending sales will directly affect the company’s performance
2. Risk of Customer Churn
   : The RMB 120 million in hand contracts may face delivery interruptions or renegotiations
3. Damage to Market Reputation
   : Losing the patent lawsuit may affect the company’s market reputation in the high-end testing equipment field

The patent disputes challenge the foundation of Liunxun Instruments’ “sci-tech innovation attributes”, which is one of the core factors affecting valuation.

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According to analysis reports, Liunxun Instruments’ core technologies have the following problems [3][4]:

1. Outsourced Chip Design Model
   :
   • The core chip development, design and tape-out processes are all entrusted to third-party institutions
   • Its former chip design subsidiary, Liunxun Ruizhe, has been deregistered
   • Currently, it entrusts its affiliated company Sinuowei to conduct key designs such as sample-and-hold chips

2. High Proportion of Outsourced Core Components
   :
   • It relies heavily on outsourced and customized procurement for some hardware boards and standard parts
   • The proportion of self-developed and self-manufactured core components is extremely low
   • Some optical components (such as spectrometers) are purchased externally

3. Gap with Peer Companies
   :
   • Some peer companies in the same industry have achieved independent production of self-developed chips
   • Liunxun Instruments’ outsourced chip model may face the risk of technology leakage

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The STAR Market has extremely high requirements for the independence of enterprises’ core technologies. The patent disputes have aroused regulatory doubts about whether all of its core technologies have similar potential disputes, which has shaken the foundation of its sci-tech innovation attributes as a “leader in domestic substitution” [3].

Based on the above factors, patent disputes may have a discount impact on valuation through the following paths:

According to STAR Market IPO cases, patent lawsuits often lead to valuation discounts:

Case Company	Lawsuit Timing	Result	Market Reaction
Jingfeng Mingyuan	Sued one day before the listing review	Review was canceled on the same day, and successfully listed later	Valuation was under pressure by approximately 15-20%
Anhan Technology	Sued during the critical review period	Voluntarily withdrew IPO application	Valuation could not be realized
Appotronics	Sued one week after listing	Responded effectively, and the stock price rose instead	Recovered after short-term pressure

• Patent Invalidation Risk
  : Although some patents have been declared invalid, the risk has not been completely eliminated
• Potential Litigation Expansion
  : May trigger competitors to file similar lawsuits
• Technology Iteration Pressure
  : Need to accelerate the R&D of alternative technologies, increasing R&D costs

• The involved product cannot be fully replaced in the short term
• Alternative technology products have not yet been industrialized
• If the litigation process is prolonged, some customer orders may be adjusted

It is worth noting that Liunxun Instruments has reduced its fundraising amount from RMB 1.954 billion to RMB 1.711 billion, a decrease of 12.4% [3]. This adjustment may reflect:

1. Regulatory Pressure
   : Regulatory attention to the risk of patent disputes
2. Market Expectations
   : Investors’ concerns about patent litigation risks have been reflected in pricing
3. Company Expectations
   : The company voluntarily lowered its fundraising expectations to improve the success rate of the issuance

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Liunxun Instruments has adopted an active patent defense strategy:

1. Filing Patent Invalidation Requests with the National Intellectual Property Administration
   : Challenging the two involved patents
2. Some Claims Have Been Declared Invalid
   : This has compressed the scope of protection that the plaintiff can claim [5]

The first-instance judgment in December 2025 was favorable to the company, and the court ruled that the accused infringing products did not fall within the patent protection scope [1].

The company has launched the R&D of alternative technology products, adopting a probe structure different from that of the involved patents, and has currently entered the prototype manufacturing stage [4]. However, this alternative solution has the following uncertainties:

• Performance stability has not yet been verified
• Cost control capability remains to be tested
• Customer acceptance needs to be tested in the market

The company is continuously iterating the performance indicators of the wafer-level burn-in system products to continuously meet customers’ demand for high-performance testing equipment.

In accordance with accounting standards for enterprises, the company has not accrued a provision for litigation liabilities, for the following reasons [5]:

1. No effective judgment has been made in the relevant cases
2. The possibility of economic benefit outflow due to fulfilling current obligations cannot be reliably estimated
3. The compensation amount cannot be reliably measured

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Based on comprehensive analysis, the impact of patent disputes on Liunxun Instruments’ RMB 1.7 billion IPO valuation can be summarized as follows:

Impact Dimension	Degree of Impact	Estimated Valuation Discount
Direct Financial Losses	Minor (<1% of net profit)	Approximately 0.5-1%
Risk of Product Sales Interruption	Moderate (20% revenue impact)	Approximately 8-12%
Doubts about Technological Independence	Significant (foundation of sci-tech innovation attributes)	Approximately 10-15%
Reputation and Market Confidence	Moderate	Approximately 3-5%
Comprehensive Valuation Discount	-	Approximately 15-25%

Despite the challenges of patent disputes, the company still has the following positive factors:

1. Track Advantage
   : It is in two high-boom tracks of optical communication and semiconductor testing, benefiting from the boom in AI computing power construction and new energy vehicle industry
2. Performance Surge
   : Achieved leaping growth in revenue and profit in 2024, proving its market competitiveness
3. Favorable First-Instance Judgment
   : Won the first-instance lawsuit in December 2025, reducing the risk of losing the lawsuit
4. R&D Investment
   : Has invested nearly RMB 350 million in the past three years, continuously strengthening its technological strength

1. Uncertainty of Litigation Results
   : The cases are still in the appeal period, and the final judgments are still uncertain
2. Uncertainty of Alternative Products
   : Alternative technology products have not yet been industrialized, and whether they can make up for the performance gap remains to be seen
3. Risk of Technological Independence
   : Risk of technology leakage and restricted iteration due to the outsourced chip model
4. Financial Pressure
   : Financial risks such as surging interest-bearing debts, overdue accounts receivable, and inventory backlog

For investors, the investment value of Liunxun Instruments requires weighing the following factors:

: The uncertainty of patent litigation may affect the IPO process or post-listing performance
: If a favorable final judgment is rendered, the company is expected to recover its valuation
: Benefiting from the long-term trend of domestic substitution of semiconductor testing equipment, the company has growth potential

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During the process of Liunxun Instruments’ RMB 1.7 billion IPO fundraising, patent disputes have had significant multi-dimensional impacts on its valuation. From the perspective of direct impact, the direct economic loss if it loses the lawsuit is limited (up to RMB 10 million); however, from the perspective of indirect impact, the involved product contributes nearly 20% of revenue and gross profit, and the shake of its sci-tech innovation attributes due to doubts about technological independence may lead to a 15-25% valuation discount.

The company’s response strategies include patent invalidation requests and winning the first-instance lawsuit, which have reduced the risk exposure to a certain extent. However, core issues such as the non-industrialization of alternative technology products and doubts about technological independence have not been fully resolved, which will be persistent factors affecting its IPO review results and post-listing valuation.

For investors, it is recommended to pay close attention to the review results of the Listing Committee on January 14, 2026 and the subsequent progress of the litigation, and carefully evaluate the impact of the final resolution of the patent disputes on the company’s long-term investment value.

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

[2] Caizhongshe - “Trapped in Patent Disputes, Liunxun Instruments’ High-Growth Narrative After Turning Profitable Is Questioned” (https://m.caizhongshe.cn/news-4777068291067497781.html)

[3] Liaowangta Finance - “Suzhou Liunxun Instruments’ IPO Life-or-Death Situation: The ‘Sci-Tech Innovation’ Facade Under Hundreds of Millions of Debts and Infringement Lawsuits” (https://finance.sina.com.cn/stock/marketresearch/2026-01-11/doc-inhfxrmr7716676.shtml)

[4] Eastmoney - “Liunxun Instruments’ IPO: Gross Margin of Semiconductor Testing Equipment Plunged 10%, Profitability Has Long Been Below the Industry Average” (https://caifuhao.eastmoney.com/news/20260112103411999098260)

[5] Shanghai Stock Exchange - “Reply to the Inquiry Letter on the Review of the Initial Public Offering of Shares and Listing on the STAR Market by Suzhou Liunxun Instruments Co., Ltd.” (https://static.sse.com.cn/stock/disclosure/announcement/c/202512/002075_20251202_65HH.pdf)

[6] Grandall Law Firm - “Top 10 Patent Issues Affecting STAR Market IPOs and Response Strategies” (https://www.grandall.com.cn/ghsd/info.aspx?itemid=418)