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| Financial Fraud Leads to Delisting of Beijing Zuojiang Technology from Shenzhen Stock Exchange |
Beijing Zuojiang Technology, once seen as a potential rival to Nvidia, will be delisted from the Shenzhen Stock Exchange due to financial fraud, as reported by the South China Morning Post. This follows the company's failure to provide a clean audit report for its 2023 financial results, prompting the delisting set for July 26.
Founded in 2007, Zuojiang Technology initially produced cybersecurity hardware but shifted its focus in late 2022 to develop data processing units (DPUs) amid China's AI boom. The company claimed its NE6000 DPU could compete with Nvidia's Bluefield-2 DPU, aiming to meet the rising demand for AI project infrastructure. However, 2022 sales were disappointing, with only one contract for 400 units, most of which remained unused by the buyer.
The China Securities Regulatory Commission (CSRC) discovered significant falsehoods in Zuojiang's 2023 financial reports, leading to the delisting decision. The company's stock, once valued at ¥300 ($41.26) a year ago, plummeted to ¥6.94 ($0.95) before trading was halted in April, dramatically impacting investor confidence.
This delisting mirrors a similar incident in June, when the Shanghai Stock Exchange barred local chip maker S2C from listing for five years due to inflated financial results. S2C was fined ¥16.5 million yuan by the CSRC for overstating its 2020 revenue and profits in its listing prospectus.
China's semiconductor industry is experiencing a surge in bankruptcies as smaller firms go insolvent. Twenty-three semiconductor companies have withdrawn their IPO applications since last year, reflecting increasing investor caution. The trend of Chinese semiconductor companies going out of business began in 2020, with over 10,000 chip-related companies shutting down between 2021 and 2022. In 2023, a record 10,900 semiconductor-related firms deregistered, significantly up from the 5,746 that closed in 2022.
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