ST Chengchang: Chinese Chipmaker Tries to Cheat Fate and the Stock Exchange

Imagine you're playing a survival game where what's at stake is not just money, but the very right to call yourself a public company. That is exactly the situation Chinese chipmaker ST Chengchang (*ST) has found itself in. If you don’t follow the specifics of the Chinese stock market, the ST prefix before a company’s name is a kind of “black mark.

” It stands for Special Treatment and signals to all investors that the company is one step away from delisting, that is, a complete ejection from the exchange. The company’s situation is genuinely deadlocked: by the end of 2024, its revenue had failed to reach even a modest 300 million yuan, while net profit had sunk into the red. Under Shenzhen Stock Exchange rules, that is an automatic ticket out unless the situation is fixed as quickly as possible.

What does a company do when the ground is giving way beneath its feet? It starts promising the moon. In its latest notice, Chengchang’s management said that in 2025 they plan to earn between 95 million and 124 million yuan in net profit.

It sounds ambitious, especially when you remember that they closed last year with a 31 million yuan loss. Such a sharp 180-degree turnaround in the microelectronics industry is rare, unless you have a secret government contract up your sleeve or a breakthrough technology nobody knows about. But for now, all we see are numbers in forecasts, not actual chip shipments.

It looks like a desperate attempt to calm regulators and keep the falling shares from being wiped out completely. The most interesting and ironic moment in this whole story is the decision to change auditing firms right in the middle of the storm. In the world of finance, that always looks like an attempt to find someone who will be more “flexible” when reviewing the accounts.

Officially, the company says this is needed to advance the 2025 audit work, but we understand that the old auditors most likely simply refused to sign off on such optimistic forecasts against the backdrop of the current crisis. Changing accountants midstream is a classic red flag that should make any sane investor think three times before believing in the coming success. If we look at the situation more broadly, the Chengchang case exposes a systemic problem in China’s semiconductor sector.

On the wave of slogans about import substitution and technological sovereignty, a huge number of small players emerged in the country, living off subsidies and cheap loans. Now that the market is becoming saturated and exchange requirements are tightening, many of them are proving unable to generate real revenue. Chengchang is trying to prove that it is an exception, but so far its arguments are built entirely on paper promises and personnel reshuffles in accounting.

For the industry, this is an important signal: the era of easy money is over, and now even the status of a “strategically important developer” will not save a company from delisting if its business model does not work. What does this mean for us? We are watching bubbles burst in those segments of China’s tech sector that failed to convert hype into real sales.

If Chengchang cannot back up its forecasts with real contracts in the first half of 2025, its story on the exchange will end in a rather inglorious way. It is a good lesson: even in the world’s most promising industry, the laws of economics and exchange rules assert themselves sooner or later. We will keep watching to see whether it manages to “draw” the required numbers or whether we are about to witness yet another loud collapse.

The key point: Chengchang is promising impossible profit growth to avoid being thrown off the exchange, but the change of auditors suggests that it is still too early to trust those numbers.