VeriSilicon Reports Record Q3 Revenue Surge Driven by AI Orders, Nearing Profitability Inflection Point
VeriSilicon Holdings posted explosive third-quarter results that dramatically exceeded expectations, with record revenue driven by surging artificial intelligence chip orders marking a potential turning point for China's leading ASIC design services provider. The company's revenue jumped 119.74% quarter-over-quarter and 78.77% year-over-year to RMB 12.84 billion yuan (US$1.77 billion), representing its highest quarterly revenue on record.
The remarkable turnaround comes after a challenging first half of 2025, when VeriSilicon reported a widened net loss of RMB 320 million yuan (US$ 44.1 million) and second-quarter revenue declined 4.8% year-over-year. The company attributed the third-quarter surge primarily to its one-stop chip customization business, signaling a successful pivot from traditional IP licensing to comprehensive design and manufacturing services.
VeriSilicon secured new orders worth RMB 15.93 billion yuan (US$ 2.2billion)in the third quarter, up 145.80% by quarter-end, with about 80% expected to convert to revenue within one year.
The results underscore VeriSilicon's transformation from a semiconductor IP licensing company to an AI-focused ASIC design leader, capitalizing on the artificial intelligence boom sweeping through China's technology sector.
Business Model Transformation Drives Growth
VeriSilicon's revenue composition reveals a fundamental shift in its business model, with manufacturing and design services now dominating traditional IP licensing fees. Manufacturing business revenue surged 158.12% year-over-year to RMB 609 million yuan (US$84 million), becoming the primary growth driver as previously designed chips entered mass production and delivery phases.
Chip design services generated RMB 429 million yuan (US59.2million),up 80.67%, representing a declining share of total revenue.
The shift toward one-stop chip customization services, which now comprises nearly 90% of the company's order backlog, offers significantly larger market opportunities compared to upfront IP licensing fees. VeriSilicon reported that third-quarter losses narrowed substantially both year-over-year and quarter-over-quarter, indicating improving operational leverage as revenue growth helps absorb fixed costs.
AI Orders Fuel Record Backlog Growth
The company's order backlog has grown for eight consecutive quarters, reaching RMB 32.86 billion yuan (US$4.53 billion) with AI-related projects representing the majority of new business. The 65% AI composition of third-quarter new orders validates market speculation about VeriSilicon's deep involvement in artificial intelligence chip design and solidifies its position as a leading AI ASIC provider.
With approximately 80% of the order backlog expected to convert to revenue within 12 months, VeriSilicon has secured high visibility for sustained growth over the next four quarters. The convertible portion alone exceeds RMB 26 billion yuan (US$3.58 billion), providing substantial revenue underpinning for continued performance momentum.
The AI focus aligns with VeriSilicon's core competencies in graphics, video, and AI processor IP, positioning the company to capitalize on China's expanding artificial intelligence infrastructure development and edge computing applications.
Strategic Acquisition Strengthens Technology Platform
VeriSilicon announced plans in September to acquire Nuclei System Technology, a leading domestic RISC-V IP supplier, to address a critical gap in its CPU IP portfolio. The acquisition aims to complement VeriSilicon's existing GPU, NPU, VPU, and ISP capabilities, creating a more comprehensive heterogeneous computing IP platform.
Goldman Sachs noted in a recent research report that the acquisition would significantly enhance VeriSilicon's ability to serve downstream applications including smart vehicles and AI terminals such as AI toys and tablets. The investment bank raised its 12-month target price to RMB 220 yuan while maintaining a "buy" rating, citing confidence in the company's long-term growth trajectory despite near-term profitability pressures from increased research and development spending.
Goldman Sachs revised its 2025 net profit forecast to a small loss from previous profit expectations due to higher R&D investments, but increased 2027-2030 profit projections by up to 7%, expecting sustained high compound growth rates as AI-related business expansion drives systematic profitability improvements.