How to Verify China’s ASIC and Chip Design Companies – A Practical Due Diligence Guide

If you are an investor, legal advisor, or consultant tracking China’s semiconductor sector, you have likely noticed the explosive growth of ASIC — Application-Specific Integrated Circuits. In the first half of 2026, ASIC emerged as the most advanced category of China’s computing chip market in terms of domestic substitution, with a domestic share reaching 38.8%. By 2030, that figure is projected to hit 75%, representing a cumulative substitution market of approximately ¥1.9 trillion over five years.

But here is the challenge: ASIC companies are not easy to evaluate through traditional financial metrics alone. Their value often lies in intellectual property, engineering talent, and ecosystem positioning — factors that are difficult to verify from a distance. This guide provides a practical framework for conducting due diligence on China’s ASIC and chip design companies, drawing on the latest market data and verified sources.

1. ASIC’s Position and Growth Logic in the Computing Chip Market

ASIC chips are purpose-built for specific workloads — unlike general-purpose GPUs, they are designed to excel at particular tasks, such as AI inference, video processing, or cryptographic operations. This specialisation gives them a significant advantage in power efficiency and cost for high-volume, repetitive workloads.

The growth of ASIC is being driven by two powerful trends:

• The rise of AI inference: As AI applications move from training to deployment, inference workloads — which are repetitive and predictable — are becoming the dominant form of AI compute. ASICs are ideal for inference because they can be optimised for specific model architectures.
• Cloud provider self-development: Major cloud providers — including Alibaba, Baidu, and Tencent — are developing their own ASICs to reduce costs, improve performance, and secure supply chains.

The numbers reflect this momentum. In 2026, ASIC chip shipments are expected to reach approximately 7.7 million units, representing 45% of the AI accelerator market. By 2027, ASIC shipments are projected to surpass GPU shipments, capturing 58% of the market. China’s ASIC market alone is expected to approach ¥70 billion in 2026, with growth rates exceeding 60% year-over-year.

2. The Chinese ASIC Landscape — Major Players and Their Backgrounds

The Chinese ASIC market is diverse and rapidly evolving, with a mix of international leaders, domestic giants, and emerging players. Based on H1 2026 data, the market is distributed as follows:

A few observations about this landscape:

• International players still dominate the top end: Broadcom (41.5%) and Marvell (20.2%) together account for nearly 62% of the market. However, their combined share has declined significantly from previous years as domestic players gain ground.
• Huawei Ascend is the domestic leader: At 26.9%, Huawei is the largest Chinese ASIC vendor and is projected to capture an even larger share in 2026-2027.
• Publicly listed players are gaining scale: Cambricon, ZTE Microelectronics (via ZTE), and VeriSilicon are all publicly listed, providing transparent financial data for due diligence.
• Emerging players are scaling rapidly: Kunlunxin (Baidu) is preparing for an IPO with a potential valuation of $50 billion, while VeriSilicon’s ASIC orders are growing at triple-digit rates.

3. What Makes ASIC Due Diligence Different — and More Complex

Due diligence on ASIC and chip design companies is fundamentally different from evaluating software companies or traditional manufacturers. Here are the key dimensions that require special attention.

🧠 Intellectual Property — The Core Asset

For ASIC companies, IP is the primary asset. This includes:

• Processor IP: GPU, NPU, VPU, and other proprietary cores. VeriSilicon, for example, has six categories of proprietary processor IP, making it the largest Chinese semiconductor IP provider.
• Software ecosystem: The ability to attract developers and build a software stack is critical. Huawei’s CANN ecosystem, though younger than CUDA, is rapidly gaining adoption.
• Patents and trade secrets: The quality and breadth of a company’s patent portfolio can be a strong indicator of technological capability.

👥 Talent and Engineering Teams

Chip design is talent-intensive. A single leading chip can require hundreds of engineers and take 3-5 years to develop. Key questions to ask:

• Where did the core team come from? Many Chinese ASIC companies have teams with backgrounds at AMD, Intel, or other global leaders.
• What is the engineering headcount? A small team may struggle to sustain multiple product lines.
• What is the attrition rate? High turnover can indicate cultural or compensation issues.

🔬 Manufacturing and Supply Chain

ASIC companies are fabless — they design chips but rely on foundries for manufacturing. This creates supply chain dependencies that must be evaluated:

• Which foundry does the company use? SMIC, TSMC, or others? US export controls may restrict access to advanced nodes.
• What is the yield rate? Low yields can significantly impact profitability.
• Are there long-term supply agreements? ZTE Microelectronics, for example, has secured 2-3 year long-term orders from ByteDance and Alibaba Cloud.

📊 Financial Health — Beyond Revenue Growth

Many ASIC companies are growing rapidly but remain unprofitable. Key metrics to examine:

• Revenue growth rate: Cambricon grew revenue 108% YoY in H1 2026; VeriSilicon grew 91%.
• Gross margins: ZTE Microelectronics maintains 45-50% gross margins.
• Customer concentration: A small number of large customers can be a significant risk.
• R&D spending: ASIC companies typically spend 20-40% of revenue on R&D — a critical investment for long-term competitiveness.

4. A Practical Framework for Verifying China’s ASIC and Chip Design Companies

Based on the unique characteristics of ASIC companies, here is a practical due diligence framework for overseas investors, legal advisors, and procurement professionals.

📋 Step 1: Verify Legal and Corporate Registration

Start with the basics: confirm that the company exists, is properly registered, and has the legal structure it claims to have.

• Business license: Verify the company’s official business registration with Chinese authorities.
• Shareholder structure: Who owns the company? Are there any state-owned or foreign shareholders that affect compliance?
• Director and legal representative information: Confirm the identities and backgrounds of key decision-makers.
• Subsidiaries and affiliates: Many ASIC companies operate through complex subsidiary structures.

📊 Step 2: Assess Financial Performance and Health

For publicly listed companies, financial data is readily available. For private companies, you may need to rely on credit reports and third-party assessments.

• Revenue and profit trends: Cambricon reported H1 2026 revenue of ¥5.996 billion; VeriSilicon reported ¥1.864 billion.
• Debt and liabilities: High leverage can be a red flag in capital-intensive industries.
• Cash flow: Positive operating cash flow is a strong indicator of financial health.

🔬 Step 3: Evaluate Technology and IP Portfolio

This is the most critical and most difficult step. Consider:

• Patent portfolio: How many patents does the company hold? What is the quality and breadth of the portfolio?
• Software ecosystem: Does the company have a developer community? How many developers use its tools?
• Customer references: Who are the company’s marquee customers? ZTE Microelectronics counts ByteDance and Alibaba Cloud as clients; VeriSilicon’s customers include global cloud providers.

⚖️ Step 4: Assess Regulatory and Compliance Risk

ASIC companies operate in a highly regulated environment with significant exposure to:

• US export controls: Does the company rely on US technology, EDA tools, or manufacturing equipment?
• Entity List exposure: Has the company — or any of its affiliates — been added to the US Entity List?
• Chinese domestic substitution mandates: Is the company positioned to benefit from China’s procurement policies?

5. How ChinaBizInsight Can Help You Verify ASIC and Chip Design Companies

At ChinaBizInsight, we specialise in providing overseas businesses with reliable, verifiable information about Chinese companies. In the ASIC era, the need for accurate due diligence has never been greater.

We help overseas businesses:

• Verify Chinese company credentials — including business licences, shareholder structures, and director information — through official government sources.
• Access comprehensive credit reports that go beyond basic registration to include legal risks, financial health, and operational history.
• Obtain notarisation and apostille services for Chinese corporate documents, ensuring they are recognised in your home jurisdiction.
• Conduct specialised due diligence on companies in the semiconductor and AI infrastructure sectors, including ASIC design, IP licensing, and manufacturing partnerships.

Whether you are vetting a potential investment, evaluating a new supplier, or conducting M&A due diligence, our team of China business intelligence specialists provides the authoritative, English-language information you need to make confident decisions.

Final Take — A New Due Diligence Imperative for the ASIC Era

China’s ASIC market is undergoing one of the most dramatic transformations in the global semiconductor industry. In H1 2026, domestic ASIC players captured 38.8% of the market — the highest domestic share of any computing chip category. By 2030, that figure is projected to reach 75%, representing a cumulative substitution market of nearly ¥1.9 trillion.

For overseas businesses — whether investors, legal advisors, or procurement professionals — this transformation creates both opportunities and risks. The companies that succeed in this market will be those that combine strong technology with sound business fundamentals. The key to identifying them is reliable, up-to-date information and a rigorous due diligence framework.

Know who you are doing business with — because in the ASIC era, the landscape is changing faster than ever.