When most people think about self-driving technology, they picture cameras and LiDAR sensors mapping the world around a vehicle. But there's another technology quietly making its way into millions of cars, and it might just be the unsung hero of autonomous driving: millimeter-wave radar. Now, one of China's leading makers of this technology wants to go public.

Shenzhen Cheng-Tech Co. Ltd. has filed for a Hong Kong IPO, hoping to capitalize on surging investor interest in autonomous driving technology. Founded in 2016 by Chen Chengwen, a former Huawei employee, and Zhou Ke, who brings over 20 years of automotive electronics experience, the company has positioned itself as China's third-largest producer of automotive millimeter-wave radar systems.

The Technology Behind the Growth

So what exactly is millimeter-wave radar? Think of it as a car's way of seeing the world through radio waves instead of light. The system emits radio wave signals, receives them when they bounce back from objects, and processes that information to detect targets and determine a vehicle's spatial position, movement direction, speed, distance, and surrounding objects.

Here's why it matters: while cameras and LiDAR get most of the attention, millimeter-wave radar has some serious advantages. It works in all weather conditions—rain, fog, snow, you name it. It offers strong anti-interference capabilities and can penetrate through various materials. As costs have fallen, the technology has become increasingly important in autonomous driving perception systems, especially as a complement to other sensing technologies that have their own limitations.

The market numbers tell the story. The millimeter-wave radar industry grew from 17.8 billion yuan ($2.54 billion) in 2020 to 29.1 billion yuan by 2024, according to third-party data in Cheng-Tech's prospectus filed late last month. That's 13.1% annual growth. Looking ahead, the pace is expected to accelerate to 16.7% annually, reaching 63 billion yuan by 2029, with automotive intelligent driving applications serving as the primary growth driver.

Impressive Revenue Growth, But Still in the Red

Cheng-Tech has some impressive credentials. The company began mass deliveries of its corner radars for passenger vehicles in 2020. A year later, it secured designation as a Tier-1 supplier for a German automaker. In 2022, it won orders from a leading domestic OEM after being named as a designated supplier.

The financial numbers show explosive growth. Revenue surged more than fivefold year-on-year to 539 million yuan in the first half of 2025. Front millimeter-wave radar sales jumped 351%, while corner millimeter-wave radar sales soared by 1,134%. This massive increase lifted the company's gross profit by 182% year-on-year to 74.51 million yuan in the six-month period.

But here's the reality check: Cheng-Tech still lost 14.43 million yuan in the first half of 2025. Part of that came from a 4.22 million yuan provision for trade and other receivables. The company also saw its general and administrative expenses triple, which it attributed to higher salaries and bonuses, as well as increased share-based payments.

The company has attracted multiple investors since its founding, including listed companies Ningbo Shanshan and Beijing Xinleineng Technology. Chairman Chen currently holds the largest stake at 15.48%.

The BYD Problem

Now we get to the elephant in the room. While Cheng-Tech's growth looks strong on the surface, there's a concentration risk that's hard to ignore. The company's listing application reveals that one customer accounted for about 82% of its revenue in 2022, and that figure climbed steadily to reach 97.4% in the first half of 2025. Though Cheng-Tech didn't name the customer, other media reports revealed it's electric vehicle giant BYD.

Having nearly all your revenue come from a single customer is never a comfortable position, no matter how big that customer is. If BYD decides to switch suppliers, diversify its supply chain, or simply reduces orders, Cheng-Tech's business could take a serious hit.

The company recognizes this risk and says it's exploring collaboration opportunities with other automotive clients. According to the listing application, Cheng-Tech has established business interactions with nine out of China's top 10 car OEMs, encompassing activities such as technical exchanges, product testing and engagement in supplier qualification processes. But apparently, none of those interactions have resulted in significant new orders to date.

Simultaneously, Cheng-Tech is looking to expand beyond automotive applications. The company says it plans to move into other industries, including high-precision industrial measurement and the low-altitude economy, in a bid to broaden its customer base.

Product Portfolio and Market Position

Cheng-Tech has developed multiple millimeter-wave radar products catering to intelligent driving demands from Level 0 (L0) to Level 2+ (L2+) on an autonomous driving scale of 0 to 5, where L5 represents fully autonomous driving. Its products are used in both passenger and commercial vehicles, covering front radars as well as rear and side-facing radars.

The broader millimeter-wave radar industry chain has three segments. Upstream consists mostly of components, including radio frequency front-end modules (MMIC), digital signal processors (DSP/FPGA), printed circuit boards (PCB), antennas and control circuits. The midstream encompasses millimeter-wave radar system design and manufacturing. Finished downstream products are mainly used in intelligent driving, traffic safety, robotics and the low-altitude economy.

Falling costs have been a primary factor boosting adoption of millimeter-wave radar products into a growing number of low- to mid-priced vehicle models, as more cost-conscious buyers increasingly want such features. The technology acts as an important part of a car's core perception system, complementing other sensing technologies like cameras, ultrasonic radar and LiDAR to prevent accidents, especially in complex or extreme driving scenarios.

Valuation Considerations

How should investors think about valuing Cheng-Tech? For context, leading autonomous driving components maker Hesai (HSAI) commands a forward price-to-earnings (P/E) ratio of 40 times its expected 2026 profit. Given Cheng-Tech's likelihood of also attaining near-term profitability, a pricing of the stock at a multiple below 30 times its projected 2026 earnings could give the shares some significant upside potential.

On the flip side, a high pricing at a forward ratio of more than 40 times could risk sending the shares underwater when they hit the market. Overall, the company is unlikely to get a premium valuation as high as Hesai's due to its excessive customer concentration and relatively smaller scale.

The timing of the IPO is notable. Hong Kong is experiencing one of its hottest IPO markets in years, with growing enthusiasm for technology stocks, particularly those engaged in autonomous driving. Cheng-Tech is clearly hoping to ride that wave of investor interest.

The question for potential investors comes down to this: Is the explosive growth story enough to offset the concentration risk? The autonomous driving market is clearly growing, and millimeter-wave radar is becoming increasingly important. But betting on a company where one customer represents 97.4% of revenue requires a strong stomach and confidence that diversification efforts will eventually pay off.