Zhan Ding System's Two-Year Capital Dream Shattered: Second Shareholder Departures, Related Company Defaults, and Restructuring Failures | Titanium Media In-Depth

Source: Titanium Media

When 8 Billion Space (688181.SH) announced on March 9th that it was divesting 11.5892% of Nantong Zhanding, a capital narrative surrounding AI liquid cooling and new semiconductor materials was officially unveiled. This deal, with a 123% premium and net profit exceeding 86 million yuan, appeared to be a perfect financial arbitrage, but concealed a darker undercurrent—the collapse of the “Zhanding system” capital map. Once pursued by prominent institutions like Sequoia Capital and whose valuation soared 700% in 27 months, this star company is now falling from its peak, while its operator Chen Chaoqi’s “Electronic Fluorinated Liquids + Electronic Special Gases” empire has faced successive capital setbacks over the past two years.

From the failed cross-border acquisition of Shimao Energy, to penalties faced by Sunflower’s restructuring, to Nantong Zhanding’s massive losses and the hurried exit of secondary shareholders, the rise and fall of the “Zhanding system” is not only a failure of a capital player but also reflects the profound shift in the capital market’s attitude toward “hard technology” and “domestic substitution” concepts—from frenzy to rationality.

At the Peak of the Bubble: The Myth of Valuation and Capital Hunting of Star Targets

Rewinding to 2022, the acceleration of AI computing infrastructure construction made immersion liquid cooling the core cooling method for AI servers, ushering in a golden window for electronic fluorinated liquids. Nantong Zhanding, founded just four months earlier, quickly gained favor with capital thanks to its main product’s track record—domestic leader 8 Billion Space first entered with 20 million yuan in initial investment at a pre-money valuation of 150 million yuan, acquiring 11.11% equity as part of its strategic layout in new materials.

At that time, Chen Chaoqi, with experience at SMIC and Applied Materials, positioned himself as a “technology expert” backing the “Zhanding system,” rapidly building a blueprint across electronic fluorinated liquids and special gases.

As the AI industry continued to heat up, capital’s pursuit of hard tech targets intensified, causing Nantong Zhanding’s valuation to soar. By March 2025, 8 Billion Space invested an additional 50 million yuan, pushing Nantong Zhanding’s pre-investment valuation to 1 billion yuan—nearly six times the initial valuation. With a total investment of 70 million yuan, 8 Billion Space remained the second-largest shareholder. During this round, well-known institutions like Sequoia Capital, Changjiang Innovation Investment, and Dingfeng Investment entered, pushing Nantong Zhanding to industry star status—less than three years from founding, with a 700% valuation increase in 27 months, it staged a capital frenzy.

At that time, 8 Billion Space was very confident about Nantong Zhanding. In November 2025, at a meeting with nearly 50 institutions, the company’s secretary publicly stated that “Nantong Zhanding is developing well” and promised to support its growth through various means. The capital market also anticipated this cross-sector investment, viewing it as a key move for 8 Billion Space to break through core bottlenecks and seize the AI liquid cooling track.

However, few noticed that behind this valuation frenzy lurked hidden risks. As early as November 2024, the “Zhanding system” attempted to connect with the A-share market—Shimao Energy (605028.SH), under pressure from its core business, planned to issue shares to acquire at least 58.07% of Nantong Zhanding, aiming to cross into semiconductor materials. At that time, Nantong Zhanding’s valuation was capped at “no more than 1.2 billion yuan,” but just four months later, the valuation at 8 Billion Space’s capital increase had dropped to 1 billion yuan—indicating that before Sequoia and others entered, Nantong Zhanding’s valuation had already quietly shrunk.

More concerning was that Shimao Energy’s restructuring was abruptly terminated after three days of suspension, with the official reason being “lack of consensus among parties,” but behind it, there may have been due diligence uncovering potential risks—on the day after the announcement, the Shanghai Stock Exchange issued a regulatory work letter, and the stock price of Shimao Energy experienced abnormal fluctuations before suspension. The sudden exit of four QFII funds also cast doubt on this cross-border M&A.

[Image source: Tianyancha APP]

The Dimming Halo: The Truth Behind the Reversal in Hot Sectors

8 Billion Space’s announcement of its liquidation for Nantong Zhanding’s core operations finally revealed the key data—shattering external expectations. Despite being in the explosive growth track of liquid cooling, Nantong Zhanding’s actual performance was the opposite: revenue and net profit declined sharply, turning from profit to loss.

In 2024, domestic AI computing infrastructure construction peaked, with internet giants and cloud service providers expanding data centers, leading to surging demand for liquid-cooled servers. The fluorinated liquids market boomed. IDC forecasted a compound annual growth rate of 46.8% for China’s liquid cooling server market from 2024 to 2029, reaching $16.2 billion by 2029; QY Research predicted that by 2030, the global immersed cooling liquid market for data centers would reach $970 million, with a CAGR of 21.2%.

In this context, fluorochemical companies like Gushen股份, Yonghe股份, and Sanmei股份 benefited, with their 2025 performance soaring.

[Chart source: IDC report]

Meanwhile, Nantong Zhanding delivered an embarrassing report: total revenue in 2024 was only 108.75 million yuan, with a net profit of just 85,100 yuan—almost negligible. In the first three quarters of 2025, revenue was only 21.19 million yuan, with a net loss of 41.54 million yuan. While the industry experienced explosive growth, Nantong Zhanding suffered massive losses, a stark contrast that cannot be simply explained by “industry cycles” or “market expansion pains.”

[Source: Announcement]

Even more puzzling, despite poor performance, Nantong Zhanding was aggressively expanding capacity—building factories in Jiangxi, Gansu, and other regions. Media reports indicated that Chen Chaoqi’s controlled Jiangxi Zhanding signed investment agreements with Jinxian County government, but project progress was far below expectations, and the company was sued by local state-owned shareholders for breach of commitments, with a claim of 16.8 million yuan. Jiangxi Zhanding’s plant remained idle for long periods, with power cut due to unpaid bills, while Chen transferred employees and assets to Gansu Zhanding at no cost, further worsening Nantong Zhanding’s operational difficulties. The Gansu project, though seemingly progressing quickly—environmental assessments in March 2025 and a groundbreaking ceremony in May—appeared more like a capital operation stunt than genuine industry development. Nantong Zhanding’s website only features a brief company introduction, with no detailed product, technology, or customer info, starkly contrasting its “star target” image.

Related Collapse: The Final Straw Crushing Capital Confidence

If Nantong Zhanding’s poor performance caused doubts, the collapse of its related company Xipu Materials’ restructuring was the final blow to investors like 8 Billion Space. As another core asset of Chen Chaoqi’s “Zhanding system,” Xipu Materials was deeply linked with Nantong Zhanding, forming a shared利益共同体—its failure in a backdoor listing became the trigger for the collapse of the “Zhanding system” capital map.

In September 2025, just half a year after 8 Billion Space’s second round of investment in Nantong Zhanding, Sunflower (300111.SZ) announced a major asset restructuring plan to acquire 100% of Xipu Materials, branding it as a “rising star in semiconductor materials,” claiming a “customized OEM + self-production” profit model with mature technology and customer channels. After the announcement, Sunflower’s stock hit three consecutive limit-ups, with trading volume surging, but the restructuring was soon exposed as a sham.

Investigation revealed that Xipu Materials’ own factories were still under construction and lacked independent production capacity. Its main products were standardized, and the so-called “customized OEM + self-production” model was misleading. The company claimed to supply from two factories, but one only had a lease agreement, not a formal contract, and the other was still being built, making capacity realization impossible. Moreover, Xipu Materials was suspected to be a trading company, relying on external procurement for core products like electronic fluorinated liquids, not self-produced.

Under regulatory scrutiny and market skepticism, Sunflower terminated the restructuring in January 2026, and in March received a “Notice of Administrative Penalty” from Zhejiang Securities Regulatory Bureau, fined 5.1 million yuan for misleading disclosures, with responsible persons including the former chairman and secretary also penalized. This failed restructuring not only cost Sunflower heavily but also exposed the “Zhanding system” capital operation mode—Chen Chaoqi’s attempt to promote assets via “shell change” ended in a fall due to false statements.

It’s worth noting that Xipu Materials and Nantong Zhanding had deep related-party transactions: Xipu Materials was a procurement customer for Nantong Zhanding’s electronic fluorinated liquids and also provided customer referrals. The head of Xipu Materials once said, “Xipu Materials was established early and has strong customer relationships, which can help Zhanding materials attract traffic.” But after Xipu Materials’ collapse, its customer resources could no longer support Nantong Zhanding, turning original business synergy into risk transmission, further intensifying Nantong Zhanding’s operational pressure. More worryingly, multiple companies controlled by Chen Chaoqi operated similar businesses, yet only pushed Xipu Materials into restructuring, revealing obvious competitive conflicts and raising serious questions about the compliance of his capital operations.

Capital Retreat: The Rise and Fall of the Zhanding System and Reflection on Hard Tech Investment

From the failure of Shimao Energy’s restructuring in 2024 to Sunflower’s penalties and 8 Billion Space’s exit in 2026, within just two years, Chen Chaoqi’s “Zhanding system” saw its two core assets suffer major setbacks, with the “electronic fluorinated liquids + electronic special gases” industry map teetering on collapse.

Reviewing the “Zhanding system” capital operation path, its core logic is clear: leveraging Chen Chaoqi’s semiconductor background, packaging hot track targets, inflating valuations through capital hype, then attempting mergers and acquisitions to list on A-shares for capital realization. This “storytelling and concept hype” model thrived during the frenzy for hard tech concepts but lacked genuine performance support and compliance awareness, ultimately leading to a bubble burst.

8 Billion Space’s exit was a warning sign. Its 2025 performance report subtly hinted that “initial investments in certain targets involved performance commitments and compensation clauses, which are under negotiation.” Given the massive losses of targets, related company failures, and doubts about the actual control capabilities, holding onto these stakes posed huge risks.

The rise and fall of the “Zhanding system” also serve as a wake-up call for the capital market. Recently, “hard tech” and “domestic substitution” have become hot pursuits, attracting large capital inflows into AI, liquid cooling, semiconductor new materials, and other tracks. But some investors blindly follow trends, ignoring the real operational capabilities and technological strength of companies, leading to valuation bubbles. Meanwhile, regulatory tightening—such as inquiries into Shimao Energy’s restructuring and penalties after Sunflower’s restructuring—demonstrates the authorities’ resolve to regulate the market and protect investors.

Now, Chen Chaoqi’s capital dreams have been severely dashed, and the future of the “Zhanding system” is uncertain. With Nantong Zhanding sued, Gansu Zhanding’s capacity questioned, Nantong Zhanding’s huge losses, and Xipu Materials’ IPO dreams shattered, this entrepreneur—who is both a technical expert and a capital player—still faces the challenge of reconstructing the “Zhanding system” narrative. The market remains to be seen whether he can do so. (Article by Company Observation, author Cao Shengyuan, edited by Deng Haotian)

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