Chinese AI Chip Giant Cambricon Kicks Off Trading on STAR Market, Share Price Soars 288%

(Source: Cambricon)

Beijing-based AI chipmaker Cambricon (688256:SH) was officially listed on the Sci-Tech Innovation Board (the STAR Market) on July 20, 2020, with an issue price of 64.39 yuan per share, a 288% increase at the opening. Its stock price reached 250 yuan per share and the market value quickly broke through 100 billion yuan.

Jointly established by Chen Tianshi and Chen Yunji on Feb. 1, 2016 and dubbed ‘the first AI chip stock’, Cambricon has completed six rounds of financing with the pre-IPO valuation reaching 22.2 billion yuan, according to its prospectus. Investors include SDIC Ventures, Ali Ventures, Lenovo Ventures, Yuanhe Origin, Guoke Investment, CICC Capital and more.

According to its official website, the company focuses on “the new intelligent ecology of cloud edge and end, and is committed to creating core processor chips for various types of intelligent cloud servers, intelligent edge devices, and intelligent terminals.” Its AI chips business mainly adopts two models: one is to license processor IP to chip manufacturers, such as its cooperation with Huawei; the other is to design and sell chips by themselves, such as Cambricon cloud smart chip for Internet companies and other users, the Paper reported.

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According to its prospectus, from 2017 to 2019, the company’s losses were 381 million yuan, 41.0465 million yuan, and 1.179 billion yuan, respectively. The total loss exceeded 1.6 billion yuan. After excluding non-recurring gains and losses such as the provision of equity incentives, Cambricon’s net loss in 2019 was 376 million yuan, which was still quite a lot compared to the 28.86 million and 172 million yuan losses in the previous two years. Meanwhile, its R&D investment accounted for 380.73%, 205.18%, and 122.32% of revenue from 2017 to 2019, respectively.

From January to March this year, the company achieved an operating income of 11.5526 million yuan, a year-on-year decrease of 18.91%, which was mainly caused by the significant year-on-year decrease in revenue from the terminal intelligent processor IP authorization business obtained from Huawei HiSilicon and the Coronavirus-ravaged economy. The net loss was 108 million yuan, mainly due to a substantial increase in R&D investment.

In 2020, the company’s main business income is expected to be approximately 600 million to 900 million yuan, a year-on-year increase of 35.15% to 102.73%. The net loss attributable to the owner of the parent company is expected to be 650 million to 400 million yuan, and the net loss attributable to the owner of the parent company after deducting non-recurring gains and losses is estimated to be 800 million to 600 million yuan.

According to the prospectus, the raised funds will be used for its new generation cloud training chip and system project, its new generation cloud reasoning chips and system projects, its new generation edge-end artificial intelligence chips and system projects, and perking up its cash flow.