Text/Yang Jianyong
Debut is the peak. The issue price of Aojie Technology is as high as 164.54 yuan, and the market value is 68.8 billion. However, it broke on the first day, and the current market value was 44.8 billion yuan, a decrease of more than 24 billion yuan, a decline of up to 35%. It should be pointed out that this is an Ali chip company, which is the single largest shareholder, and Xiaomi is also its shareholder. It's just a pity in terms of the performance of the capital market. Originally, it was intended to raise 2.38 billion yuan, but the actual net amount of funds raised reached 6.546 billion yuan, exceeding nearly 4.2 billion yuan. To a certain extent, this also pushed up the issue price, so that the new players were caught off guard, did not "soar", and evaporated more than 40% on the first day.
Raising more than 6.5 billion yuan and increasing the research and development of new chips will help enhance competitiveness
According to previous disclosures, Aojie Technology intends to raise 2.38 billion yuan for the design of new communication chips, intelligent IPC chip design projects, the integration of multiple wireless protocols, the overall solution and platform project of high-precision navigation and positioning under multiple fields, as well as the construction of research and development centers and supplementary liquidity funds. Among them, 1.059 billion yuan was used for the design of new communication chips, including the research and development of commercial 5G enhanced mobile broadband terminal chip platforms, 5G industrial Internet of Things chip projects, and commercial WiFi6 chip projects.
Aojie Technology is a platform chip enterprise providing wireless communication and ultra-large-scale chips, has successfully mass-produced more than 25 new chips, the product line fully covers the field of cellular communication, non-cellular communication, AI field, to achieve product breakthroughs in the field of non-cellular and AI, and gradually reach cooperative relations with leading enterprises in various fields, and achieve large-scale sales. During the reporting period, the company's cellular baseband chip product sales exceeded 80 million sets, and the sales volume of non-cellular IoT chip products exceeded 40 million.
It should be known that Aojie Technology was founded in 2015 and can achieve rapid development, mainly due to the rapid expansion through acquisitions, including the acquisition of Alphean, Jiangsu Zhiduoxin, Marvell Mobile Communications Division, zhiqing information, and revenue has also been able to grow exponentially. From 2018 to 2020, the revenue was 115 million yuan, 398 million yuan and 1.08 billion yuan respectively, and the compound growth rate of operating income was 206%. It should also be pointed out that Marvell's mobile communications division is a abandoned mobile phone baseband chip business, and Aojie Technology has obtained Marvell's long-term precipitated technical achievements, including the launch of a new generation of baseband communication chips, which is also undertaken by Marvell.
In recent years, the revenue of Aojie Technology mainly comes from cellular products represented by baseband communication chips and mobile intelligent terminal chips, accounting for more than 70% of the total revenue, and in 2018 and 2019, it accounted for more than 90% of the total revenue. It is only that the mobile phone baseband chips sold are used for functional machines, and the smart phone baseband chip revenue has not yet been formed. Aojie Technology pointed out that the new generation of smart phone chip products still need 3 to 5 years from the beginning of the project to product design, mass production and commercialization. It can be seen that the main cellular products of Aojie Technology are 4G products, and 5G chips have not yet been sold.
Chip designers such as Qualcomm, MediaTek, HiSilicon, and Tsinghua Unigroup have launched corresponding chip products and successfully realized industrialization. For Aojie Technology, the 5G smartphone chip that has not yet launched is temporarily at a disadvantage when competing. However, in this fundraising, it is planned to invest 700 million yuan for the research and development of commercial 5G enhanced mobile broadband terminal chip platform and 5G industrial Internet of Things chip project.
This will help enhance the core competitiveness of Aojie Technology, complete the expansion from 4G product line to 5G product line, promote product upgrading, and consolidate its position in the communication chip design industry. With the large-scale construction of 5G commercial networks in mainland China, applications in downstream consumer electronics, industrial Internet, autonomous driving, telemedicine and other fields have been vigorously developed, and the demand for 5G terminal chips will be further expanded, and the industry will usher in a new round of opportunities, which will also help improve the profitability of Aojie Technology.
Continuing to lose money, Aojie Technology is expected to turn a profit in 2022
Aojie Technology has been in a state of loss for a long time. From 2018 to 2020, the amount of losses was 537 million yuan, 583 million yuan and 233 million yuan respectively, and the cumulative loss in the three years was as high as 1.353 billion yuan. The expected loss in FY2021 is 550 million to CNY 607 million. Mainly in 2020, a large amount of share payment expenses of 1.767 billion yuan were accrued, resulting in a large loss in 2020. On the whole, the integrated circuit design industry is a typical technology- and capital-intensive industry, with the characteristics of high capital investment and large R&D risk. The company's establishment time is short, and it needs a large amount of R & D investment to ensure the accumulation of technology and product development, so it is in a state of loss.
It is worth mentioning that Aojie Technology actively develops Internet of Things chips, in the field of non-cellular wireless communications, not only has a variety of high-performance Internet of Things chips based on WiFi, LoRa, Bluetooth technology, but also based on Beidou navigation (BDS) / GPS / Glonass / Galileo technology global positioning navigation chips, which can fully cover the application scenarios of various transmission distances in the Internet of Things market. With the advancement of non-cellular IoT chips, revenue has grown rapidly. In 2019, the revenue of non-cellular IoT was only 19.7 million yuan, and by 2020, it will grow to 88.49 million yuan, accounting for 10% of chip revenue.
It is understood that the low-power LoRa system chips and highly integrated WiFi chip products successively launched by Aojie Technology have excellent product performance, which can fully meet the needs of customers in the intelligent Internet of Things market in the near, long distance, ultra-long distance and various application scenarios. It is an integrated circuit design enterprise in China that has the R&D and design strength and batch supply capability of full-scale cellular baseband chips and multi-protocol non-cellular IoT chips. For example, in the field of AI, it is one of the few chip design companies in China that already has a simultaneous layout on the "cloud side" and "end side".
With the advent of the era of 5G network communication and the Internet of Everything, all kinds of consumer electronics and intelligent Internet of Things market will usher in a variety of different new applications, the Internet of Things market will usher in explosive growth, and cellular baseband chips as the basic hardware of the Internet of Things will have a large space for development and demand. The future technological innovation and product development direction of Aojie Technology includes the research and development of commercial 5G enhanced mobile broadband terminal chip platform, 5G industrial Internet of Things chip research and development, commercial Wifi 6 chip research and development, intelligent IPC chip design, and a variety of wireless protocol fusion, multi-field high-precision navigation and positioning chip overall solutions.
It is in line with the new needs of the 5G network communication and the Internet of Everything era, which is expected to drive continuous revenue growth. According to the calculations of Aojie Technology, the revenue will exceed 3.8 billion yuan in 2022, and the proportion of expenses to revenue will decrease significantly during the period, so as to achieve a small profit. That is to say, if the conditions for the calculation of the assumption of the turnaround can be met, the expected time node for the turnaround is 2022.
At last
As the development direction of information technology, the Internet of Things has developed rapidly in the past few years. From the perspective of connection scale, the global Internet of Things connection scale will reach 30 billion in 2020, and the connection volume will be close to 65 billion by 2024, and the mainland as an important global Internet of Things market, by the end of 2020, China's Internet of Things IP connection volume will reach 4.53 billion, and the total connection volume is expected to reach 10.27 billion by 2025. The above data is from an earlier report published by IDC.
From smart cars, smart buildings, smart healthcare to enterprise asset management equipment to industrial equipment, extensive connectivity has driven the transformation of information technology from mobile Internet to Internet of Everything, and tens of billions of smart devices are connected to the network. At this point, the demand for chips suitable for various smart devices has soared, which can release tens of billions of dollars in the market. With the help of the Internet of Things dividend, chip manufacturers are expected to usher in new opportunities.
Yang Jianyong, a contributor to Forbes China and winner of the NetEase 2020 Most Influential Award, is committed to in-depth interpretation of cutting-edge technologies such as the Internet of Things, cloud services and artificial intelligence, and his views and research strategies have been cited by many authoritative media and well-known enterprises.