Text/Yang Jianyong
As an Ali-related chip company, Aojie Technology has attracted countless attentions, landing on the Science and Technology Innovation Board with an issue price of 164.54 yuan, corresponding to a market value of 68.8 billion yuan. Regrettably, the first day of the listing transaction fell below the issue price, and then continued to decline, the lowest price of 86.72 yuan, compared with the issue price, the current market value of 36.9 billion yuan, a decrease of 31.9 billion yuan. It should be pointed out that Aojie Technology originally wanted to raise 2.38 billion yuan, and 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 and suffered heavy losses.
Aojie Technology is a platform-based chip enterprise providing wireless communication and ultra-large-scale chips, with a product line that comprehensively covers the field of cellular communication, non-cellular communication and AI, and has achieved product breakthroughs in the field of non-cellular and AI. In the previously disclosed documents, it was pointed out that the cumulative sales of cellular baseband chip products exceeded 80 million sets, and the cumulative sales 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 Department, and Zhiqing Information, and the revenue has been doubled.
In 2017, 2018, 2019 and 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%. In 2021, revenue is expected to be 2.138 billion yuan, an increase of about 1.057 billion yuan over 2020, an increase of 97.78% year-on-year. However, net profit is in stark contrast to the exponential growth rate of revenue, and it has been in a state of loss for a long time. From 2017 to 2020 alone, the cumulative loss was as high as 4.4 billion yuan, with losses of 978 million yuan, 537 million yuan, 583 million yuan and 2.327 billion yuan respectively.
Among them, in 2020, a large amount of share payment expenses of 1.767 billion yuan was accrued, resulting in a large loss in 2020. Overall, the integrated circuit design industry is a typical technology- and capital-intensive industry with high capital investment. The establishment time of Aojie Technology 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. The 2021 loss is expected to be 564 million yuan. Although the amount of loss narrowed by 1.763 billion yuan, 75.76% narrower than the same period last year, in the author's view, profitability is worrying, long-term losses are difficult to support high valuations, and the cumulative loss in the past five years has exceeded 5 billion yuan, and the prospect is worrying.
However, the IoT industry has a bright future. According to IDC's forecast of the scale of domestic IoT spending, by 2025, the scale of domestic IoT spending will reach $306.98 billion, showing a rapid growth trend. Aojie Technology told investors that due to the emergence of a variety of applications of the Internet of Things, customers mainly purchase communication modules through module manufacturers. In 2020, domestic module manufacturers have collectively occupied 60% of the global market share. The company has entered the supply chain of domestic mainstream module manufacturers, and has great growth potential in the cellular Internet of Things market.
However, 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. And the mobile phone baseband chip sold is used for functional machines, and has not yet formed a smart phone baseband chip revenue. It can be seen that the main cellular products are 4G products, and 5G chips have not yet been sold. However, at present, 5G chip products have been successfully tape-out, and we are continuing to actively promote the mass production of 5G chips.
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. It is worth mentioning that in this fundraising, it is planned to invest 1 billion 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.
In addition, 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 has a global positioning navigation chip based on Beidou navigation /GPS/Glonass/Galileo technology, which can fully cover all kinds of transmission distance application scenarios in the Internet of Things market. With the advancement of non-cellular IoT chips, revenue has grown rapidly. In 2020, non-cellular IoT revenue increased 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. 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". At the same time, with the advent of 5G network communication and the era of 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, 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 include 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.
Finally, a wide range of smart devices are connected to the network to drive information technology into the era of internet of everything. IDC's earlier forecast data shows that by 2024, the global Scale of Internet of Things connectivity will be close to 65 billion, from smart cars, smart buildings, smart healthcare to enterprise asset management equipment to industrial equipment. Massive IoT smart devices have a strong demand for chips, 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.