Core stuff (public number: aichip001)
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Core East reported on June 24 that just now, the domestic CPU design manufacturer Loongson Zhongke landed on the science and technology innovation board at an issue price of 60.06 yuan / share.
The opening price of Loongson Zhongke was 96.28 yuan / share, an increase of 60.31%. After the opening of the market, the stock price of Loongson Zhongke declined. As of the writing of the core, the stock price of Loongson Zhongke was 89.33 yuan / share, an increase of 48.73%, and the total market value was 35.8 billion yuan.
Loongson Zhongke originated from the "Loongson" project started in 2001 by the Institute of Computing Sciences of the Chinese Academy of Sciences, was established in 2008, and began to operate in the market in 2010. "Loongson" is one of the earliest general processor series developed in China, which has been supported by the Knowledge Innovation Project of the Academy of Sciences, the 863 Program, the 973 Program, the Natural Science Foundation, and the Nuclear High-tech Foundation Major Project.
According to the prospectus, Loongson Zhongke's products are mainly aimed at industrial control and information chips, applied to the field of critical information infrastructure, and are gradually expanding to the commercial market. At present, Loongson Has basically completed the technical "make-up lesson" and formed an autonomous instruction set LoongArch, whose general-purpose processor performance has approached the mainstream product level of the commercial market, and the operating system tends to be mature and stable.
During the reporting period, Loongson Zhongke's revenue achieved rapid growth, with revenues of 486 million yuan, 1.082 billion yuan and 1.201 billion yuan from 2019 to 2021, respectively.
The controlling shareholder of Loongson Zhongke is Tiantong Xinyuan Company, and the actual controllers are Hu Weiwu, chairman and general manager of Loongson Zhongke, and Jin Hong, investment director.
In this IPO, Loongson Plans to Raise 3.512 Billion Yuan, which will be used for three projects: "Advanced Process Chip R&D and Industrialization", "High-performance General Purpose Graphics Processor Chip and System R&D" and "Supplementary Working Capital". After the end of the subscription, the total amount of funds raised by Loongson Zhongke was 24.62 yuan, which was more than 1 billion yuan different from the expected fundraising.
▲Loongson Zhongke plans to raise funds
First, it originated from the Institute of Computing of the Chinese Academy of Sciences, but it is necessary to "eliminate the poison of the academic school"
Loongson Originated from the "Loongson" project of the Institute of Computing, Chinese Academy of Sciences. According to Hu Weiwu, chairman and general manager of Longxin Zhongke, not long after he graduated with a doctorate, he was full of enthusiasm and felt that such a big country as China could not do without its own CPU, so he began to develop his own CPU.
However, the development of the "Loongson" project has not been smooth.
During the "Tenth Five-Year Plan" period, the domestic chip industry also appeared in the "Hanxin counterfeiting" incident, and the reputation of "Loongson", which is also supported by state funds, was also implicated. In 2005, Zhang Fuxin, Wu Shaogang, Hu Mingchang and others of "Loongson" went to Changshu to build an industrialization base, and in the case of no one using it, they started from the whole machine and promoted 150,000 sets of Loongson education computers for primary and secondary schools in Jiangsu.
In 2009, the "Loongson" team began to organize a business, and few people were interested. Hu Weiwu laughed at himself: "I am like Don Quixote, holding a spear called Dragon Core, and wanting to fight two windmills, one called Intel and the other arm." In the end, the Zhongguancun Management Committee held more than 20 coordination meetings for the Beijing Industrial Development and Investment Corporation (Beijing Industrial Development and Investment Corporation) to invest.
▲Hu Weiwu, chairman and general manager of Longxin Zhongke
The chairman of The Board of Directors of Beijing Industrial Investment went to the Institute of Computing of the Chinese Academy of Sciences at that time and bluntly said that he knew that investing in Loongson would definitely be lost, but it would also be invested if he lost, because this was a political task. Beigong Investment invested 100 million yuan and drove private capital to invest 100 million yuan, which became the first financing of Loongson Zhongke.
In 2010, the "Loongson" team transformed into a market-oriented operation. Hu Weiwu mentioned that researchers like himself started with "negative numbers" because they read too many papers and national project guides to eliminate the poison of "academics".
To this end, Hu Weiwu has set several basic principles, one of which is: The Loongson team does not evaluate the national award and does not report to the academician. In 2009 and 2011, the Institute of Computing of the Chinese Academy of Sciences voted to elect Hu Weiwu to select academicians, but he refused because "China does not lack academicians, but there is a lack of a company like Intel."
In 2013, Loongson Carried out the transformation of management, marketing and research and development, and clarified the policy of "taking innovation and development as the theme, industrial development as the main line, and ecological construction as the goal". In 2015, Loongson Zhongke's sales revenue exceeded 100 million yuan for the first time, and for the first time, it achieved breakeven.
It is reported that in 2016, CDH Capital led the B round of financing of Loongson Zhongke. In 2017 and 2019, Loongson Zhongke completed C and D rounds of financing respectively, with C-round investors including Linzhi Dingfu and CDH Investment, etc., and the leading investor of The D round was Guoxin Science and Technology Innovation Fund.
In market practice, Loongson Zhongke finally clarified the two market directions of industrial control and informatization. Its industrial control chips are oriented to embedded special equipment, industrial control and terminals; Information-based chips are geared towards desktops and servers.
So far, Loongson Zhongke has launched Loongson No. 1 series, Loongson No. 2 series and Loongson No. 3 series products, Loongson No. 1 and Loongson No. 2 are mainly for industrial control applications, and Loongson No. 3 is mainly for information applications.
▲Loongson server CPU roadmap
Second, the average annual growth rate of revenue is 57%, and the net profit in 2021 will exceed 200 million
During the reporting period, loongson Zhongke due to the formation of technical core competitiveness, its products in the domestic CPU related performance indicators in the leading ranks, and the industrial environment continued to improve, 2019-2021 period, its revenue continued to grow, the average annual compound growth rate of 57.28%.
In 2019, 2020 and 2021, Loongson Zhongke's revenue was 486 million yuan, 1.082 billion yuan and 1.201 billion yuan, respectively. Its net profit also rose from 192 million yuan in 2019 to 237 million yuan in 2021, and its net profit in 2020 was 72.23 million yuan.
▲Loongson Zhongke's revenue and net profit changes from 2019 to 2021
In the three years from 2019 to 2021, Loongson Zhongke's annual R&D investment was 78.2139 million yuan, 208 million yuan and 322 million yuan, accounting for 16.11%, 19.26% and 26.78% of each year's revenue, respectively.
During the reporting period, the main business income of Loongson Zhongke can be divided into industrial control chips, information chips and solutions according to products. Information-based chips are the main source of revenue for Loongson Zhongke, and the revenue of this business will account for more than 50% from 2019 to 2021.
▲From 2019 to 2021, loongson zhongke's revenue accounted for the proportion
Third, self-developed instruction set, ten technologies compatible with x86 and Android applications
At present, in the global IT industry, Intel and Microsoft have formed a "Wintel" ecosystem, and Arm and Google Android have formed an "AA" ecosystem.
Loongson does not use the more mature Intel x86 and Arm architectures, but from MIPS to the self-developed LoongArch instruction set. The instruction set is a set of instructions that the processor chip can execute, and is the interface between the processor hardware and software applications.
In 2011, Loongson Zhongke valued the open ecology of the MIPS instruction set, so it signed mips technology licensing contracts in 2011 and 2017 respectively, and obtained the license for research and development, production and sales based on the MIPS instruction set.
Before 2020, Loongson Zhongke's CPU products basically adopted MIPS instruction sets, and during the reporting period, Loongson Zhongke's revenue based on MIPS instruction sets accounted for about 70%. In 2020, LoongArch launched its autonomous instruction set LoongArch, no longer using MIPS to develop new CPU products.
In the same year, Chiplink, which was awarded a MIPS technology license contract, sued MIPS in the U.S. District Court for the Northern District of California. MIPS and its parent company, Wave Computing, enter into bankruptcy protection proceedings.
In February 2021, the Hong Kong International Arbitration Centre initiated an arbitration with Loongson Zhongke on the MIPS technology licensing contract dispute, and the arbitration is currently underway.
The prospectus emphasizes that Loongson Zhongke is committed to building an autonomous ecosystem independent of "Wintel" and "AA", not only launched an autonomous instruction set, but also mastered all the source code of the CPU IP core, and has the core capabilities of the operating system and basic software. At present, the performance of Loongson Zhongke's general-purpose processor has approached the mainstream product level in the commercial field market.
However, this kind of self-development starting from the instruction set has also led to the previous computer equipment based on Loongson Zhongke processors being difficult to be compatible with most graphical applications, and many programs will also lack a lot of basic component support and report errors.
In order to solve the problem of software ecology, Hu Weiwu summarized the 10 major technologies of "2+3+3+2" required. The first "2" is the BIOS and kernel; The two "3s" are the three compilers GCC, LLVM, GoLong, and the three virtual machines Java, JavaScript, and . NET。 The above 8 technologies are the key to Loongson's compilation of a complete Linux system, and the last "2" is the two major binary translators.
At present, Loongson Has Mastered All 10 Technologies, and is also developing software applications based on Loongson processors and instruction sets, and is compatible with some x86 and Arm applications with binary translation technology. Although Loongson does not use Windows and Android operating systems, it is compatible with its software applications.
At the "2022 LoongArch Ecological Development and Tongming Lake Innovation and Application Forum" on June 6, Hu Weiwu, a member of Loongson, said that the main contradiction of the LoongArch technology platform in 2022 turned to the application ecology. The software ecology based on LoongArch has three major development directions: First, it provides a basic version of the open source operating system; The second is to eliminate the barriers of the instruction system through an efficient binary translation system and achieve wide compatibility; The third is to form an independent programming language and programming framework.
During the forum, Loongson Announced that it will build a new generation of server software and hardware platforms with Tianyi Cloud, Tencent, Inspur Cloud, Dragon Lizard Community, Euler Community, Tongxin, Kirin, Tongfang, Guoguang, Haier and other enterprises, which will include instruction sets, chips, servers, software systems and server clusters.
▲LoongArch server industry ecology
In the domestic market, Loongson Zhongke mainly faces competition from domestic CPU players such as Dianke Shentai, Huawei HiSilicon, Feiteng Information, Haiguang Information, and Shanghai Zhaoxin.
However, because many domestic CPU players are not listed, Loongson Zhongke and comparable companies in the same industry have certain differences in business. During the reporting period, loongson's gross profit margin level was slightly higher than the average level of comparable companies in the industry.
▲Comparison of gross profit margins of Loongson Zhongke with comparable companies in the same industry
Loongson Has obtained more than 400 patents in the fields of general processor design, system software, and compilation technology, including 388 domestic invention patents and 21 overseas invention patents, filling the gap in the core basic software and hardware in China. As of the end of 2021, Loongson Has a total of 539 R&D personnel, accounting for 65.57% of the total number of employees.
Loongson has a total of 6 core technical personnel, all from the Institute of Computing, Chinese Academy of Sciences.
Fourth, the Institute of Computing of the Chinese Academy of Sciences was one of the top five customers, and Tongfu Microelectric was a packaging service provider
In the prospectus, in addition to the Institute of Computing of the Chinese Academy of Sciences, the top five customers of Loongson Zhongke from 2019 to 2021 are all represented by alphanumeric codes, and the customer names of Loongson Zhongke are not disclosed. In 2020, the Computing Institute of the Chinese Academy of Sciences was the fourth largest customer of Loongson Zhongke.
In 2019, 2020 and 2021, the sales amount of loongson's top five customers accounted for 67.92%, 70.24% and 60.86% of the current operating income, and the customer concentration was high.
▲The top five customers of Loongson Zhongke in 2021
Loongson Zhongke adopts the Fabless (fabless) business model, and the main procurement items include chip processing, electronic components, outsourced complete machine boards and outsourced processing services.
Most of its suppliers also use alphanumeric codes, and only leak 3 suppliers of Tongfu Microelectronics, Jones Day Precision and Zhongbang Self-Control, which are the top five suppliers of Loongson Zhongke during the reporting period, of which Tongfu Microelectric provides chip processing services for Loongson Zhongke, and Jones Day Precision and Zhongbang Self-Control provide purchased complete machine board services for Loongson Zhongke.
▲The top five suppliers of Loongson Zhongke in 2021
5. Mr. and Mrs. Hu Weiwu are the actual controllers
The controlling shareholder of Loongson Zhongke is Tiantong Xinyuan, which holds 23.98% of the shares of Loongson Zhongke. The actual controllers of Longxin Zhongke are Hu Weiwu and Jinhong.
Hu Weiwu received his bachelor's degree from the University of Science and Technology of China in 1991 and his Ph.D. from the Institute of Computing Technology of the Chinese Academy of Sciences in 1996. From 1996 to January 2021, Hu Weiwu worked at the Institute of Computing, Chinese Academy of Sciences, and successively served as assistant researcher, associate researcher, researcher, doctoral supervisor, assistant director, deputy chief engineer, chief engineer and other positions. In August 2009, Hu Weiwu was appointed vice chairman and general manager of Longxin Zhongke; Since November 2019, he has been the chairman and general manager of Loongson Zhongke.
Jinhong served as the department manager of Beijing Vega Star Grid Technology Co., Ltd. and the department manager of Beijing Haidian Zhongke Computing Technology Transfer Center. Since May 2008, she has successively served as the manager of Loongson's zhongke department, risk control director and investment director.
▲Loongson Zhongke shareholding structure
In addition to Tiantong Xinyuan, the shareholders who account for more than 5% of the shares of Longxin Zhongke include Zhongke Suanyuan, Zhongke Baifu, Hengqin Lihebo and Beigong Investment, accounting for 21.52%, 14.35%, 10.04% and 7.17% of the shares respectively.
▲Loongson Zhongke share capital situation
Conclusion: Loongson Zhongke listing to help domestic CPU breakthroughs, software ecology is a short board
Loongson Zhongke is a representative chip design enterprise in the field of domestic CPU, and this time it plans to raise 3.5 billion yuan for advanced process chips and general-purpose graphics processors, or to help its next-generation Loongson processors and graphics processor research and development and technological breakthroughs.
In the prospectus, Loongson Zhongke has repeatedly emphasized its own ecological construction, not only in the development of its own software application ecology, but also in the compatibility of some applications based on x86 and Arm. However, this aspect is still the short board of Loongson processors, and if Loongson wants to enter the commercial processor market, it still needs to provide consumers with more application support.
Reference source: "Spiritual Hard Talent Technology Hard" Hu Weiwu