Continuous loss of performance, departure of venture capital shareholders... Cambrian and genius founder Chen Tianshi's "eventful autumn."

Per reporter: Ke Yang Per editor: Liang Qi

In 2023, big models and generative AI are hot, but the Cambrian, the "first stock of AI chips", has entered an eventful autumn. In April, news of layoffs was reported in Cambrian. In September, after the venture capital shareholders completed the liquidation reduction, Chen Tianshi promised not to reduce his holdings, but he was caught in the controversy of "verbal protection".

The Cambrian led by Chen Tianshi is considered a representative of the "academic school". Chen Tianshi was born in 1985 and calls himself an "ordinary researcher". Before Cambrian went public, he expressed the company's ambition in an interview: "The intelligent era will give birth to new hardware giants, and I don't hide that Cambrian wants to be this 'general'." (Note 1)

Brother Chen Yunji's evaluation of Chen Tianshi is: business matters are handed over to his younger brother, he is more cautious, every step will think of feasibility, can avoid the "pit" in industrial development, suitable for leading an enterprise to rush forward. (Note 2)

Growth is bound to go through many dangers. From the performance point of view, despite the unprecedented popularity of the AI chip market, Cambrian still lost money in the first half of the year. Domestic AI chip leaders have a long way to challenge international giants.

"I know people want to see the movie, but this movie is long, long. You might as well care about another decades-old movie - the story of Intel and AMD is not over. (Note 3) Chen Tianshi once said.

The "first stock of AI chips" frequently shoots to protect the plate

In order to convey confidence to the market, Cambrian has been moving a lot over the past week.

On September 26, Cambrian issued two announcements. First, in the morning of the same day, Chen Tianshi, the actual controller, chairman and general manager of the company, voluntarily promised that the company's shares (about 120 million shares) directly held by him would not be reduced in any way from the date of the commitment letter to December 31, 2024.

However, according to the new rules issued by the CSRC at the end of August, Chen Tianshi is not yet eligible to reduce his holdings. According to the new regulations, if a listed company has broken through the issuance or net breakdown, or has not paid cash dividends in the past three years, and the cumulative cash dividend amount is less than 30% of the average annual net profit in the past three years, the controlling shareholder or actual controller shall not reduce its holdings of the company's shares through the secondary market.

After market hours on September 26, Cambrian announced again, saying that it repurchased 124,400 shares for the first time in a centralized bidding transaction, accounting for 0.03% of the company's total share capital, and the repurchase transaction price ranged from 127.97 yuan / share to 129 yuan / share.

Previously, Cambrian Venture Capital's shareholder SDIC (Shanghai) Science and Technology Achievements Transformation Venture Capital Fund Enterprise (Limited Partnership) notified on September 21 to complete the reduction plan, and from March 23 to June 29, it has reduced its holdings of about 7.3987 million shares of Cambrian, accounting for 1.776%, with a total amount of about 1.482 billion yuan, almost liquidated.

For this reduction, Zhang Binlei, a senior analyst at Xinmou, said in a telephone interview with the "Daily Economic News" reporter that from the second year of listing, due to the impact of changes in large customers on performance, Cambrian's stock price fell sharply compared with when it was listed, to this year, the outbreak of AIGC concept and the landing of related products have brought new voices to the industry, driving Cambrian's stock price up, and shareholders are ultimately pursuing return on investment. Exiting at a good stage is a good decision for them.

Focusing on the development prospects of Cambrian, Zhang Binlei believes that for some cutting-edge technologies, while welcoming technological innovation and breakthroughs, there are also concerns about (technology) landing. "But the entire AI track is very valuable and promising, so I think the work they do is meaningful, and I am still optimistic that this track can run out of the domestic head chip companies in the future."

In response to related topics such as the withdrawal of venture capital shareholders and Chen Tianshi's commitment not to reduce his holdings, the reporter also expressed interview demands to Cambrian, but did not receive an effective response as of press time.

Before Cambrian became a general

"I'm just an ordinary researcher, and I started a company by various chances, far from such a big coffee stall. I don't have any big goals personally, I don't think about how great I have to become, I just want to do my job well. [Note 4] In an interview with the media in 2020, Chen Tianshi reviewed his entrepreneurial journey like this.

At that time, the unicorn of the domestic chip track had just got rid of the shadow of "breaking up" with Huawei. "Our revenue is growing rapidly, and we hope to have the opportunity to publicly disclose our earnings to everyone in the future." [5] When asked about the impact of his breakup with Huawei, Chen Tianshi replied. At that time, Cambrian had officially launched an IPO and broke through the science and technology innovation board. From the submission of the IPO application to the approval of the meeting, the star company took less than 70 days.

"Ordinary scientific researcher", this is the label Chen Tianshi gave himself. Cambrian prospectus describes his positioning and role as follows: "Responsible for controlling the overall technical direction, business process and strategic development direction of the company, and leading academic research and industrialization work, laying the technical foundation for the company to quickly enter the forefront of the artificial intelligence chip industry, and making outstanding contributions to the formulation and development of the company's overall technical route." ”

In the interpretation of the outside world, Chen Tianshi is called a "genius boy". He was admitted to the junior class of the University of Science and Technology of China, graduated with a doctorate in his early twenties, developed the first artificial intelligence chip at the age of 31, and has more than 10 years of experience in the field of AI chip research. , 31 years old "went to the sea" to start a business and founded Cambrian.

In 2016, Chen Tianshi and the Chinese Academy of Sciences Arithmetic jointly funded the establishment of Cambrian. For a long time afterward, the growth of this star unicorn company was almost smooth.

Recalling the beginning of his business, Chen Tianshi said: "When we first started to make artificial intelligence (AI) chips, AI chips were actually not hot at all - first of all, AI was not hot; Make a special chip for AI, and it is even less hot. (Note 6)

The AI fever came soon. In the spring of that year, AlphaGo and Lee Sedol fought for five hours in the fifth game of the man-machine battle, which ended with Lee Sedol admitting defeat, and the total score was fixed at 4:1. Then, the artificial intelligence market also seemed to be ignited and began a new round of outbreak.

"Fortunately," Chen Tianshi said more than once when referring to entrepreneurship and financing, "I heard that many AI chip startups are asked when raising funds - 'How do you compare with Cambrian?'" "It's really not difficult for us to raise funds, which may be the resource aggregation effect of the head company." (Note 7)

In 2017, Cambrian quickly climbed onto the shoulders of giants. Huawei's first mobile phone AI chip, the Kirin 970, released in 2017, integrates Cambrian's A1 processor. Cambrian was valued at $2.5 billion in June 2018 after raising a Series B round, just two years after the company was founded.

The crisis appears when accelerating driving. The breakup with Huawei was the first crisis Chen Tianshi faced with Cambrian.

In 2017~2019, Cambrian's terminal intelligent processor IP licensing business revenue was 7.71 million yuan, 117 million yuan and 68.77 million yuan, accounting for 98.95%, 99.69% and 15.49% of the revenue, respectively. Among them, Huawei HiSilicon contributed 7.7127 million yuan, 114 million yuan, and 63.658 million yuan in sales, accounting for 100.00%, 97.94%, and 92.56%.

In 2018, Huawei HiSilicon changed direction and chose to independently develop artificial intelligence chips and launch a number of products. In 2019, Cambrian's terminal intelligent processor IP licensing business revenue decreased by 41.23% year-on-year. Cambrian mentioned in the prospectus that it was mainly Huawei's HiSilicon that chose to develop its own terminal smart chips and did not continue to cooperate with the company. Since Cambrian and Huawei HiSilicon have not continued to reach new cooperation, it is difficult for the company to develop large customers of the same business volume in the short term, so the revenue of the company's terminal intelligent processor IP licensing business will continue to decline in 2020.

Under the crisis, Chen Tianshi chose to shift Cambrian's business focus to intelligent computing cluster systems and cloud AI chips.

After bidding farewell to Huawei, Cambrian quickly launched an intelligent cluster system, providing cloud AI chips as the basis for computing power, providing a basic system software platform, and then combining with other brands of servers, storage devices, etc., to form a relatively complete cloud computing solution. Since 2019, Cambrian's revenue has become an intelligent cluster system.

The genius boy once again came to the crossroads

In the winter of 2022, Chen Tianshi and Cambrian suffered a setback for the second time.

In March 2022, Cambrian announced that Liang Jun, a core technology backbone and CTO, responsible for the overall technology and product research and development of AI chips, and R&D team management, left "due to differences with the company". Cambrian later responded that the disagreement mainly focused on the company's future development, and the company wanted to "focus on the widespread implementation of products and seize the opportunity period, while Liang Jun wanted to invest more and study in technology."

The disagreement with Liang Jun was seen as a sign of accelerated commercialization in the Cambrian. According to the 2022 annual report, Cambrian's current operating income mainly comes from cloud product lines, edge product lines and intelligent computing cluster system business. In the cloud product line, Cambrian has launched four generations of chip products. In 2022, Cambrian's Siyuan 290 and Siyuan 370 products will complete product introduction in many enterprises, becoming Cambrian's main revenue-generating product line, driving a substantial increase in Cambrian's cloud product line business revenue in 2022.

In 2023, the market should have expected more from Cambrian. While the product landing is accelerating, ChatGPT and large models are rapidly becoming popular, and the demand for AI chip computing power is increasing rapidly.

The opportunity is here, but the crisis is re-emerging.

In December 2022, 36 entities, including Cambrian, were placed on the U.S. Department of Commerce's Bureau of Industry and Security (BIS) on the "Entity List" for export controls.

In the 2022 annual report, Cambrian said that the impact of this matter on the company's research and development is still within a limited scope, and the company's core technology comes from Cambrian's independent research and development, has independent intellectual property rights, and will not have a significant adverse impact on the company's product research and development and core competitiveness. The company will actively evaluate and respond to the impact of the "Entity List" on the company's research and development work, production process, market expansion, etc., and control this impact within a controllable range.

The aftermath spread to 2023, and Cambrian intelligent driving chip subsidiary "Cambrian Xingge" was exposed to layoffs and other adjustments. As of the end of June 2023, Cambrian had 980 R&D personnel, compared with 1,207 in the same period of the previous year, a year-on-year decrease of 227.

Chen Tianshi's last appearance was at Cambrian's performance communication meeting. For the first time in the face of investors, he responded to the Cambrian woes of the year.

According to titanium media reports, at the results briefing on August 31, Chen Tianshi said that after the company was included in the "entity list" by the US Department of Commerce, the products have been affected to a certain extent due to supply chain factors. The company has overcome external difficulties, and the research and development and various operations of Cambrian and its subsidiaries are progressing in an orderly manner. "The current development of the company and the industry is clearly influenced by a number of non-commercial and non-technical factors, and in this well-known context, we earnestly appeal to the media to show more tolerance and support to the company and other companies in the same industry." (Note 8)

Although Chen Tianshi did not respond positively to the layoffs at the results meeting, he said that the company's and its subsidiaries' research and development and various operations are progressing in an orderly manner, mainly because the company comprehensively integrates industry, market, supply chain and other factors for business planning, saying that it will strictly follow the requirements of relevant laws and regulations and fulfill information disclosure obligations in accordance with the law.

In an interview in 2020, Chen Tianshi once said: "Intel is 52 years old this year, AMD is 51 years old this year, and NVIDIA is 27 years old this year. Cambrian is only 4 years old, and he is only a child compared to his predecessors in the industry. Rome was not built in a day, and the benchmarks of our predecessors are all from the blue strands of the road, we have great ambitions, but the long-distance running has just begun. (Note 9)

Long-distance running into the 7th year, in the integrated circuit industry of "stuffy for a year and a half, take out a chip", Chen Tianshi is becoming more and more "stuffy", but the industry still has expectations for this company, waiting for Chen Tianshi to bring it through this crisis and take out the next "chip".

Cover image source: Visual China - VCG41N1188747468

Exegesis:

1. "Miss A Talks to Chen Tianshi: The AI chip market is vast, Cambrian friends are all over the world|Jiazi Lightyear", Jiazi Lightyear WeChat public account

2. "The "Gemini" of Chinese Core for AI - Chen Yunji and Chen Tianshi, founders of Cambrian Technology, Science and Technology Daily

3. "Miss A Talks to Chen Tianshi: The Race to a Great Chip Company is Long|Jiazi Lightyear", Jiazi Lightyear WeChat public account

4. "Miss A Talks to Chen Tianshi: The Race to a Great Chip Company is Long|Jiazi Lightyear", Jiazi Lightyear WeChat public account

5. "Cambrian is Coming", Observer Network

6. ""Maker" Chen Tianshi and the Cambrian Outbreak, China Science Daily

7. "Miss A Talks to Chen Tianshi: The Race to a Great Chip Company is Long|Jiazi Lightyear", Jiazi Lightyear WeChat public account

8. "Cambrian Chairman Chen Tianshi: Due to the US "Entity List", the supply chain is blocked and the products are affected to a certain extent|Silicon-based World", titanium media

9. "Miss A Talks to Chen Tianshi: The Race to a Great Chip Company is Long|Jiazi Lightyear", Jiazi Lightyear WeChat public account

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