Although my country's automotive chip industry is still in the early stages of development, it has already burst out with unlimited potential.
On the one hand, the development of smart cars continues to drive demand growth; on the other hand, under the guidance of policies, auto chip companies continue to seize high ground. In this regard, at the 2023 China Automobile Forum held from July 5th to 7th, Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers, stated that "China will become the gathering place for future automotive chip development."
Recent developments in the automotive chip industry have further verified industry trends.
According to the public information of the Hong Kong Stock Exchange, Black Sesame Smart Technology Co., Ltd. (hereinafter referred to as "Black Sesame Smart") has formally submitted a listing application to the Hong Kong Stock Exchange, planning to be listed, with an expected fundraising scale of 200-300 million US dollars. CICC Hehuatai International is its joint sponsor.
It is worth mentioning that just 10 days before Black Sesame Smart applied for listing, Shanghai Xinwang Microelectronics Technology Co., Ltd. (hereinafter referred to as "Xinwang Micro"), another automotive chip company, also made an initial public offering on the Shanghai Stock Exchange. Sprint to the Science and Technology Innovation Board. In addition, AI chip start-up company Beijing Horizon Robot Technology Research and Development Co., Ltd. (hereinafter referred to as "Horizon") also frequently reported that it will go to Hong Kong for an IPO.
Different from the previous years, domestic car chip companies are more concerned with updating their research and development results. This year, related companies frequently post orders and apply for listing financing one after another. Does this mean that the car chip industry will usher in a key market decisive period?
The future of the car core is bright, and Black Sesame Smart brings products to break through
Since the car gauge chip is the core hardware of the decision-making layer of the automatic driving system, the development of the car gauge chip industry has become a prerequisite for the development of the autonomous driving industry. With the increasing demand for localization in recent years, the smart connected car market in the downstream industry of automotive chips is becoming more and more popular. Many car companies are competing to increase the automotive chip industry in order to ensure the stability of the smart chip supply chain of OEMs. For example, SAIC recently publicly stated that it subscribed to invest 6 billion yuan to hold 99.8% of the shares and jointly establish a car core company with an external company.
Against this background, the future of the car core is bright. According to the forecast of China Association of Automotive Engineers, it is estimated that by 2027, the market size of China's automotive high-power chips will exceed 6 billion yuan.
Specifically, there are currently three main car core suppliers. One is established chip designers, such as Nvidia, AMD, and Qualcomm. These manufacturers have more R&D strength and experience because they achieved high profitability in the consumer electronics chip track in the early days. The second is the self-research team of auto companies. At present, the core-making companies that have entered the game include not only new car manufacturers such as NIO, Ideal, and Xiaopeng, but also traditional auto companies such as BYD, Dongfeng, Great Wall, and BAIC. Finally, there are car core start-ups such as Black Sesame Smart. Due to the characteristics of independent project establishment and strong research and development background, new ventures have amazing financing "resume". Among them, Black Sesame Smart has completed 10 rounds of financing, with a total financing of 695 million U.S. dollars; Xinwang Micro has completed C2 round & strategic financing, and has obtained multiple investment funds including FAW Investment, Shanghai Science and Technology Venture Capital Group, and Zhangjiang Science and Technology Investment. institutional investment.
Although there are many players on the track, established foreign chip manufacturers still have major advantages, and domestic car core companies are always facing considerable pressure for development. For example, among mass-produced car cores, Nvidia Orin currently has the highest single-chip computing power and is difficult to replace. Car companies focusing on L4 are almost inseparable from the computing platform supported by Orin when promoting product testing and development, commercial landing and other processes. In terms of car core research and development technology, domestic manufacturers have not yet fully realized independent control.
In addition, the continuous implementation of the cost reduction strategy of downstream car companies has also brought R&D pressure to the car core industry. In addition to overcoming technology, core companies must also do a good job in cost performance of chips to cater to the mainstream consumer market.
Based on this, in recent years, car core manufacturers have intensively cultivated their own research and set off a "breakout battle". Among them, those who can successfully break through must be companies that can meet market demand to a greater extent and have excellent product strength. In terms of products, Black Sesame Smart does have advantages that cannot be underestimated.
When purchasing chips, car companies generally pay attention to whether the chips have accurate market positioning, support larger cross-domain platforms, and whether they can help them save development time and costs. For this reason, in April this year, Black Sesame Smart once again upgraded its core products and launched the "Wudang" C1200 series chips, which focus on cross-domain computing. A single chip can meet automatic driving, smart cockpit, body control and other computing functions. The first cross-domain computing chip platform for smart cars. It can be seen from this that the biggest selling point of the black sesame smart chip is that a single chip can carry multiple functions, enabling car companies to have cost advantages.
In addition, the company also has Huashan series focusing on autonomous driving, including Huashan A1000, Huashan A1000L, Huashan A1000 Pro, Huashan A2000 and other chip products. Due to its remarkable self-research strength, as of now, Black Sesame Smart has received intentional orders for 15 models from 10 auto OEMs and Tier 1, and has more than 30 partners, including Baidu, FAW, Dongfeng, Jiangqi, etc., and the number of customers is in the It has grown year by year, helping to improve the performance of enterprises. According to the prospectus, from 2020 to 2022, Black Sesame Smart will achieve revenues of approximately 53.02 million yuan, 60.5 million yuan, and 165 million yuan respectively.
However, for domestic automotive chip manufacturers, the deep water area is to make breakthroughs in fast, multi-type, mass production and application of updated products. In view of the current growing customer demand, domestic chip manufacturers still have a lot of room for improvement on the road to mass production .
Car core companies involve "mass production" Black Sesame Smart Leveraging IPO
In the long run, the needs of domestic chip manufacturers are characterized by diversification and complex development. Even though companies such as Black Sesame Smart have formed a stable customer base, they still have to face many realities under the huge demand of customers. pressure.
Relevant data can reflect the real dilemma of the industry. According to the data compiled by the China Automotive Chip Industry Innovation Strategic Alliance Standard Working Group, there are currently more than 100 domestic enterprises and institutions engaged in R&D and production of car chips, and more than 50 listed chip companies have publicly stated that they have car-grade products or have entered mass production. Only half of the chip companies have actually achieved mass production of chips. In addition, it is worth noting that more than 70% of companies have no more than 10 types of chip products on the shelves. The weak mass production link and the lack of typical applications are still tricky points.
The reason for the difficulty in mass production of chips and the lack of typical applications lies in the characteristics of the car core product itself. Different from consumer electronics chips, the safety requirements for car core production are higher, and it is necessary to cooperate with the OEM to invest a lot of verification work, and it is necessary to maintain the supply of after-sales parts for a long time. These characteristics make the car core suppliers invest a lot in the early stage, many of which are still in the research and development stage and are just getting involved in commercialization, and therefore face large operating losses.
According to the prospectus, Black Sesame Smart will lose 293 million yuan, 722 million yuan, and 1.053 billion yuan respectively in 2020-2022. The loss area has a tendency to expand year after year, and the main funds flow to research and development expenses. In 2022, Black Sesame Smart R&D expenditure will be 764 million yuan. Yuan, while the research and development expenditure in 2020 is 255 million yuan, and the research and development expenditure has increased by 2 times in three years. The difference between Xinwangwei's net cash flow and net profit in 2020-2022 is 17.6913 million yuan, -61.2367 million yuan, and -195.3515 million yuan, respectively. It can be seen that the realization of mass production requires a strong financial foundation to drive it. Even if the leading car core companies want to achieve mass production of the entire product line, there are certain difficulties.
However, with the increase in investment, players in the industry have found a certain way on the road to mass production. It is understood that as the trend of automobile intelligence becomes more and more clear, OEMs and chip manufacturers continue to increase technical exchanges, and the supply chain relationship has also changed from one-way to a form of integration and win-win. In response to this change, Xinchi Technology series products are based on platform design, which can be freely upgraded, flexibly match the deduction rhythm of electronic and electrical architectures of different OEMs, and accelerate the mass production process.
The horizon has come up with the killer "open software" to realize the efficient flow of data flow. It is reported that Horizon's TogetheROS Auto (hereinafter referred to as "TROS A") can help developers achieve rapid iterations from development to verification, and improve the efficiency of the entire process by 200%. It is worth mentioning that TROS·A is also the industry's first native development kit for data streams, providing a mass-production-level development framework, thereby supporting the rapid construction of data streams and the seamless high-speed flow of data, improving mass production efficiency.
Black Sesame Smart simplifies the delivery process with the "single-chip integration of travel and parking" solution and improves product cost performance, which once became the "favorite" of car companies. According to reports, Black Sesame’s Drive Sensing solution based on the A1000 series chips is the only high-end driving and parking integrated solution that can be mass-produced with a single SOC chip in the industry. It supports L2++ driving pilot NOA, parking HPA/AVP, and 3D 360 surround view Panorama, multi-channel DVR and other functions. According to the prospectus, Huashan A1000 series SoCs will start mass production in 2022, and by the end of 2022, the total shipments will exceed 25,000 pieces.
With the continuous expansion of shipments, Black Sesame Smart has become the world's third largest supplier based on the shipments of automotive-grade high-computing SoCs in 2022, with a global market share and a Chinese market share of 4.8% respectively. And 5.2%, second only to Nvidia and Horizon.
Car core companies are working tirelessly for mass production, and relevant industry organizations are also actively improving the certification process to promote mass production. Recently, the Society of Automotive Engineers stated that it will build a third-party joint evaluation platform and combine the strengths of upstream and downstream institutions in the industry chain to standardize the certification process of domestic chips and reduce certification costs.
The good news gives players the confidence to make big moves. Xinwang Micro, which is sprinting for the Science and Technology Innovation Board, plans to raise 1.7 billion yuan to deepen the R&D and industrialization projects of automotive-grade MCUs, deploy automotive-grade signal chains and RF SoC chips, and other automotive chip fields to enhance market competitiveness.
Considering that the automation level of the vast majority of smart cars is not higher than the L3 level, Black Sesame Smart plans to strategically develop and commercialize L2 to L3 level products at this stage, and stated in the prospectus that the IPO raised The net proceeds will be mainly used for the research and development of smart car-grade SoC, smart car support software and autonomous driving solutions. At the same time, the company is also full of confidence in its future shipment performance. It is expected to deliver more than 100,000 SoCs in 2023, which is four times the shipment in 2022, which will also promote its market share. Data shows that in 2023, the shipments of high computing power SoCs in China and the world will reach 1.05 million and 1.2 million respectively. Based on this calculation, the market share of Black Sesame Smart in China and the world will reach 9.7% and 8.5%, respectively.
Overall, the car core industry as a whole is moving forward. The guidance of industry policies and the significant increase in the attention of vehicle manufacturers to the localization of car chips will further facilitate the construction of the supply chain of car chips. "Lack of good chips" is only a matter of time.
Author: Tiny
Source: Hong Kong Stock Research Institute