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Under the ever-changing trend of global science and technology, innovative fields such as artificial intelligence, 5G, and new energy vehicles are experiencing unprecedented accelerated development, and the semiconductor industry, which is the core foundation of these industries, has also entered a period of prosperity. In this upsurge, a large number of semiconductor companies have seized the opportunity to increase the pace of development and embarked on the capital market.
According to incomplete statistics from Jiwei.com, in the first half of 2023 alone, as many as 46 semiconductor companies submitted prospectuses and were successfully accepted. The total amount of funds raised reached an astonishing 45.2 billion yuan. They come from various fields, covering multiple key links in the semiconductor industry chain from design, manufacturing, packaging and testing, to materials and equipment. The listing of these companies will undoubtedly inject new vitality into the entire industry and accelerate the advancement and innovation of semiconductor technology.
In the face of the prosperity of the semiconductor industry, Shenzhen Chipsbank Technology Co., Ltd. (hereinafter referred to as "chipsbank technology") has submitted a prospectus for an initial public offering and listing on the Science and Technology Innovation Board. In this IPO plan, Chipsbank Technology expects to publicly issue no more than 40.7964 million A shares, accounting for no less than 25% of the total share capital, and plans to raise 605 million yuan to promote three major projects: SSD solid state drive control chip And algorithm research and development, UWB+BLE dual-mode high-precision positioning chip research and development and industrialization, and high-performance smart home appliance control chip upgrade and industrialization.
Founded in 2005, Chipsbank Technology is an integrated circuit design company focusing on SoC design. Its leading products include mobile storage control chips, smart home appliance control chips, and UWB high-precision positioning chips. Although its stock was listed for public transfer on the National Equities Exchange and Quotations System in July 2014, in March 2020, the company chose to terminate the listing. Today, Chipsbank Technology is preparing to be listed on the Science and Technology Innovation Board, and its business model and operating conditions deserve our in-depth analysis and attention.
The scale of revenue is gradually increasing
From the point of view of revenue, Chipsbank Technology's operating income is increasing year by year. The operating income from 2020 to 2022 is 99 million yuan, 175 million yuan, and 192 million yuan respectively. It shows a downward trend, from 76.77% in 2021 to 9.71% in 2022. It can be seen that in 2022, Chipsbank Technology's revenue growth rate will slow down.
While the operating income increased, the net profit of Chipsbank Technology did not increase accordingly, but showed a downward trend. From 2020 to 2022, the net profit of Chipsbank Technology will be 39 million yuan, 35 million yuan, and 38 million yuan respectively. In terms of net profit growth, Chipsbank Technology will show a growth trend, from -10.26% in 2021 to 2022. 9.71%.
Source: Chipsbank Technology Prospectus Data Ape Compilation
Source: Chipsbank Technology Prospectus Data Ape Compilation
From the perspective of major expenditures, the R&D expenses of Chipsbank Technology, the ratio of R&D investment to revenue in 2020-2022 is 13.78%, 9.76%, and 11.11%, respectively. Although R&D expenditures have been increasing year after year, according to its prospectus, Chipsbank's R&D expense ratios are 13.78%, 9.76%, and 11.11%, respectively. During the same period, the industry averages of comparable companies were all around 20%, 20.80%, 19.13%, and 23.54%, respectively. In 2022, the average R&D expense rate of peers is twice that of Chipsbank.
Source: Chipsbank Technology Prospectus Data Ape Compilation
Although the R&D expense rate is far lower than the industry average, Chipsbank's sales expenses during the reporting period were higher than the average level of comparable companies in the same industry. From 2020 to 2022, the sales expenses of Chipsbank Technology will be 6 million yuan, 11 million yuan, and 10 million yuan respectively, and the sales expense ratios will be 6.49%, 6.31%, and 5.26%, respectively. The industry averages for the same period are 4.4%, 3.54%, and 5.11% %.
Chipsbank also admitted frankly that the sales expenses of Chipsbank are mainly personnel salaries and welfare expenses. There is a certain gap between comparable companies in the industry.
Source: Chipsbank Prospectus
Mobile storage control chips become the mainstay of revenue
Chipsbank Technology adopts the Fabless business model, focusing on the design, development and sales of mobile storage control chips, smart home appliance control chips and other chip products, entrusting the wafer manufacturing, chip packaging, testing and other links to professional fabs, packaging factory to complete.
Relying on the modular SoC design technology platform, Chipsbank has developed new smart home appliance control chips and memory card control chips based on this technology platform. In addition, based on the self-developed 32-bit CISC special processor and Flash control algorithm, Chipsbank successfully designed the first USB storage disk control chip and SD memory card control chip in 2005 and 2007.
Source: Chipsbank Prospectus
The main business income of Chipsbank Technology consists of: mobile storage control chips, smart home appliance control chips, other chips and devices.
Source: Chipsbank Technology Prospectus Data Ape Compilation
1. Mobile storage control chip
The mobile storage control chip is used to control the NAND Flash memory chip (Nand-flash memory is a kind of flash memory, which uses a nonlinear macro-cell mode inside, has the advantages of large capacity, fast rewriting speed, etc., and is suitable for the storage of large amounts of data) data read and write. Chipsbank's mobile storage control chips are mainly used in mobile storage products such as USB storage disks and SD memory cards. The service life of mobile storage products.
Schematic diagram of internal storage control chip and NAND Flash storage chip of mobile storage products
Today, with the rapid development of emerging fields such as big data, the Internet of Things, and cloud computing, as well as the digitalization and intelligence of traditional fields such as industry, home appliances, and automobiles, a large amount of data is produced and needs to be stored. According to the data and forecast provided by IDC in 2021, the compound annual growth rate of global data generation will reach 23% from 2020 to 2025.
Chipsbank's mobile storage control chips mainly include two types: USB storage disk control chips and SD memory card control chips. Among them, the USB storage disk control chip is mainly used in scenarios such as personal mobile storage, business office, medical paperless, vehicle-mounted multimedia, etc. Human-machine, driving recorder, game equipment, mobile phone, tablet computer and other scenarios.
According to the prospectus, the operating income of Chipsbank's mobile storage chips in the past three years was 75 million yuan, 69 million yuan, and 136 million yuan, and the operating income of mobile storage control chips will reach the highest in 2022. The revenue share of Chipsbank Technology fluctuates greatly. The revenue share of mobile storage control chips will drop from 76.98% to 39.90% in 2021, and then rise to 72.36% in 2022. It can be seen that in 2022, mobile Storage control chips have made a greater contribution to Chipsbank's revenue.
In terms of gross profit margin, the gross profit margins of Chipsbank's mobile storage control chips were 55.22%, 52.17% and 54.20%, respectively, remaining stable overall.
Source: Chipsbank Technology Prospectus Data Ape Compilation
2. Smart home appliance control chip
At present, the human-computer interaction methods of smart home appliances include mechanical, touch button, voice interactive, etc. With the trend of intelligent and high-end home Touch button interaction gradually replaces mechanical interaction, because there is no limit on the number of times that touch buttons can be used, and their service life is much longer than that of mechanical buttons. The smart home appliance control chip is the center of smart home appliances. Through the precise perception of external commands, the control of home appliances is realized through a series of signal transmissions.
According to Statista data, the global penetration rate of smart home appliances is 5.5% in 2022, and it is expected that the penetration rate will reach 11.6% in 2025, with sales reaching US$71 billion.
According to the prospectus, the operating income of Chipsbank Technology’s smart home appliance control chips has fluctuated greatly in the past three years. From 2021 to 2022, it will not increase but will decrease, from 103 million yuan to 50 million yuan. In terms of revenue share, it is just the opposite of mobile storage chips. Smart home appliance control chips will account for 59.51% of revenue in 2021, then begin to decline, and finally drop to 26.56% in 2022.
In this regard, Chipsbank Technology explained that the revenue scale of smart home appliance control chips will increase significantly in 2021, mainly due to the fact that downstream home appliance brand manufacturers have increased procurement efforts and continuously increased the scale of stocking in response to the impact of the "chip shortage tide" in the market. The sales of control chips for high-tech smart home appliances have increased significantly, and Chipsbank has increased the price of its products accordingly.
The decline in the revenue of smart home appliance control chips in 2022 is mainly due to the sluggish demand in the consumer electronics and home appliance markets, as well as the fact that downstream brand home appliance manufacturers will stock up more at the end of 2021 and reduce the purchase of related products during the inventory digestion period.
In terms of gross profit margin, compared with mobile storage control chips, the gross profit margin of smart home appliance control chips has more obvious fluctuations, and the overall trend is downward. In 2021, the gross profit margin of this business rose briefly, and then dropped rapidly in 2022, to 28.70%, 34.61% and 22.11% respectively. In this regard, the prospectus disclosed that fluctuations in gross profit margins were mainly affected by the "core shortage tide" that year.
Generally speaking, the development prospect of Chipsbank Technology's industry is relatively broad, and its main business is more prominent. In terms of revenue, mobile storage control chips will increase significantly in 2022; in terms of revenue proportion, Chipsbank Technology's main business The proportion of business revenue fluctuates greatly. In terms of gross profit margin, during the reporting period, mobile storage control chips and smart home appliance control chips accounted for more than 99% of the gross profit of the main business, which is the main source of the gross profit of Chipsbank Technology’s main business. source.
Source: Chipsbank Prospectus data source compilation
With Risk Comes Opportunity
Integrated circuit design is located in the upstream of the integrated circuit industry and is a typical technology-intensive industry. In recent years, industries such as big data, Internet of Things, 5G, artificial intelligence, and consumer electronics in mainland China have risen rapidly, and mainland China has become one of the most important semiconductor consumer markets in the world. According to statistics from the China Semiconductor Industry Association, the sales revenue of China's integrated circuit design industry will reach 451.9 billion yuan in 2021, an increase of about 74 billion yuan compared with 2020, of which the integrated circuit design industry accounts for about 43%, which is the highest proportion of integrated circuits. A link in the circuit industry chain. Therefore, the prospect of Chipsbank Technology's industry is still very broad and has great potential for development.
However, opportunities often come with risks.
1. High concentration risk of suppliers
From 2020 to 2022, the procurement ratios of the top five suppliers of Chipsbank Technology will be 93.69%, 91.00% and 91.88% respectively, mainly SMIC, Huahong Grace, Hualiwei, Huatian Technology, and China Resources Ansheng And other professional wafer manufacturing, packaging and testing manufacturers, suppliers are highly concentrated.
If the production capacity of the supply chain continues to be tight or the supplier has an unexpected situation, it may cause Chipsbank Technology to be unable to obtain the production capacity that can meet the production and sales needs, which is very detrimental to the production and operation of Chipsbank Technology. In addition, as the overall demand for integrated circuits continues to grow and the scale of domestic integrated circuit design companies continues to expand, there may be shortages in the production capacity of fabs, packaging and testing factories and other manufacturers, and the purchase price of wafers, packaging and testing will rise accordingly.
2. High risk of customer concentration
From 2020 to 2022, the sales revenue of the company's top five customers will be 77 million yuan, 110 million yuan and 139 million yuan respectively, accounting for 78.20%, 62.79% and 72.27% of the operating income. Among them, the sales revenue of the largest customer Xinxin Electronics (including enterprises under the same control) accounted for 50.70%, 28.42% and 45.08% of the operating revenue, respectively, and the customer concentration is relatively high.
3. Risks of the VAM agreement
According to the prospectus, the actual controller and controlling shareholder of Chipsbank Technology and some of its shareholders have agreed on terms of gambling such as equity repurchase. If Chipsbank Technology fails to be listed successfully (including but not limited to not being accepted by the review agency, withdrawal of application materials, rejection of listing application, and failure to issue for any reason), within a certain period of time, the repurchase obligee has the right to request The repurchase obligor repurchases all or part of the shares of the issuer it holds.
If the VAM repurchase clause is triggered due to the failure of Chipsbank Technology to go public, the existing equity structure of Chipsbank Technology may change to a certain extent.
The scale is gradually expanding, but the revenue does not increase. In addition, the problem of excessive concentration of customers and suppliers has yet to be resolved, and the VAM agreement is pressing harder and harder. This may be the reason why Chipsbank Technology had to choose to go public.
SWOT Analysis and Strategic Recommendations
In order to understand the overall situation of Chipsbank Technology in a more comprehensive and in-depth manner, we will conduct a SWOT analysis on it.
According to the SWOT analysis of Chipsbank Technology, it can be found that:
Chipsbank's technology and R&D experience in the field of mobile storage control chips has enabled it to occupy a place in the domestic market. This not only represents a competitive advantage for the company, but also provides it with a solid market position. In addition, considering the rapid development of big data, Internet of Things, 5G, AI and other industries in mainland China, the company will face huge growth opportunities. The possibility of going public would provide the company with more opportunities to raise capital and boost its brand recognition.
However, despite the company's revenue growth, its growth rate seems to be slowing down, which may be due to certain challenges in the company's business structure, product mix and market strategy. For example, the revenue share of mobile memory chips fluctuates greatly, reflecting unstable market demand or internal company strategy adjustments. The decline in the gross profit margin of smart home appliance control chips means that market competition has intensified or production costs have increased. It is worth noting that the company's R&D investment is relatively low, which will affect its position in technological innovation and market competition.
In addition, Chipsbank faces some notable external threats. Supply chain issues can become a major bottleneck for a company, especially when there are problems with key suppliers or supply chain tensions. High customer concentration increases the risk of dependence on a single customer, which means that if the relationship with major customers is damaged, the company's performance may be seriously affected. Finally, the existence of gambling agreements with shareholders puts additional pressure on companies, especially if they are considering going public.
To sum up, Chipsbank has significant competitive advantages and industry opportunities, but it also faces some internal and external challenges. To stay ahead in the fierce market competition, companies need to develop effective strategies to address these challenges while making the most of their core strengths.
Specifically, in view of the company's current situation and future, its development strategy can focus on the following key directions:
Strengthen R&D:
The company's technological prowess is a key driver of its continued growth. Chipsbank Technology has established a strong position in the field of mobile storage control chips, but in order to maintain this advantage, it must further strengthen its research and development capabilities. This includes digging deep into existing technology fields, such as 5G, AI, etc., and looking for new technology growth points. Strengthening research and development will not only strengthen its leading position in the market, but also pave the way for the company's expansion in emerging markets in the future.
Expand business boundaries:
With the rapid changes in the market environment, the dependence on a single business line may increase the company's risk. Chipsbank needs to actively look for new business opportunities related to its core technology. Cross-border cooperation and deployment in emerging fields, such as the Internet of Things and edge computing, can help companies further strengthen their market positions and increase sources of profit. This requires the company to make careful arrangements and investments in strategic planning, resource allocation and talent management.
Strengthen supply chain management:
The stability of the supply chain is a key factor to ensure the smooth operation of the company. In the current complex environment of the global supply chain, Chipsbank Technology should pay attention to the relationship management with various suppliers to ensure the flexibility and reliability of the supply chain. Diversified cooperation and the establishment of contingency plans can greatly reduce the risk of supply chain disruption.
In addition to the above key directions, Chipsbank Technology should also pay attention to the following aspects: optimize the capital structure to meet the capital needs of different development stages; implement strict risk management and internal control systems to ensure the company's stable operation; strengthen cooperation with domestic and foreign universities, research Institutional cooperation to attract and develop top technical and management talents; promote the alignment of employees with the company's goals and values by strengthening corporate culture.
Ultimately, Chipsbank's prospects depend not only on market fluctuations and changes in the external environment, but also on its own decision-making and execution capabilities. We look forward to this company with a solid foundation, which will continue to bring more innovation and value to China's semiconductor industry in the future.
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Text: Yuanyuan / Data Ape
